District Court Ruling Prevents Defunding of State Social Service Grants

On July 17, 2026, a federal district court ruled that the U.S. Office of Management and Budget (OMB) and several federal grant-making agencies cannot terminate state grant funding. The court granted summary judgment in favor of 20 states, three governors, and the District of Columbia, who challenged the government’s interpretation of a regulation known as the “Termination Clause.” This ruling affects $5.3 billion in grants.

The grants had been awarded by the U.S. Department of Agriculture, the Department of Commerce, the Department of Defense, the Department of Homeland Security, the Department of Justice, the Department . . .