U.S. District Judge Indira Talwani granted summary judgment for 23 states, blocking the Trump administration from using a grant-termination clause to impose billions of dollars in funding cuts.
Talwani said the administration's reading of the clause lacked clear textual support, conflicted with the broader regulatory scheme and rulemaking history, and would violate the Constitution's Spending Clause.
The disputed language—introduced in 2020 and revised in 2024—lets agencies end grants that no longer advance program goals or agency priorities; the states said it was being used for the first time to cancel existing and future awards.
The lawsuit said the cuts hit programs from crime prevention and food security to scientific research, while government lawyers argued the case was too broad, some grants were already terminated, and the requested relief would not restore any single grant.
The ruling marks a setback for the administration's wider effort to align federal spending with presidential priorities, after states described the policy as a nationwide campaign to gut critical funding.