BOSTON — U.S. District Judge Indira Talwani issued a ruling Friday barring the Trump administration from using a specific clause to make billions of dollars in funding cuts requested by a group of states. The decision resolves a lawsuit filed last year challenging the legality of the terminations.

Talwani granted summary judgment in favor of the states and denied the government's motion to dismiss. "Defendants’ interpretation of the Termination Clause is not clearly supported by the text of the provision, runs counter to the regulatory scheme, receives no support in the rulemaking history, and would violate the Spending Clause’s requirement that conditions be imposed unambiguously," Talwani wrote in her decision.

The states accused the administration of using the clause to cut funding across multiple areas, including crime prevention, food security, and scientific research. The lawsuit argued that the Office of Management and Budget used the clause to justify what it described as a "nationwide slash-and-burn campaign." The clause was first introduced in 2020 and revised in 2024, allowing federal agents to terminate a grant if the award no longer effectuates the program goals or agency priorities. The states argued that the language, put in place during the Biden administration, was being used for the first time to terminate grants.

New Jersey Attorney General Jennifer Davenport said the ruling confirmed that the administration acted unlawfully. "Today’s decision is an important win for all New Jerseyans and confirms that the Trump Administration defied the law when it embarked on its campaign to gut critical federal funding to the states," Davenport said. "Instead of working with us to keep the public safe and lower costs for hardworking New Jerseyans, the Trump Administration has recklessly and illegally gutted federal funding for public safety, disaster preparedness, scientific research, clean water, and more," she said.

Lawyers for the federal government had urged the court to dismiss the case, calling it an extraordinarily unusual lawsuit. They argued that some grants had already been terminated and that the states' arguments about future grants were speculative. Government lawyers accused the states of raising blanket, undifferentiated objections to the termination of thousands of grants without seeking relief that would restore a single grant. "That mismatch between the allegedly unlawful agency ‘decision’ on one hand, and the amorphous relief requested in this suit, on the other, creates a set of jurisdiction and justiciability defects that doom this lawsuit at the threshold," the government argued.

The court rejected those arguments. Talwani, who was nominated by Democratic President Barack Obama, sided with the states and issued the permanent bar against the use of the clause. The ruling prevents the administration from relying on the clause to terminate federal grants.