A group of 21 Democratic state attorneys general filed a lawsuit on Tuesday asking a judge to declare that a key tool President Donald Trump’s administration has relied on to cancel federal grants is being used unlawfully.

The complaint said that the states have lost billions of dollars for crime prevention, education, medical and scientific research, and clean drinking water. The states are seeking declaratory and injunctive relief for these and other projects that were approved to receive federal funding before President Trump took office in January.

The states argued that the administration is relying on a single clause within an Office of Management and Budget (OMB) regulation that says federal agencies may cancel grants “pursuant to the terms and conditions of the Federal award, including, to the extent authorized by law, if an award no longer effectuates the program goals or agency priorities.”

The lawsuit claimed that the language in the regulation is being applied in an unprecedented way and in a manner that is contrary to the original intent and history of the rule. The states noted:

OMB never suggested, in either the 2020 or 2024 rulemaking, that a grant could be terminated even though the grant was continuing to serve the very goals for which the monies had initially been awarded, merely because the agency’s priorities shifted midway during the use of the grant—let alone with no advance notice.

The lawsuit was filed in federal district court in Massachusetts against multiple federal agencies and agency leaders. The states represented in the lawsuit include: New Jersey, Massachusetts, New York, Arizona, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, Oregon, Pennsylvania, Rhode Island, Vermont, Wisconsin, as well as the District of Columbia.

The complaint alleged that the Trump administration is using the OMB clause to justify the canceled grants and points to an executive order that directs employees of the Department of Government Efficiency (DOGE) to cut funding according to the administration’s new priorities. The lawsuit claimed these actions are “inconsistent with the separation of powers” and contradict Congress’ power under the Constitution’s Spending Clause.

The states seek a declaratory judgment that the termination of federal grants is unauthorized under the OMB clause cited by the administration and an injunction to stop the termination of federal grants to the states.