The U.S. Department of Transportation has begun a large wave of grant terminations. These are the cancelation of existing grants, for which a grant agreement has already been signed and a federal funding obligation legally recorded (and, in some indications, where federal dollars have already changed hands).

The termination letters do not allege that the grant recipients have done anything wrong to violate the grant agreement (the most common reason to legally terminate an existing grant agreement, and the one the Administration chose when terminating the $929 million FY 2010 grant for the California high-speed rail project). Instead, the Trump Administration has strung together a legal rationale saying, essentially, “the federal government has changed its mind and no longer likes this kind of thing.”

The grant terminations are expected to center on grants made by the Office of the Secretary, which include BUILD grants (or RAISE, or TIGER, or whatever you want to call them the farther back you go), MEGA grants, INFRA grants, Safe Streets and Roads for All (SSR4A) grants, and Neighborhood Access and Equity grants.

Here is the legal boilerplate for the grant termination notices:

This letter provides notice that the U.S. Department of Transportation (Department or DOT) is terminating your federal grant, “[insert grant name and ID number]”, effective immediately. DOT is doing so in accordance with the terms of the grant agreement and relevant regulations.

At the time your grant was issued, the grant agreement and applicable regulations authorized termination by “the Federal awarding agency or pass-through entity, to the greatest extent authorized by law, if an award no longer effectuates the program goals or agency priorities” 2 CFR § 200.340(a)(2) (2020). DOT’s priorities presently include:

• Ensuring that taxpayer dollars are used efficiently in ways that maximally benefit the American people and improve their quality of life; and
• [insert priority specific to the grant].

Having individually reviewed your grant in light of DOT’s priorities, the Department has determined that your grant is inconsistent with the priorities listed above. [Insert specific violation of priorities.] Because your grant “no longer effectuates…agency priorities,” 2 CFR § 200.340(a)(2) (2020), DOT has determined that your grant is no longer in the public interest in accordance with section 16.1(a)(5) of the General Terms and Conditions of your grant agreement, and therefore is terminating your grant.

Costs incurred after this termination are generally not allowable. 2 CFR § 200.343. You are encouraged to carefully review and discharge your closeout responsibilities as set forth in 2 CFR § 200.344-46 and the grant agreement. Those responsibilities include, but are not limited to, your obligation to “promptly refund any unobligated funds” that have been paid out but “are not authorized to be retained.” Id. § 200.344(e).

We could envision every Neighborhood Access and Equity grant being canceled on these grounds, because the Biden Administration, which awarded the grants, placed a high priority on reconnecting neighborhoods that had been broken up by urban highways, and getting rid of existing highways if necessary, while the Trump Administration places no priority on that and instead places a high priority on maximizing automotive mobility.

Likewise, BUILD grants that went for bike-ped activities, or safety grants focused on slowing down cars, may well get canceled en masse.

The “changing agency priorities” legal strategy to justify grant termination is rather open-ended. Even if Congress wrote the statute to make a specific kind of project eligible for a grant, the regulation quoted (full version here) does seem to say that the federal agency can terminate a grant, to the extent authorized by law, “if an award no longer effectuates the program goals or agency priorities.” Emphasis added to the word “or” which is doing a lot of work here – the statute could make 50 different kinds of projects eligible for grants, but if the Administration de-prioritizes 49 of them, it becomes a one-priority grant program under this regulatory interpretation.

Please let us know if you have specific examples of these new grant cancelation, or if you see anyone citing statute to fight such terminations on the grounds of the “to the extent authorized by law” part…