Full Breakdown
Judge Blocks Trump Administration’s Use of OMB Grant-Termination Clause
7/18/2026, 2:27:47 AM
Core Ruling and Legal Basis
On July 17, 2026, U.S. District Judge Indira Talwani in Boston granted summary judgment to a coalition of Democratic-led states, ruling that the Trump administration illegally invoked an Office of Management and Budget (OMB) regulation to cancel grants that had already been approved by Congress. The decision, entered in *State of New Jersey v. US Office of Management and Budget*, 25-cv-11816 (D. Mass.), held that the “Termination Clause” does not permit agencies to terminate grants based on program goals or agency priorities identified after the awards were made. The judge emphasized that the regulation “demands only that grantees be apprised of those goals and priorities before grants are awarded.”
Background of the Termination Clause
The contested provision was added to OMB regulations in 2020 during President Donald Trump’s first term, allowing agencies to end a grant if it “no longer effectuates the program goals or agency priorities.” After Trump returned to office in 2025, the White House used the clause to terminate billions of dollars in funding for initiatives the administration deemed misaligned with its priorities, including diversity, equity and inclusion programs and climate-change preparedness projects. The clause was later revised under President Joe Biden, narrowing its scope.
Official Responses
The lawsuit, filed in June 2025 by attorneys general and governors from 23 states and the District of Columbia—led by Massachusetts, New York and New Jersey—asserted that the cuts jeopardized essential services such as disaster preparation, medical research, clean-water projects, and state unemployment systems. New Jersey Attorney General Jennifer Davenport said the ruling “confirms that the Trump administration defied the law when it embarked on its campaign to gut critical federal funding to the states.” The Justice Department declined to comment, and the White House offered no immediate response.
Criticism and Opposition
State officials argued that the administration’s actions threatened at least 1,100 active grants worth over $5 billion, including funding for universities, hate-crime combat, school-lunch programs, and EPA research on “forever chemicals.” The Justice Department has previously defended the use of the clause in other cases, asserting that grant recipients were on notice that funding could be terminated.
Verbatim Quotes
- “Nothing in this interpretation of the Termination Clause limits the president or agencies from setting program goals and agency priorities before awarding new grants,” — Judge Indira Talwani
- “The regulation, as declared by this court, demands only that grantees be apprised of those goals and priorities before grants are awarded.” — Judge Indira Talwani
- “confirms that the Trump administration defied the law when it embarked on its campaign to gut critical federal funding to the states.” — Jennifer Davenport, New Jersey Attorney General
