A judge in Michigan has ruled that religious-based adoption agencies that contract with the state can refuse to place children in LGBTQ homes. State Attorney General Dana Nessel reached a settlement earlier this year barring faith-based agencies from excluding same-sex couples from adoption services, but on Thursday a federal judge in Grand Rapids shot that down.

In 2017, Nessel, a Democrat who is Michigan's first openly gay statewide officeholder, and the American Civil Liberties Union of Michigan sued the state on behalf of two lesbian couples. The couples claimed they were turned away from adoption agencies because they are gay. Nessel argued that was illegal discrimination, and in March 2019, reached a settlement overturning the practice.

Less than a month later, faith-based adoption agencies sued the state of Michigan, naming Nessel, the federal Department of Health and Human Services and other government officials in the lawsuit.

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The suit, filed by the Becket Fund for Religious Liberty St. Vincent Catholic Charities, alleges violations of the plaintiffs' First Amendment rights and the federal Religious Freedom Restoration Act. It is among more than 90 agencies that receive state funding, according to the complaint. The state often contracts private adoption agencies to place children from troubled homes with new families.

Faith-based agencies argued they would have to shut down their adoption and foster care services rather than violate their religious beliefs. However, Democrats and LGBTQ advocates said restrictions against gay families amounted to a "policy of bigotry."

On Thursday, District Judge Robert Jonker issued a preliminary injunction blocking Nessel's settlement while the case is fully litigated, saying it conflicted with state law and existing contracts and practices.

Jonker's ruling said St. Vincent Catholic Charities' longstanding practice of adhering to its religious beliefs and referring same-sex and unmarried couples to other agencies is not discriminatory.