Judge Blocks Trump Administration from Revoking Billions in State Grants

U.S. District Judge Indira Talwani ruled that the Donald Trump administration illegally used a "Termination Clause" to revoke billions of dollars in federal grants. The ruling follows a lawsuit filed in June 2025 by a coalition of 23 Democratic-led states, the District of Columbia, and the Wisconsin Department of Justice. Judge Talwani found that the Office of Management and Budget lacked the authority to cancel grants based on priorities identified after the funds were already awarded, stating such actions would violate the Spending Clause of the U.S. Constitution.

The decision protects approximately 1,100 active grants valued at over $5 billion. Affected programs include food security, crime prevention, scientific research, and clean water. In Wisconsin, the cuts specifically targeted $32 million for unemployment insurance modernization and $5.4 million for food banks. New Jersey Attorney General Jennifer Davenport stated the ruling confirms the administration "defied the law" during its campaign to gut critical funding.

Parallelly, in the case of Thakur v. Trump, federal agencies admitted to using keywords such as "diversity," "gender," and "COVID-19" to screen and terminate more than 1,000 research grants at the University of California. This action resulted in the loss of nearly $2 billion in funding. National Institutes of Health filings suggested the Department of Government Efficiency, led by Elon Musk, may have used AI to target these grants. Judge Rita F. Lin has issued preliminary injunctions to restore some of this funding, and a hearing on potential constitutional violations is scheduled for October 20.