Judge Blocks OMB From Canceling Grants Over Changed Priorities, Leaves Lawsuit Intact

U.S. District Judge Indira Talwani in Boston blocked the Office of Management and Budget on Friday from using a grant termination clause to revoke billions of dollars in federal funding based on shifting agency priorities. She denied the Trump administration's request to dismiss a lawsuit filed by 20 states, three governors, and the District of Columbia.

The states sued last year after agencies invoked the clause to end grants for universities, school lunch programs, violent crime prevention, and hate crime prevention. The clause language first appeared in 2020 and was revised in 2024 under the prior administration.

Talwani ruled that the regulation does not authorize agencies to cancel awards simply because new program goals or priorities emerged after the grants were made.

Before the current term, agencies had not used the provision solely for priority shifts during the grant period, according to court filings. Talwani, an appointee of former President Barack Obama, wrote that federal law bars termination based on priorities identified after an award.

New Jersey Attorney General Jennifer Davenport, who co-led the lawsuit, said the decision confirms the administration defied the law in its campaign to cut funding to the states.

She added that the president and his allies cannot hold critical programs hostage to personal whims and political ideologies. The ruling leaves the underlying lawsuit intact and bars retroactive terminations tied only to changed priorities.