Attorney General Bonta Secures Final Ruling Blocking Major Avenue Used by Trump Administration to Cut Off Federal Funding to States

Since January 2025, the Trump Administration has baselessly relied on a single subclause buried deep in federal regulations to slash billions in previously awarded grant funding

OAKLAND — California Attorney General Rob Bonta today secured a decision by the U.S. District Court for the District of Massachusetts barring the Trump Administration’s use of a single subclause buried in federal regulations to terminate billions of dollars in grant funding to the states. The Trump Administration has claimed that five words in this subclause —  “no longer effectuates . . . agency priorities” — provide federal agencies with unfettered authority to withhold funding any time they no longer wish to support the programs for which Congress has appropriated funding. In today’s decision granting summary judgment, the Court finds that the subclause does not allow the Trump Administration to terminate awards based on new “priorities” that differ from those in place at the time the grants were issued. As such, the Court vacates the Trump Administration’s decision to invoke the subclause as grounds for terminating grants based on a subsequent change in agency priorities and permanently bars the Trump Administration from invoking the subclause in that manner in the future.   

“Since taking office, the Trump Administration has used a single subclause buried deep in federal regulations as its sole justification to withhold billions of dollars in federal funding to California,” said Attorney General Bonta. “It has done so in clear violation of the law and with uncaring disregard for the real impact these dollars have on our peoples’ daily lives. This funding directly supports public safety, addresses food insecurity, and protects public health. With today’s victory, we’ve closed this much-misused avenue for withholding federal funding to California. Time and again, this Administration has used federal funding as a political bludgeon, and we’ll continue to partner with states across the country to fight to defend against President Trump’s next round of attacks.”

BACKGROUND

With the stroke of a pen, federal agencies ranging from the U.S. Department of Justice to the Environmental Protection Agency to the Department of Labor have deprived California and other states of essential funding they rely on to combat violent crime and protect public safety, equip law enforcement, educate students, safeguard public health, protect clean drinking water, conduct life-saving medical and scientific research, address food insecurity, ensure access to unemployment benefits, and much more. Federal agencies have done all of this without advance notice, without explanation to the state recipients, and in direct contravention of the will of Congress.  

In their lawsuit, Attorney General Bonta and a coalition of 24 states argued that federal agencies’ invocation of the subclause to terminate grant funding runs counter to the Office of Management and Budget’s (OMB) own interpretation of its regulations. When OMB first promulgated the subclause in 2020, it made clear that the language did not authorize federal agencies to arbitrarily terminate grants based on subsequent changes to their priorities. Indeed, the coalition is not aware of a single instance prior to January 2025 in which a federal agency relied on the subclause to terminate a grant on the grounds that agency priorities had changed after the award of the grant. Since January 2025, however, federal agencies across the Trump Administration have asserted that the subclause provides them with a blank check to terminate grants already awarded to states based on newly identified agency priorities — even when those priorities conflict with the priorities identified by Congress or by the agency at the time of the grant award. Today’s decision forecloses the subclause’s future use by the Trump Administration to terminate similar grant funding.