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Michigan AG Nessel joins multi-state lawsuit to block Trump administration’s use of a vague regulation to cancel billions in federal funding.
Nessel fights Trump’s use of obscure clause to cut Michigan’s critical federal funding
Attorney General Dana Nessel announced June 24 that Michigan has joined 20 other states in a federal lawsuit targeting the Trump administration’s aggressive move to slash federal grant funding. The administration’s action relies on a five-word provision buried in federal regulations that allows termination of grants if they “no longer effectuate … agency priorities.” The lawsuit, filed in the U.S. District Court for Massachusetts, seeks a declaratory judgment to block this use of the clause.
The administration began terminating previously awarded grants in January 2025, citing the clause to cut funds used for law enforcement, education, clean water, public health, food assistance, and scientific research.
Nessel called the effort a “blatant violation” of the rule of law. “We’ve secured 10 injunctions already against unlawful acts by this administration,” she said in the announcement. “This clause is the latest example of how Trump’s team rewrites the law to push its agenda and punish states.”
Michigan programs already hit by sweeping federal terminations
Since February, Michigan has faced termination of multiple awarded grants. These include funding for local food programs, educational research, and environmental projects. The Department of Agriculture canceled Michigan’s participation in the Local Food Purchase Assistance Program, cutting off funds used to provide fresh produce from local farms to low-income residents.
The lawsuit argues that these cuts violate the U.S. Constitution’s Spending Clause. Plaintiffs say there was no advance warning that the federal government could revoke funds midstream based on shifting political goals.
Lawsuit alleges sweeping federal overreach under Trump’s 2025 executive orders
The complaint, 80 pages long, outlines how President Trump directed agencies and the newly formed Department of Government Efficiency (DOGE) to slash grants en masse through executive orders issued after the 2024 election. Federal departments—including Defense, Education, Commerce, and the EPA—were instructed to reallocate funding or terminate entire programs that conflicted with “new agency priorities.”
Critics say this tactic ignores Congressional appropriation authority. The lawsuit states that “with the stroke of a pen,” federal agencies erased funding legally authorized by Congress for purposes such as food security, public safety, and pandemic recovery.
Legal scholars say case could test limits of executive power
Legal experts believe this case could determine how far the executive branch can go in unilaterally reversing previously awarded funding.
Michael Gerhardt, a constitutional law professor at the University of North Carolina, told Reuters, “This is a novel and aggressive interpretation of administrative law. If it stands, it opens the door to massive instability in federal-state partnerships.”
According to the lawsuit, states accepted these grants in good faith under the assumption they were stable unless explicitly violated. The Trump administration’s reinterpretation makes every grant potentially temporary—regardless of state compliance.
21 states unite in rare bipartisan lawsuit to defend federal funding
Along with Michigan, states including California, New York, Illinois, Pennsylvania, and Wisconsin joined the lawsuit. The states argue that cutting funds without legislative authority disrupts everything from rural broadband deployment to disaster recovery. The defendants named in the suit include high-level officials from 13 federal agencies, including the Department of Justice, Defense, Homeland Security, Agriculture, and Commerce.
If the court strikes down this clause usage, it could block future administrations from deploying similar tactics. If upheld, it may lead to further disruptions of federally supported programs across the country.
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