Federal Judge Blocks Grant Terminations on 'Changed Priorities' as OMB Seeks to Cement Political Control

A federal judge ruled last week that federal agencies cannot use 'changed priorities' to terminate previously awarded grants, striking down one of the Trump administration's tools for canceling research funding. The court order applies only to the 23 states that sued. At the same time, the White House is advancing a sweeping rule change that would give administration officials more power over billions of dollars in federal grants.

U.S. District Court of Massachusetts Judge Indira Talwani's ruling largely concerned the meaning of a White House Office of Management and Budget clause that says a 'federal award may be terminated in part or its entirety' for reasons 'including, to the extent authorized by law, if an award no longer effectuates the program goals or agency priorities.' Talwani concluded that while the termination clause may allow for ending grants that no longer fulfill the priorities in place when they were awarded, it cannot be used to ax them based on an administration's new goals. 'Requirements prioritize ensuring that grantees are on notice, before applying, as to what the program goals and agency priorities are for any particular award,' she wrote. 'It would be contrary to this extensive scheme to interpret the Termination Clause to allow the termination of grants based on new priorities, including priorities not disclosed to the grantees.'

The states sued the OMB and multiple federal agencies, including the National Science Foundation and the National Endowment for the Humanities, alleging that agencies terminated billions of dollars in federal grants to them, including canceling grants for universities and school lunch programs. The plaintiffs assert they possess numerous active awards—at least 1,180 active grants totaling more than $5,391,125,688 in grant funding. The judge granted protection against similar terminations of current and future grants, rejecting the government's argument that the states' fear of future termination was only 'hypothetical.'

But if the OMB finalizes its controversial proposed changes to its uniform guidance for federal grant making, the administration may again be able to terminate grants based on its own changing priorities. The proposal—which has garnered more than 490,000 public comments—would change the termination clause to say grants could be canceled if they do not further priorities 'as they exist at the time of the termination.' The more than 400-page document, proposed in late May, would also direct 'senior appointees' at federal agencies to take charge of awarding and terminating new and existing research grants and other federal awards, making political appointees, not peer reviewers, the primary deciders of who gets grants.

The proposal would ban grants that push 'disparate impact liability theories, discriminatory event services, DEI [diversity, equity and inclusion], gender ideology' and 'child sex mutilation,' while also prohibiting grants for voter registration campaigns, issue advocacy, or political activities. It does not, as had been expected, cap indirect research cost reimbursement rates at 15 percent; OMB said it is not proposing updates to the indirect cost rate negotiation system. OMB has argued that the changes would bring 'much-needed accountability to the grantmaking process and ensure taxpayer dollars are spent wisely.'

The New England Journal of Medicine compared the proposal to Lysenkoism, writing that 'allowing politics to control the scientific process can halt or even reverse a nation's progress.' Opposition groups and scientific journals have called for a flood of public comments.

The uncertain federal research funding environment has also taken a toll on graduate programs. The number of Ph.D. students admitted to 55 research universities declined 15 percent over the past year, and enrollment of new Ph.D. students at 42 universities fell 11 percent between fall 2024 and fall 2025. The California Institute of Technology expects to have 40 percent fewer new graduate students this fall, and the Massachusetts Institute of Technology is expecting about 20 percent fewer. Domestic applications to Ph.D. programs rose 3 percent, but international applications fell 21 percent. AAU member institutions confer about half of the nation's research doctorates.

Leaders of the scientific community are focused on moving forward after what the CEO of the American Association for the Advancement of Science called 'a rupture.' 'We're not going back. It's not possible. Too much damage has been done. Too much has changed,' the CEO said at the organization's annual meeting in Phoenix. The meeting marked a year since widespread grant cancellations, funding freezes, bans on certain research topics, layoffs, and shaky morale. The AAU, which had never filed a lawsuit against the federal government since its founding in 1900, sued over the NIH's plan to cap indirect research costs at 15 percent; that policy and similar ones from other agencies have been blocked by courts and Congress. While the Trump administration proposed cutting nearly 40 percent of the NIH's budget and 56 percent of the NSF's for fiscal year 2026, Congress rejected that proposal and instead voted to keep funding for scientific research mostly flat.