Federal judge blocks Trump administration from revoking billions in grants over policy priorities

WASHINGTON, DC: A federal judge has blocked the Trump administration from using a White House budget office regulation to cancel billions of dollars in previously awarded federal grants over changes in presidential priorities.

The ruling marks a setback for federal agencies that have sought to withdraw funding from programs the administration argued no longer matched its goals, including initiatives tied to diversity, equity, and inclusion efforts and climate-related programs.

Judge finds no legal basis for canceling previously awarded grants

In Boston, US District Judge Indira Talwani ruled in favor of a group of Democratic-led states, finding that the administration had improperly relied on an Office of Management and Budget (OMB) regulation to revoke grants that had already been approved.

The regulation, which appeared in OMB rules in 2020 during President Donald Trump's first term and was later revised under President Joe Biden, allows agencies to terminate grants if they determine the funding "no longer effectuates the program goals or agency priorities."

Since Trump returned to office, several federal agencies have used the provision to target funding for universities, crime prevention programs, school lunch initiatives and other programs.

Talwani, who was appointed by former President Barack Obama, wrote that the clause "does not permit agencies to terminate grants based on program goals and agency priorities identified after grants were awarded."

She said the administration's interpretation had no legal basis and that imposing such conditions on already awarded funds would violate the US Constitution. The judge noted that the regulation "demands only that grantees be apprised of those goals and priorities before grants are awarded."

The White House did not immediately comment on the ruling.

States challenge Trump administration grant cancellations

The lawsuit was filed last year by Democratic attorneys general and governors from 23 states and the District of Columbia, led by Massachusetts, New York and New Jersey.

The states argued that the administration had expanded the use of the OMB clause beyond its original purpose and given federal agencies broad authority to reclaim funding long after grants had been approved.

During court proceedings, the states warned that more than 1,100 active grants worth over $5 billion could be affected if the court did not intervene.

New Jersey Attorney General Jennifer Davenport, a Democrat, said the decision "confirms that the Trump administration defied the law when it embarked on its campaign to gut critical federal funding to the states."

The ruling adds to ongoing legal challenges over grant terminations across multiple federal agencies, as Democratic-led states have continued to challenge funding cuts they argue were driven by political priorities rather than program requirements.

It remains unclear whether the administration will appeal Friday's decision. The ruling could have broader implications for future efforts by federal agencies to withdraw previously awarded grants under the same regulatory provision.