Attorney General Bonta Sues Top Trump Officials over Illegal Termination of Tens of Billions in Grant Funding

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

OAKLAND – California Attorney General Rob Bonta today sued the Trump Administration over its improper use of a single subclause buried in federal regulations promulgated by the Office of Management of Budget (OMB) to terminate tens of billions of dollars in grant funding to the states. Since taking office, the Trump Administration has engaged in a nationwide slash-and-burn campaign, unlawfully invoking 2 C.F.R. § 200.340(a)(4) (“the Clause”) to justify the termination of tens of billions of dollars in critical federal funding appropriated by Congress and awarded to the states. The Trump Administration has claimed that five words in the Clause — “no longer effectuates . . . agency priorities” — provide federal agencies with virtually unfettered authority to withhold funding any time they no longer wish to support the programs for which Congress has appropriated funding. In today’s lawsuit, Attorney General Bonta and a multistate coalition argue that the Administration is misconstruing the Clause and that the Clause, properly read, does not allow for grant terminations based on agency priorities that were set or changed only after a grant was originally awarded. 

“The Trump Administration has recklessly and chaotically slashed federal grant funding that is intended to prevent crime, rebuild our roads, develop technology for the future, and everything in between,” said Attorney General Bonta. “This hack job has been done under the flimsy premise of ‘changed agency priorities’ — even when this funding has been previously appropriated by Congress and awarded to the states. For federal funding to work, the states that receive that funding need to be able to plan ahead, make investments, and be confident that this funding will not be terminated on a whim. We’re asking the court to block the Trump Administration’s unlawful invocation of this clause as a sweeping justification for the termination of grant funding.”

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, prevent terrorist attacks, educate students with special needs, respond to natural disasters, protect clean drinking water, conduct life-saving medical and scientific research, upgrade crumbling transportation infrastructure, 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 the lawsuit, Attorney General Bonta and the coalition argue that federal agencies’ invocation of the Clause to terminate grant funding runs counter to OMB’s own interpretation of its own regulations. When OMB first promulgated the Clause in 2020, it made clear that the language granted federal agencies only limited authority to terminate grants. Indeed, the coalition is not aware of a single instance prior to January 2025 in which a federal agency relied on the Clause 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 Clause 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. Attorney General Bonta and the coalition today ask the District Court to declare that the Clause and the Trump Administration’s regulations implementing the Clause do not on their own provide sufficient grounds to terminate awards; vacate the Trump Administration’s decision to invoke the Clause as grounds for terminating grants based on a change in agency priorities; and permanently bar the Trump Administration from invoking the Clause in the future.   

Attorney General Bonta joins the attorneys general of New Jersey, Massachusetts, New York, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, Oregon, Rhode Island, Vermont, and Wisconsin, as well as the state of Pennsylvania, in filing the lawsuit. 

A copy of the lawsuit is available here.