A group of 21 state attorneys general, along with the District of Columbia, have launched legal action against the Trump administration, challenging its use of specific language to slash billions in federal funding. The lawsuit, filed in Massachusetts’ U.S. District Court, specifically targets a provision from the Office of Management and Budget that permits grant termination when it “no longer effectuates the program goals or agency priorities.”
The legal challenge names multiple federal departments as defendants, including Agriculture, Commerce, Defense, Homeland Security, Justice, Labor, and State, as well as the Environmental Protection Agency. According to the complaint, the administration has been employing this clause since January to cut funding for various congressionally approved state projects and programs.
These affected initiatives span various crucial areas, including violent crime prevention, education, clean water protection, medical research, public health measures, and food security programs. The coalition of attorneys general, representing states such as Arizona, California, Illinois, Massachusetts, Michigan, and New York, argues that the administration has misused five specific words from the clause – “no longer effectuates… agency priorities” – to exercise nearly unlimited power in withdrawing federal funding whenever it chooses to discontinue support for congressionally funded programs.
The lawsuit contends that these funding cuts have been implemented without providing advance notice or explanations to state recipients, directly contradicting congressional intent. The attorneys general maintain that this interpretation represents a significant departure from historical practices and the OMB’s original understanding of the clause when it was first introduced in 2020.
The legal filing emphasizes that the OMB never previously suggested that grants could be terminated simply due to shifting agency priorities, particularly while these grants continued to serve their original intended purposes. The coalition is seeking either a declaratory judgment limiting the administration’s ability to terminate funding based on changing priorities or a complete reversal of the administration’s decision to invoke the regulation for funding termination.
The Trump administration has defended its actions, maintaining that it has the authority to freeze and cancel grant awards that don’t align with its priorities, particularly those supporting diversity, equity, and inclusion initiatives and climate programs. This lawsuit represents one of several legal challenges that this predominantly Democratic-led coalition of states has initiated regarding these funding cuts.
In response to the legal action, White House spokesperson Harrison Fields issued a statement suggesting that Democrats pursuing the case should prioritize serving their constituents rather than party leadership, and work collaboratively with the president’s
administration to implement policies that have received broad public support.
The case highlights growing tensions between state governments and federal authorities over the allocation and management of federal funding, particularly regarding programs that may not align with current administrative priorities. The outcome of this legal challenge could have significant implications for how federal agencies manage and terminate grant funding in the future, potentially affecting billions of dollars in state-administered programs across the country.
The lawsuit’s focus on the interpretation and application of the OMB clause underscores the broader debate about executive authority in managing congressionally appropriated funds and the extent to which administrative priorities can influence the distribution of federal resources to state-level programs.