Overview
- U.S. District Judge Indira Talwani issued a summary judgment Friday that vacated past invocations of 2 C.F.R. §200.340(a)(4) and barred the administration from using that provision to terminate grants based on changed agency priorities.
- The dispute centers on a five‑word phrase — “no longer effectuates … agency priorities” — that the administration used to justify mass terminations beginning in January 2025 and which the court found is not supported by the regulation’s text or its rulemaking history.
- A coalition led by California Attorney General Rob Bonta and joined by 20–24 states, three governors, and the District of Columbia sued OMB and federal agencies arguing the practice violated the Spending Clause and denied states clear notice of conditions on awards.
- The ruling recognizes that terminations have already deprived states of funding for public safety, disaster mitigation, research, clean water, and nutrition but does not automatically restore every cut grant because individual remedies or administrative reinstatements may be required.
- The decision narrows executive discretion over awarded funds and raises a separate policy fight over proposed OMB changes that would expand agency control of grants, a proposal that has drawn concern from members of Congress.