Federal judge bars Trump from cutting billions in state grants
A federal court has blocked the US administration from using a regulatory clause to withhold billions of dollars in state grants, restoring near-term funding certainty for public infrastructure and research programmes.
A federal judge in Boston on Friday barred the Trump administration from using an obscure regulatory clause to slash billions of dollars in federal grants. U.S. District Judge Indira Talwani granted a summary judgment in favor of 23 states that sued to stop the funding cuts, which affected sectors from scientific research to disaster preparedness.
The ruling provides critical stability for state budgets and the private contractors that rely on federal disbursements. States had warned that the abrupt withholding of awarded funds threatened public safety initiatives and local infrastructure projects, creating severe budgetary uncertainty.
At the centre of the dispute was a provision introduced in 2020 and revised in 2024 during the Biden administration. It allows agencies to terminate a grant if the award “no longer effectuates the program goals or agency priorities.” The states argued the Office of Management and Budget was weaponising this previously unused language to execute what they described as a “nationwide slash-and-burn campaign.”
Judge Talwani agreed, noting the administration's interpretation lacked textual support and violated the Spending Clause's requirement that funding conditions be unambiguous. “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,” she wrote.
Federal lawyers had argued the lawsuit should be dismissed, calling it an “extraordinarily unusual lawsuit.” They contended the states' objections to future grants were too speculative and accused plaintiffs of raising blanket objections without seeking relief that would “restore a single grant.”
New Jersey Attorney General Jennifer Davenport characterized the decision as a decisive victory for state finances. “The President and his allies cannot hold critical programs hostage to their personal whims and political ideologies, destabilizing the country by yanking essential federal funding that was already awarded to the states,” she said. The Office of Management and Budget did not respond to a request for comment.
