A federal judge in Boston has issued a ruling preventing the Office of Management and Budget (OMB) from using a grant termination clause to revoke federal funding due to changes in agency priorities. U.S. District Judge Indira Talwani denied a request from the Trump administration to dismiss a lawsuit filed by 20 states, three governors, and the District of Columbia, which challenged the policy.
The lawsuit, initiated last year, contended that the administration improperly used the clause to terminate grants for various programs, including those related to universities, school lunch initiatives, and crime prevention. The OMB regulation in question allows agencies to end grants if they no longer meet program goals or agency priorities, a provision first introduced in 2020 and revised in 2024 under the Biden administration. The states argued that this clause was meant for specific grant program adjustments, not for terminating grants based on a new administration's policy changes.
In her ruling, Judge Talwani stated that the regulation does not grant agencies the authority to revoke grants simply because their priorities have shifted. She noted that federal law does not permit agencies to terminate grants based on new goals identified after the award has been made. New Jersey Attorney General Jennifer Davenport, who co-led the lawsuit, described the decision as a significant victory for New Jersey residents, asserting that the Trump administration acted unlawfully in its efforts to reduce federal funding for critical programs.