A federal judge has dismissed the Trump administration’s assertion that it has the authority to cancel grants approved by Congress. This decision, though not widely publicized, is crucial in curbing Trump’s influence.
The case was brought by a coalition of 20 states, including New Jersey, Massachusetts, New York, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, Oregon, Rhode Island, Vermont, and Wisconsin. Additionally, three governors—Josh Shapiro of Pennsylvania, Laura Kelly of Kansas, and Andy Beshear of Kentucky—as well as the District of Columbia, joined the lawsuit against the Office of Management and Budget over the unilateral cancellation of federal grants.
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The dispute centered on the Spending Clause, which is often referred to as the congressional power of the purse, and the Termination Clause, which permits the Executive Branch to withdraw federal grants if the recipients fail to meet the conditions set forth in the grant.
The Trump administration argued that the Termination Clause allowed it to override the Spending Clause and cancel grants that had been appropriated by Congress. They have used this interpretation to halt funding for various initiatives, including medical research, social programs, and women’s health services.
A group of Democratic states challenged this interpretation, and U.S. District Judge Indira Talwan ruled in their favor. Judge Talwan stated:
The plaintiffs’ argument is more compelling. Both the first clause of 2 C.F.R. § 200.340(a) and the Termination Clause set conditions for grants. According to the first clause, a Federal agency or pass-through entity can terminate a grant “if the recipient or subrecipient fails to comply with the terms and conditions of the Federal award,” 2 C.F.R. § 200.340(a)(1). Under the Termination Clause, a grant can be terminated if it “no longer effectuates the program goals or agency priorities,” 2 C.F.R. § 200.340(a)(4).
If the terms and conditions of the Federal award, along with the program goals and agency priorities, are known at the time the grant is awarded, the state can make an informed decision to accept the grant, as required by Pennhurst. However, if the regulation is interpreted to allow changes in program goals and agency priorities against which the grant is measured, the necessary notice is absent.
The Trump administration has revoked grants to states and has threatened further cancellations. However, this ruling clarifies that the administration cannot alter the grant terms after they have been awarded.
Significantly, this decision prevents Trump from canceling grants based on personal preference.
