Court Ruling Limits Federal Power to Cancel Minnesota Grants
A federal judge ruled agencies cannot use a grant-termination clause to cancel awarded grants solely because later priorities changed, but Minnesota programs already cut are not automatically restored.
A federal judge has ruled that federal agencies cannot rely on a grant-termination clause to cancel an already-awarded grant solely because the agency later adopts different priorities. The July 17 decision may limit future cancellations affecting Minnesota, but it does not automatically restore funding that has already been terminated.
U.S. District Judge Indira Talwani of the U.S. District Court for the District of Massachusetts issued the ruling in a lawsuit brought by 20 states, three governors and Washington, DC. Minnesota was one of the plaintiff states.
What the court decided
The case centered on 2 C.F.R. § 200.340, a federal regulation governing grant terminations. The 2024 version says an award may be terminated when it no longer carries out program goals or agency priorities, “to the extent authorized by law.”
Talwani ruled that the Termination Clause does not authorize agencies to terminate an award based on program goals or agency priorities newly identified after the grant was made. The court said the clause also must be read in light of the terms and conditions of the award and other legal limits.
The court granted the states’ motion for summary judgment on Count I, which sought a declaration about the meaning and future use of the Termination Clause. It denied the federal government’s motion to dismiss that claim. The court said motions involving two alternative claims, Counts II and III, remained pending.
The court’s memorandum and order describes the decision as addressing future terminations. The plaintiffs did not seek damages or other relief for grants that had already been terminated.
Minnesota says tens of millions were cut
Minnesota Attorney General Keith Ellison announced the ruling July 20. His office said the federal administration has terminated tens of millions of dollars in Minnesota grant funding since January 20, 2025, using the rationale challenged in the lawsuit.
That figure is the attorney general’s account, not an independently audited statewide total. His office cited a Minnesota grant terminated April 22, 2025, that supported training for teachers and school administrators on violence-prevention strategies. The funding was authorized by Congress through the STOP School Violence Act of 2018.
The Minnesota attorney general’s announcement identified Minnesota as part of a coalition that included attorneys general from 20 states and Washington, DC, along with the governors of Kansas, Kentucky and Pennsylvania. The court’s order lists Minnesota among the 20 plaintiff states.
What the ruling does not do
The ruling does not by itself restore Minnesota’s STOP School Violence Act grant or any other award previously canceled. Because the lawsuit did not seek relief for past terminations, a recipient seeking recovery for an individual grant may need to pursue separate legal procedures, including proceedings involving the specific award and agency action.
The decision also does not mean every Minnesota federal grant is protected from termination. Federal agencies may still act under other lawful authorities, including when a recipient violates grant terms or when the award’s stated conditions permit termination.
Independent reports from the Associated Press and Reuters described the ruling as a limit on the administration’s use of changed policy priorities to revoke grants after awards were made. The federal government could still seek further review or take other action; the order does not end the litigation on every claim.
What happens next in Minnesota
Minnesota agencies, schools, nonprofits and other grant recipients will need to track individual award records and federal agency actions. The practical effect will depend on whether agencies follow the court’s interpretation, whether specific past terminations are challenged separately and whether additional court proceedings or an appeal occur.
The Minnesota Department of Children, Youth and Families maintains a Federal Funding Action Tracker covering separate federal funding disputes and program updates. The tracker says some matters remain under court review and that programs continue under existing practices unless officials direct otherwise.
For Minnesota residents, the immediate result is a legal limit on one asserted rationale for canceling already-awarded grants, not an automatic restoration of services or money. Schools, public agencies and nonprofits affected by past cuts will need program-specific notices rather than assuming the July 17 ruling has reopened funding.
Sources
- U.S. District Court Memorandum and Order
- Associated Press court report
- Reuters ruling report
- Minnesota Federal Funding Action Tracker
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