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By Mayah Nachman –
A federal district judge ruled that the Trump administration misused a federal provision to improperly revoke billions of dollars in grant funding from organizations and state agencies across the country.
U.S. District Judge Indira Talwani in Massachusetts ruled Friday that federal agencies cannot revoke federal grants after they’ve been awarded solely because a new administration has taken office and shifted its priorities.
The ruling was a victory for the 23 states, including Maryland, and the District of Columbia that filed suit last summer to stop what they called the administration’s “unprecedented and unlawful campaign to terminate billions of dollars in critical federal funding appropriated by Congress.”
While the lawsuit didn’t aim to restore the terminated grants, Talwani’s ruling affirms that policy changes will not put grants at risk of termination by the current administration and future ones.
“This ruling protects billions of dollars in already awarded federal grants from being cancelled without warning or clear justification,” Maryland Attorney General Anthony Brown said in a statement Monday on Talwani’s ruling. “My office will always hold the federal government accountable when it tries to revoke what was already promised merely because its priorities shifted.”
The lawsuit was a response to President Donald Trump’s directive last year to federal agencies to review grants and contracts to find ways to reduce government spending, according to court documents. It names a dozen federal agencies and their directors as defendants, including the Office of Management and Budget and Director Russell Vought.
The OMB did not respond to a request for comment on the ruling and how it will proceed in time for publication.
The lawsuit centers on a federal provision, called the termination clause, that says the government can revoke a federal grant “if an award no longer effectuates the program goals or agency priorities.”
Federal agencies regularly cited the clause when notifying grant recipients that their funding was being pulled, according to court documents. This cuts resulted in a loss of funding for a wide range of projects, from university research to distributing food to underserved communities and combating violent crime.
In her ruling, Talwani said terminating funding solely because of a change in priorities has no basis in law because agencies apply and are awarded grants based on a set list of application requirements. Her ruling does not prohibit the government’s ability to terminate grants entirely, but it said that revoking grants after they are awarded solely for shifts in policy is unlawful.
“It would be contrary to this extensive scheme to interpret the Termination Clause to allow the termination of grants based on new priorities, including priorities not disclosed to the grantees,” Talwani wrote. “Such an interpretation would obviate any need to notify parties of program goals and priorities, given that agencies could change goals and priorities at any time.”
In the lawsuit, the states cite a non-exhaustive list of grants that had already been cut or were at risk. Maryland said in its filing that it experienced several unexpected losses of funding to its universities and state agencies.
The largest listed in the suit was the nearly $25 million the Maryland Department of Labor lost after the U.S. Department of Labor terminated four grants in May 2025 that were going to be used to improve the state’s unemployment insurance program.
Dinah Winnick, a state Labor Department spokesperson, said in a statement Tuesday that losing the funding paused or delayed “modernization projects meant to improve the efficiency, security, and accessibility” of the state program. While the department is still working to make improvements, she said they are on a delayed timeline, and the agency has had to use state funding for important systems they counted on the federal funding for, like fraud prevention.
Court documents said the Maryland Department of Agriculture lost almost $5 million in grants for the Local Food Purchase Assistance Cooperative Agreement, which allows states to buy food from local farmers and food producers and distribute it to feeding programs, like food banks.
That’s led to a surge in applications to the Maryland Farm and Agricultural Resiliency Mechanism Grant Program, which helps food banks and other providers buy local farm products, said Rachel Felver, the state Agriculture Department spokesperson. She said in a statement Tuesday that the program had $200,000 to distribute last year, when it got $12 million in requests.
Besides Maryland and the District, states involved in the lawsuit include Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Massachusetts, Maine, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, and Wisconsin, along with the governors of Kansas, Kentucky and Pennsylvania.
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Republished under a Creative Commons License with permission from Maryland Matters, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence.
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