Administration can't terminate grants just because of changing priorities, judge rules

The Trump administration cannot cancel grants that have already been awarded to states simply because “program goals and agency priorities” have changed, a federal judge ruled Friday in a case affecting billions of dollars in grant funding.

Twenty-three states and the District of Columbia sued multiple federal agencies, including the Agriculture Department, claiming that grants they had received were illegally ended, and that grants they currently have totaling nearly $5.4 billion are at risk of being terminated.

The lawsuit did not seek restoration of previously canceled grants but sought a “declaratory judgment” from the court on how the Office of Management and Budget’s termination clause should be interpreted. The 2024 version of the clause says an award can be terminated if it “no longer effectuates the program goals or agency priorities.”

“After review of the plain language, regulatory scheme, regulatory history, the Spending Clause of the U.S. Constitution, and defendants’ argument regarding the implementation of the President’s vision, the court agrees with plaintiffs and finds that the termination clause does not permit agencies to terminate grants based on program goals and agency priorities identified after grants were awarded,” U.S. District Judge Indira Talwani said in an opinion issued Friday.

In the lawsuit filed in June 2025, the states accused a number of agencies of terminating an array of federal grants by claiming they no longer effectuated “agency priorities,” including two USDA programs used for purchasing local foods for schools and food banks — the Local Food Purchase Assistance Cooperative Agreement Program (LFPA) and the Local Food for Schools and Child Care Cooperative Agreement Program (LFSCC), which totaled 1 billion. 

They also said the University of Wisconsin-Madison had lost a $600,000 Equity in Conservation Outreach grant for funding community-led conservation projects. 

The judge said her interpretation does not limit “the President or agencies from setting program goals and agency priorities before awarding new grants. The regulation, as declared by this court, demands only that grantees be apprised of those goals and priorities before grants are awarded." 

Talwani’s decision follows a similar federal court ruling last week reversing terminations of grants for congressionally authorized USDA programs.

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