Federal Judge Rules Trump Administration Can Not Terminate Billions in Federal Grants Due to Change in Administration Priorities

WASHINGTON D.C. (KEYT) – A federal judge in Massachusetts has blocked the Trump Administration from unilaterally terminating billions in grant funding for states already appropriated by Congress.

"Plaintiffs—twenty states, three governors, and the District of Columbia—brought this action against Defendants U.S. Office of Management and Budget, Russell Vought in his official capacity as Director of the OMB, and various grant-making Executive Branch agencies and their heads in their official capacity," opened Friday's summary judgement by District Judge Indira Talwani. "The parties dispute the basis on which, pursuant to the Termination Clause, Defendant-Agencies may terminate currently awarded grants or grants Defendant-Agencies may later award Plaintiff-States."

Federal law details how the the executive branch can lawfully terminate federal awards, but, beginning last year, the Office of Management and Budget began using one particular clause to terminate grants approved by Congress in a novel way.

"The Trump Administration has claimed that five words in this Clause [2 C.F.R. § 200.340(a)(4)]—'no longer effectuates . . . agency priorities'—provide federal agencies with virtually unfettered authority to
withhold federal funding any time they no longer wish to support the programs for which Congress
has appropriated funding," plaintiffs argued in their lawsuit filed in June of last year. "With the stroke of a pen, federal agencies have deprived States of critical funding they rely on to combat violent crime and protect public safety, equip law enforcement, educate students, safeguard public health, protect clean drinking water, conduct life-saving medical and scientific research, address food insecurity experienced by students in school, ensure access to unemployment benefits for workers who lose their jobs, and much more. Federal agencies have done all of this without any advance notice, without any explanation to the State recipients, and in direct contravention of the will of Congress."

"Plaintiffs are not aware of a single instance prior to January 2025 in which a federal agency relied on the Clause to terminate a grant on the grounds that agency priorities had changed after the award of the grant," added the plaintiffs.

According to the plaintiffs, employees at DOGE were formally directed to terminate grants en masse under the authority of Executive Order 14222 issued in February of last year.

"This order [Executive Order 14222] commences a transformation in Federal spending on contracts, grants, and loans to ensure Government spending is transparent and Government employees are accountable to the American public," Section 1 of Executive Order 14222 stated.

Article 1 Section 8 of the U.S. Constitution, also known as the Spending Clause, empowers Congress with the power to collect revenue and to appropriate money for federal expenditures.

The section does not include any executive branch position, office, department, or agency in the spending approval process.

"Defendants' limitless assertion of authority to terminate grants based on newly identified agency priorities is inconsistent with the separation of powers," noted the plaintiffs in their suit. "[U]nder
Defendants' capacious application of the Clause [2 C.F.R. § 200.340(a)(4)], Defendants have terminated entire programs by substituting their priorities for those identified by Congress, even when Congress has directed funds to be spent on those very programs. Defendants' decision to invoke the Clause to terminate grants based on changed agency priorities is also in tension with the Spending Clause because Defendants have failed to provide States with clear and unambiguous notice of the conditions that apply to their grants."

Federal courts have slowly reversed some of the grant terminations made last year including the Building Resilient Infrastructure and Communities (BRIC) program signed into law by President Trump as part of the Disaster Recovery Reform Act of 2018 to fund disaster mitigation projects nationwide.

"The BRIC program was yet another example of a wasteful and ineffective FEMA [Federal Emergency Management Agency] program," the Department of Homeland Security, which FEMA is part of, shared with Your News Channel when reached for comment in June of last year. "It [the BRIC program] was more concerned with political agendas than helping Americans affected by natural disasters. Under Secretary Noem's leadership, we are committed to ensuring that Americans in crisis can get the help and resources they need."

The disaster preparedness program was one of many federal grant programs noted in the plaintiff's June lawsuit.

"Often, termination letters to Plaintiffs note only that the funded activity no longer aligns with agency
priorities," noted Judge Talwani in Friday's summary judgement. "Plaintiffs allege that they anticipate that many of these [still-pending] applications would be granted but are uncertain as to whether they may rely on this funding, should they receive it, given the risk of unilateral termination based on further policy changes after an award is granted."

The risk to future grants was something the Trump Administration argued was unfair to include when deciding if the plaintiffs had been harmed by the terminations and had ground to file suit in federal court.

"Defendants argue it is not possible to predict how individual decisionmakers within the Executive Branch may behave, such that it is not possible to conclude grants would in fact be terminated," explained Judge Talwani before noting that, "The record shows terminations are continuing and that there are express instructions from the Executive Branch directing Defendant-Agencies to proceed with terminations. Though it is not necessarily possible to identify which of Plaintiffs' numerous grants may be terminated, it is possible to conclude that some grants are substantially likely to be terminated."

This question regarding the Constitutional process of federal spending versus the shifting priorities of successive administrations going forward isn't just limited to Friday's summary judgement regarding unilateral grant terminations.

The Trump Administration recently proposed changes that would fundamentally alter all future Congressionally-approved funding by requiring them to be approved by political appointees in the executive branch.

"This proposal dramatically expands agencies' authority to the point where the President could terminate or suspend any grant at any time for any reason and without any notice," argued a letter signed by 47 Senators earlier this month about the proposed changes. "When Congress authorizes and appropriates money for federal grants, it does so with the understanding that all Administrations will distribute those grants consistent with Congressional intent and the funding instructions articulated in law. The type of discretion the President intends to bestow upon himself through this proposed rule is counter to all past precedent and ignores the reality of how appropriations and authorizing laws are drafted."

The same lack of Constitutional authority to unilaterally terminate Congressionally-approved funds was noted Friday by Judge Talwani.

"After review of the plain language, regulatory scheme, regulatory history, the Spending Clause of the U.S. Constitution, and Defendants' argument regarding the implementation of the President's vision, the court agrees with Plaintiffs and finds that the Termination Clause does not permit agencies to terminate grants based on program goals and agency priorities identified after grants were awarded."

"The court declares that 2 C.F.R. § 200.340(a)(4) (2024) and 2 C.F.R. § 200.340(a)(2)(2021) do not allow terminations of awards based on new program goals or agency priorities that an agency identifies after granting the award," the federal judge concluded.