Attorney General Mayes and Coalition Win Ruling Protecting Billions in Critical Federal Funding
PHOENIX – Attorney General Mayes today announced that a coalition of 24 states won a key ruling Friday declaring that the Trump Administration illegally misused its regulatory authority to unlawfully pull billions of dollars in federal funding that Congress had set aside for crucial state programs and services.
In her decision, U.S. District Judge Indira Talwani in the District of Massachusetts wrote that five words in U.S. Office of Management and Budget (OMB) regulations-- referencing situations where a grant “no longer effectuates … agency priorities”—did not silently give federal agencies effectively unfettered authority to revoke grants nationwide just because the federal administration claims it is shifting its focus.
"Arizonans depend on federal funding for everything from clean drinking water to lifesaving medical research, and the Trump Administration has no legal authority to rip that funding away on a whim," said Attorney General Mayes. "This ruling makes clear that the President cannot use a five-word regulatory loophole to override Congress and cut off billions of dollars that our state has already been promised. My office will continue fighting to protect Arizona's funding and hold this Administration accountable when it breaks the law."
Without providing any lawful justification and without any advance warning or explanation, the Trump Administration relied on this regulation to gut funding across the entire federal government. A multistate coalition led by New Jersey, Massachusetts, and New York sued to stop the unprecedented attack. Prior to the second Trump Administration, federal agencies never terminated grants merely because the agency’s priorities shifted midway through the grant period.
The multistate complaint, filed last year, argued that the Trump Administration’s decision to invoke the regulation to terminate grants based on their changed agency priorities is unlawful. The lawsuit explained that the regulation does not authorize federal agencies to terminate grants based on changes in agency preferences that occur after a grant is awarded. The lawsuit also noted the importance of obtaining clarity regarding the scope of this regulation, as states collectively accept hundreds of billions of dollars a year that are at risk of termination pursuant to this regulation.
Judge Talwani granted the states a declaratory judgment that the OMB regulation and the agencies’ regulations do not independently authorize the Trump Administration to terminate funding based on agency priorities that were only identified after the grant was awarded.
Nationwide, the indiscriminate cuts have caused programmatic chaos and uncertainty for grantees, including those working to combat violent crime, conduct lifesaving medical and scientific research, educate students, protect clean drinking water, safeguard public health, address food insecurity, and much more.
AG Mayes joins the attorneys general of New Jersey, Massachusetts, and New York who led the case, and they were also joined by the attorneys general of 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 governors of Kansas, Kentucky, and Pennsylvania.
