An article fromDive Brief Trump officials can’t revoke grants due to new agency goals, judge rules

The ruling scores a win for a coalition of 21 attorneys general and three governors who sued over the Trump administration’s approach to grant terminations.

Published July 20, 2026Natalie Schwartz Senior Editor

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New York Attorney General Letitia James speaks at an event on Jan. 19, 2026, in New York City, N.Y. James praised a federal judge's ruling on July 17, 2026, barring the Trump administration from cutting existing federal grants based on new government priorities. Natasha Moustache via Getty ImagesDive Brief: 

• A federal judge ruled Friday that federal officials can’t cancel existing grants simply because they don’t align with new government priorities, marking a victory for a coalition of 21 attorneys general and three governors that sued over the Trump administration’s approach to grant terminations. 
• Since President Donald Trump began his second term, his administration has terminated billions of dollars in federal grants, including for university research, because they no longer align with the federal government’s goals, according to the lawsuit. 
• However, U.S. District Judge Indira Talwani ruled that federal regulations and the U.S. Constitution’s spending clause bar the Trump administration from canceling existing grants based on that reason. 

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Colleges have faced significant financial uncertainty in Trump’s second term, with many reeling from mass grant terminations. Johns Hopkins University alone, for instance, said the value of its federal research portfolio declined by $500 million last year due to a combination of federal grant terminations and fewer new awards. 

The new ruling could herald more stability for colleges’ existing awards. The plaintiffs — led by the attorneys general of New Jersey, Massachusetts and New York — said they held $5.4 billion in existing grants that they feared could be at risk due to the Trump administration’s approach to award terminations. 

New Jersey Attorney General Jennifer Davenport praised the ruling Friday, alleging the Trump administration had “recklessly and illegally gutted federal funding,” including for scientific research. 

“The President and his allies cannot hold critical programs hostage to their personal whims and political ideologies,” Davenport said in a statement. 

Letitia James, attorney general for New York, likewise slammed the Trump administration’s grant cuts.

“This administration has spent the past year and a half trying to slash vital funding that keeps people safe, helps working families make ends meet, protects our environment, and much more,” James said in a statement Friday. “Today, a court upheld the rule of law and put an end to their flimsy justification for these dangerous cuts.”

The Office of Management and Budget did not immediately respond to a request for comment Monday. 

The coalition did not challenge the past award terminations, according to the ruling. Instead, it asked the judge to block the Trump administration from cutting awards in the future based on shifting government priorities. 

When cutting grants, the Trump administration has often relied on OMB regulations that say a federal grant can be terminated “if an award no longer effectuates the program goals or agency priorities.”

The plaintiffs argued that this language refers to the specific goals and priorities established when the award was granted. They contended that this means that the language gives the federal government the power to cancel grants if awardees aren’t meeting those preestablished goals — not if they don’t align with a broader shift in the administration’s policy goals. 

Talwani agreed, ruling that the Trump administration’s interpretation of this clause “is not clearly supported by the text of the provision” and “runs counter to the regulatory scheme.”

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