Judge blocks Trump grant-cut strategy tied to agency priorities
A Boston federal judge sided with 23 states that challenged the administration’s use of a grant termination clause covering agency goals and priorities.
By Hana Yoshida · Markets Reporter
3 min read
A federal judge in Boston ruled Friday that the Trump administration may not use a grant termination clause tied to agency priorities to carry out broad federal funding cuts. The decision limits a strategy that 23 states said threatened billions of dollars in awards for public safety, food programs, research and other state-backed work.
U.S. District Judge Indira Talwani granted summary judgment to the states and rejected the federal government’s request to dismiss the case. Talwani, who was nominated by President Barack Obama, found that the administration’s reading of the clause did not fit the text, the regulatory structure or the rulemaking record.
“Defendants’ interpretation of the Termination Clause is not clearly supported by the text of the provision, runs counter to the regulatory scheme, receives no support in the rulemaking history, and would violate the Spending Clause’s requirement that conditions be imposed unambiguously,” Talwani wrote.
The dispute centered on language allowing a federal grant to be terminated if the award “no longer effectuates the program goals or agency priorities.” The clause was first introduced in 2020 and revised in 2024, according to the court record described by the states.
The states argued that the administration was using that language in a new way to cancel grants that had already been awarded and to justify future cancellations. Their lawsuit accused the Office of Management and Budget of promoting the clause as part of what the complaint called a “nationwide slash-and-burn campaign.”
The challenged cuts covered a wide range of state concerns, according to the lawsuit, including crime prevention, food security, disaster preparedness, clean water and scientific research. The states said the administration’s approach could destabilize programs that relied on federal commitments already made.
New Jersey Attorney General Jennifer Davenport said the ruling confirmed that the administration acted unlawfully. “Instead of working with us to keep the public safe and lower costs for hardworking New Jerseyans, the Trump Administration has recklessly and illegally gutted federal funding for public safety, disaster preparedness, scientific research, clean water, and more,” Davenport said in a statement.
Davenport said the decision was “an important win for all New Jerseyans” and accused the administration of trying to “hold critical programs hostage to their personal whims and political ideologies.”
Federal government lawyers had urged Talwani to throw out the case, calling it an “extraordinarily unusual lawsuit.” They argued that some grants had already been terminated and that the states’ warnings about future grants were too speculative to support the case.
The government also said the states were making broad objections to thousands of grant terminations without asking the court for relief that would restore any specific award. In their dismissal motion, federal lawyers said the gap between the alleged unlawful agency action and the relief sought created jurisdictional and justiciability problems.
A spokesperson for the Office of Management and Budget did not respond to a request for comment, according to Fortune.
This story draws on original reporting from Fortune.