The Second Circuit on Tuesday affirmed a pair of decisions blocking the Trump administration’s so-called public charge rule, which penalizes immigrants who use public benefits, but narrowed the scope of the nationwide preliminary injunctions to apply only to states that fall under its jurisdiction.

In a 110-page decision, a unanimous three-judge panel agreed with the trial court that injunctions blocking the new policy are warranted. The rulings were issued in two separate lawsuits, one case brought by a group of states and New York City and another suit filed by five nonprofits that provide legal and social services to noncitizens.

However, the panel modified the scope of the injunctions to cover only the states of New York, Connecticut and Vermont. The appellate court explained that current litigation surrounding the new public charge rule is “volatile” and circuit splits may arise. Therefore, it’s unclear if the court that imposes the “most sweeping injunction should control the nationwide legal landscape,” the opinion says.

“We see no need for a broader injunction at this point, particularly in light of the somewhat unusual posture of this case,” the opinion says.

The rule penalizes green card applicants who are found likely to use public assistance programs and it has faced an onslaught of legal challenges in jurisdictions across the country since the U.S. Department of Homeland Security announced it in August 2019.

In October, U.S. District Judge George Daniels issued the nationwide preliminary injunctions in the current lawsuits, calling the policy change “repugnant to the American Dream.” But earlier this year, the U.S. Supreme Court gave the DHS the green light to carry out the new immigration rule as the cases are being litigated, despite multiple federal court orders that found the new rule is likely illegal.

The DHS started implementing the policy in all 50 states in February, allowing it to deny green cards to immigrants who have used certain public benefits in the past or are considered likely to use them in the future based on factors like age, education level and health.

Meanwhile, the government appealed the initial injunctions to the Second Circuit. But on Tuesday, the Second Circuit mostly sided with the states and nonprofits.

The panel agreed with the district judge that the plaintiffs will likely win their arguments that the policy is unlawful, both because the new rule is arbitrary and capricious and because it conflicts with the Immigration and Nationality Act and Congress’ intent to limit who qualifies as a “public charge.”

“We conclude that Congress’s intended meaning of ‘public charge’ unambiguously forecloses the rule’s expansive interpretation,” the opinion says. “We are not persuaded by DHS’s efforts to argue otherwise.”

The panel also rejected the government’s argument that it was justified in revising the definition of public charge to include any noncitizen who might temporarily need public assistance.

“We conclude that DHS failed to provide a reasoned explanation for its changed definition and the expanded list of relevant public benefits and that the plaintiffs are thus also likely to succeed on the merits of their claim that the rule is arbitrary and capricious under [the Administrative Procedure Act],” the opinion says.

The appellate court found that the nonprofits and states also could suffer “actual and imminent” financial harm by the new policy, which the opinion explained could lead to drops in Medicaid revenue and federal funding, thereby overburdening hospitals and straining resources. Ultimately, the balance of equities and public interest “clearly tips in favor of the plaintiffs,” the opinion says.

Despite the panel’s findings, the appellate court said the orders blocking the policy across the country go too far, since they could override or contradict differing opinions in other jurisdictions. The panel added that district judges should be mindful of potential circuit splits when issuing injunctions in such hotly contested cases.

“When confronted with such a volatile litigation landscape, we encourage district courts to consider crafting preliminary injunctions that anticipate the possibility of conflict with other courts and provide for such a contingency,” the opinion says.

Javier H. Valdés, co-executive director at the nonprofit Make the Road New York, said in a statement Tuesday that the Second Circuit’s decision reaffirms that the Trump administration’s public charge rule is “racist and unlawful.”

“This racist wealth test is an inhumane attack on immigrants of color and low-income families, and as we face the COVID-19 pandemic, immigrants should be able to access vital services without fear,” Valdés said. “We applaud the court’s decision and will continue to fight to protect all immigrants and our communities from this administration’s harmful policies.”

A representative for New York City said in a statement this is a big win for the state and its immigrant residents, and the city will continue its fight to defeat this “malicious rule which has caused so much suffering to the most vulnerable in our communities during this crisis.”

Representatives for the government and the states didn’t immediately respond Tuesday to requests for comment.

The Second Circuit’s decision comes less than a week after Judge Daniels again issued nationwide injunctions and orders to stay the rule, concluding that the states and nonprofits had provided “ample evidence” that the policy deters immigrants from seeking COVID-19 testing and could threaten efforts to curb the spread of the disease.

The judge also found that U.S. Citizenship and Immigration Services‘ efforts to address these concerns were “plainly insufficient.” The agency’s alert informing immigrants that any testing or treatment for coronavirus would not be counted against them is ambiguous and “further adds chaos and confusion,” Judge Daniels said.

On Monday, the government asked Judge Daniels to stay his recent orders pending the outcome of its appeals.

U.S. Circuit Court Judges Pierre N. Leval, Peter W. Hall and Gerard E. Lynch sat on the panel for the Second Circuit.

The state of New York is represented by Judith N. Vale, Letitia James, Barbara D. Underwood, Steven C. Wu, Matthew Colangelo, Elena Goldstein and Ming-Qi Chu of the New York attorney general’s office. Connecticut is represented by William Tong of the Connecticut attorney general’s office. Vermont is represented by Thomas J. Donovan Jr. of the Vermont attorney general’s office. New York City is represented by New York City corporation counsel James E. Johnson of the New York City Law Department.

Make the Road New York, African Services Committee, Asian American Federation, Catholic Charities Community Services and Catholic Legal Immigration Network Inc. are represented by Jonathan H. Hurwitz, Andrew J. Ehrlich, Elana R. Beale, Robert J. O’Loughlin and Daniel S. Sinnreich of Paul Weiss Rifkind Wharton & Garrison LLP; Ghita R. Schwarz, Brittany Thomas and Baher A. Azmy of the Center for Constitutional Rights; and Susan E. Welber, Kathleen Kelleher, Susan Cameron and Hasan Shafiqullah of The Legal Aid Society of New York City.

The government is represented by Gerard J. Sinzdak, Joseph H. Hunt, Joshua Dos Santos, Geoffrey S. Berman and Daniel Tenny of the U.S. Department of Justice‘s Civil Division.

The cases are New York et al. v. U.S. Department of Homeland Security et al., case number 19-3591, and Make the Road New York et al. v. Kenneth T. Cuccinelli et al., case number 19-3595, in the U.S. Court of Appeals for the Second Circuit.