California Attorney General Rob Bonta has filed a lawsuit against the Trump Administration, challenging its use of a specific subclause in federal regulations to terminate tens of billions of dollars in grant funding. The administration has been using 2 C.F.R. § 200.340(a)(4), which includes the phrase “no longer effectuates . . . agency priorities,” as justification for withdrawing previously awarded funds.
Attorney General Bonta criticized the administration’s actions, stating, “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.” He emphasized that such actions disrupt state planning and investments.
Federal agencies including the U.S. Department of Justice, Environmental Protection Agency, and Department of Labor have reportedly used this clause to withdraw essential funding from states without prior notice or explanation. This has affected various sectors such as crime prevention, education for special needs students, disaster response, and infrastructure upgrades.
The lawsuit argues that the Trump Administration’s interpretation of the clause contradicts the Office of Management and Budget’s (OMB) original intent when it was established in 2020. The coalition supporting Attorney General Bonta contends that there were no instances before January 2025 where this clause was used to terminate grants due to changed agency priorities post-award.
Attorney General Bonta is joined by attorneys general from 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, Wisconsin and Pennsylvania in this legal action.
The coalition seeks a court declaration that the clause does not justify grant terminations based on new agency priorities and aims to vacate any decisions made under this premise since January 2025.
