Attorney General James Sues Trump Administration Over Sweeping Cuts to Billions of Dollars in Essential Services Funding

NEW YORK – New York Attorney General Letitia James today co-led a coalition of 21 other attorneys general in suing the Trump administration challenging its claim that it has limitless authority to cut grant funds that support essential services throughout the country. Since January, the Trump administration has used a single clause buried in the regulations of the Office of Management and Budget (OMB) that states federal agencies can terminate a grant if it “no longer effectuates the program goals or agency priorities,” to cancel billions of dollars of funding to states. These grants support programs to combat violent crime, educate students with special needs, protect clean drinking water, repair crumbling infrastructure, and more. Attorney General James and the coalition argue that the Trump administration is using this clause unlawfully to enact mass funding cuts – even when Congress has specifically directed spending on a particular program. In a lawsuit filed in the United States District Court for the District of Massachusetts, Attorney General James and the coalition are seeking a judgment from the court ruling that the administration cannot cut grant funding in this way.

“From slashing money for law enforcement to cutting grants that provide resources for vulnerable students, this administration’s reckless funding cuts have put communities throughout our country at risk,” said Attorney General James. “On top of causing dangerous chaos and confusion, these cuts are simply illegal. Congress has the power of the purse, and the president cannot cut billions of dollars of essential resources simply because he doesn’t like the programs being funded.”

In 2020, OMB adopted the current version of the regulation, stating that federal agencies may terminate a grant if it “no longer effectuates the program goals or agency priorities.” OMB has made clear that the regulation only gave agencies limited power to end certain grants. Agencies need additional evidence that a particular grant is not effective at achieving a program’s goals, and the regulation cannot be used to arbitrarily make mass funding cuts.

At the start of the Trump administration in 2025, federal agencies, along with the Department of Government Efficiency (DOGE) employees assigned to them, began using this language to terminate grants on a massive scale. The administration slashed billions of dollars in funding for states on the grounds that federal agency priorities have changed since the grants were awarded. No administration has ever used OMB’s regulation in this way. As Attorney General James and the coalition argue, this provision has important limitations, and it cannot overrule Congress’s appropriations laws.

The funding cuts the administration has enacted have canceled billions of dollars for state programs, undermining critical services throughout the country with devastating consequences. The cuts have jeopardized preparation for natural disasters, lifesaving medical research, efforts to keep drinking water clean and safe, improvements to state unemployment systems, and more. The Department of Justice has used the OMB regulation to pull funds for state law enforcement to combat hate crimes. The Environmental Protection Agency (EPA) terminated funding to research new ways to eliminate “forever chemicals” from drinking water. In New York, the Department of Agriculture cut a program to connect communities facing food insecurity with local farms that provide high-quality produce. The Department of Labor cut over $20 million of grants to help New York upgrade its unemployment insurance system to make it easier for people who have lost their jobs to get assistance.

Attorney General James and the coalition argue that federal agencies do not have the power to cut funds on a whim based on new “agency priorities” that did not exist when the grants were made. With this lawsuit, Attorney General James and the coalition are seeking a ruling from the court clarifying that the Trump administration does not have the power to use the OMB regulation to enact mass funding cuts.

Attorney General James is leading this lawsuit with the attorneys general of Massachusetts and New Jersey. The coalition also includes the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, Oregon, Rhode Island, Vermont, Wisconsin, and the District of Columbia, along with the state of Pennsylvania.