Coalition of states sue federal agencies over illegal use of regulation to slash billions in funding

June 24, 2025 (DENVER) – Attorney General Phil Weiser today announced that he joined a coalition of 21 states and the District of Columbia in suing the Trump administration to limit its unprecedented and unlawful attempts to misuse a federal regulation to strip away billions of dollars in critical federal funding for states.

Since January 20, at the direction of President Trump and the Department of Government Efficiency, or DOGE, federal agencies have stripped away thousands of grants they had previously awarded to states and grantees. The administration has slashed this critical federal funding by invoking a federal regulation, which provides that agencies may terminate an award of federal funding if it “no longer effectuates … agency priorities.”

Attorney General Weiser said those five words have formed the basis for much of the administration’s indiscriminate campaign to unlawfully terminate critical funding expressly called for by Congress.

“The Trump administration’s decision to invoke a highly questionable regulation for terminating funds based on their changed ‘agency priorities’ is unlawful. We are challenging this action because Colorado and other states accept hundreds of billions of dollars a year to combat violent crime, educate students, protect clean drinking water, conduct lifesaving medical and scientific research, and safeguard public health. All these priorities are at risk of funding cuts based on the misuse of this regulation,” Attorney General Weiser said.

As today’s lawsuit explains, the government’s decision to invoke this regulation as its basis for slashing billions of dollars of critical funding to states is unlawful and a dramatic departure from past practice. Historically, federal agencies had not terminated grants on a whim merely because the administration changed—and an agency’s priorities shifted—midway during the use of the grant. Indeed, in promulgating this regulation, the federal government assured the public that it could not use this regulation to arbitrarily terminate grants.

Since President Trump took office, however, federal agencies have shifted course and claimed unfettered authority to terminate grants with no advance notice and without any reasoned basis. In February, the president issued an executive order formally directing agencies—and the DOGE employees assigned to these agencies—to terminate grants en masse. And federal agencies have carried out that directive by invoking the regulation as grounds for terminating entire programs based on a purported shift in agency priorities in conflict with the federal statutes appropriating funding for these programs.

The coalition filed today’s lawsuit against the Office of Management and Budget and several federal agencies including the Departments of Agriculture, Commerce, Defense, Homeland Security, Justice, Labor, and State, as well as the Environmental Protection Agency, Federal Emergency Management Agency, National Endowment for the Humanities, and National Science Foundation.

The lawsuit filed in federal court in Massachusetts seeks a judgment that the challenged regulation does not independently authorize the Trump administration to terminate funding based on changed agency priorities that were identified after the grant was awarded.

Attorney General Weiser joins the attorneys general of Arizona, California, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Wisconsin, and the state of Pennsylvania in filing this lawsuit.

Read the states’ lawsuit State of New Jersey v. Office of Management and Budget (PDF).

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Media Contact:
Lawrence Pacheco
Chief Communications Officer
(720) 508-6553 office
lawrence.pacheco@coag.gov