Federal Judge Rules Trump Administration Can’t Cancel Grants Over New Agency Priorities

Federal agencies cannot terminate grants simply because a new administration decides the money no longer matches its priorities, a federal judge ruled Friday.

U.S. District Judge Indira Talwani of the District of Massachusetts granted summary judgment to a coalition of 20 states, the District of Columbia, and the governors of Kansas, Kentucky, and Pennsylvania in their lawsuit against the Office of Management and Budget, Director Russell Vought, and eleven grant-making agencies, including the Departments of Justice, Agriculture, and Homeland Security, the EPA, FEMA, the National Science Foundation, and the National Endowment for the Humanities.

The case turned on the "Termination Clause" in 2 C.F.R. § 200.340, an OMB regulation that allows an agency to end a federal award that "no longer effectuates the program goals or agency priorities." Since January 2025, agencies have cited that language to cancel billions of dollars in funding, often with termination letters stating only that the work no longer aligned with agency priorities.