Federal judge bars Trump administration from using obscure clause to
make huge funding cuts
[July 18, 2026]
By MICHAEL CASEY
BOSTON (AP) — A federal judge in Boston on Friday ruled the Trump
administration can’t use an obscure clause relating to agency priorities
to make billions of dollars in funding cuts.
Twenty-three states had a filed a lawsuit last year accusing the
administration of using the clause to make cuts to everything from crime
prevention to food security to scientific research. They were concerned
that it would be used to cancel current and future grants.
U.S. District Judge Indira Talwani granted a summary judgment preventing
the administration from relying on the clause to make cuts and denied a
motion by the government to dismiss the case.
“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, and would violate
the Spending Clause’s requirement that conditions be imposed
unambiguously,” Talwani, who was nominated by Democratic President
Barack Obama, wrote.
The lawsuit argued that the Office of Management and Budget promulgated
the use of the clause in question to justify what it described as a
“nationwide slash-and-burn campaign.”
The clause, which was first introduced in 2020 and revised in 2024, says
federal agents can terminate a grant if the award “no longer effectuates
the program goals or agency priorities.” The states argued that the
language, put in place during the Biden administration, was for the
first time being used to terminate grants.
“Instead of working with us to keep the public safe and lower costs for
hardworking New Jerseyans, the Trump Administration has recklessly and
illegally gutted federal funding for public safety, disaster
preparedness, scientific research, clean water, and more,” New Jersey
Attorney General Jennifer Davenport said in a statement.
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Russell Vought, acting director, Office of Management and Budget,
testifies before the House Financial Committee on the Consumer
Financial Protection Bureau (CFPB) semi-annual report, on Capitol
Hill in Washington, Wednesday, July 15, 2026. (AP Photo/Cliff Owen)
"Today’s decision is an important win for all New Jerseyans and
confirms that the Trump Administration defied the law when it
embarked on its campaign to gut critical federal funding to the
states,” she continued. “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.”
Calling the case an “extraordinarily unusual lawsuit," lawyers for
federal government argued it should be dismissed because some of
those grants have already been terminated and plaintiffs' argument
about the impact to future grants was far too speculative. They also
accused the states of “raising blanket, undifferentiated objections”
to the termination of thousands of grants without seeking relief
that would “restore a single grant.”
“That mismatch between the allegedly unlawful agency ‘decision’ on
one hand, and the amorphous relief requested in this suit, on the
other, creates a set of jurisdiction and justiciability defects that
doom this lawsuit at the threshold,” lawyers wrote in the motion to
dismiss.
A spokesperson for the Office of Management and Budget did not
respond to a request for comment.
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