Judge Criticizes Trump Administration for Allegedly Fabricating AI-Generated Justifications for Public Health Funding Cuts to ‘Sanctuary’ States

A federal judge issued a decisive ruling on Thursday, blocking the Trump administration from withholding approximately $600 million in public health grants from four states. The judge criticized the administration’s reasoning for the funding cuts as “contrived” and unjustified.

The lawsuit, spearheaded by Illinois and joined by California, Colorado, and Minnesota, challenges the administration’s attempt to defund states it perceives as politically unfavorable. The plaintiffs argue that the cuts target states with policies that the federal government opposes, as outlined in a detailed lawsuit filed in February.

Shortly after the lawsuit was filed, a hearing was promptly scheduled. On the same day, U.S. District Judge Manish S. Shah, appointed by Barack Obama, issued a temporary restraining order. He deemed the funding cuts “likely unlawful,” accusing the administration of misusing funding to impose a policy agenda unrelated to the grants.

On March 6, the states involved requested a preliminary injunction to ensure the continued flow of federal funds while the case proceeds at the district court level.

In a clear ruling, the judge reaffirmed his stance in favor of the states, asserting that the administration’s funding cuts were not about public health but rather a punitive response to the states’ stances on federal immigration policies.

In a seven-page order, Shah notes that there are “stated explanations for grant terminations,” but says the government “has not explained why or how plaintiffs were selected” for the cuts in question.

The plaintiffs, however, have an explanation: They were targeted because they are so-called “sanctuary” jurisdictions.

The court ran through the series of events in detail.

Crucial to the case was President Donald Trump’s announcement in early January that “states having sanctuary cities” would stop receiving any federal funding starting in February.

That threat, of course, did not pan out. But the court believes the Office of Management and Budget (OMB) tried to realize the defunding plan in league with the Department of Health and Human Services (HHS) in the days that followed.

The judge notes that “[t]hree days” after Trump’s announcement, OMB “discussed something with HHS that led to OMB asking for a list and acknowledging the effort to support the President’s priorities.”

Then, one particular sub-agency got to work, the court noted

“Between January 22 and 23, the Centers for Disease Control (CDC) put together a list of active awards to Colorado, California, Minnesota, and Illinois,” the order goes on. “There is no explanation in the record for why those four states were treated as a group for data collection. But the chronology suggests that this scramble was tied to the January 13, 2026 announcement.”

On Feb. 1, the cuts were announced.

On Feb. 5, back-filling an explanation, the Trump administration “used an artificial intelligence model to generate language supporting grant terminations based on misalignment with agency priorities,” the judge explained.

Days later, the lawsuit was filed – largely based on alleged violations of the Administrative Procedure Act (APA), particularly a section which requires an agency to make reasoned decisions.

Such decisions likely did not occur here, Shah said.

“[W]here an explanation appears contrived or incongruent with what the record reveals about the process, then the agency violated the reasoned explanation requirement of administrative law,” the judge mused. “That is likely the case here, where there is a disconnect between the government’s expressed hostility to the plaintiffs as states with certain immigration-related policies…and later grant-specific explanations.”

Shah believed the “machine-generate[d]” explanation was a post hoc effort to explain the cuts. And though the plaintiffs have not produced a so-called “targeting directive,” the timeline, including the lack of affirmative denials by OMB, suggested the states were targeted.

“What remains, then, is a matter of inference,” the order goes on. “The sequence of events does not suggest mere inconsequential coordination. Instead, the reasonable inference is that the Office of Management and Budget directed HHS to cut funding for plaintiffs by February because plaintiffs were on a list of states with sanctuary jurisdictions.”

The court goes on like this, at length:

There was an OMB “project” to be implemented. Both OMB and HHS missed the target date by a few days, but the most plausible inference is that OMB drove HHS’s decision. Coordination and influence are not surprising, and it is not improper to work with other agencies to substantiate the legal basis for a preferred policy. But this looks instead like a final decision by OMB with a different motive than what HHS used to explain its grant-termination decision.

“Plaintiffs are likely to succeed on their claim that OMB’s targeting of them for HHS cuts must be set aside under the Administrative Procedure Act,” the order continues. “The Act requires courts to set aside agency action that is arbitrary, capricious, contrary to constitutional right, or in excess of statutory authority or limitations.”

While the court enjoined HHS from moving forward with the $600 million in public health cuts, the injunction stopped short of the full relief requested by the plaintiffs. The judge said the idea of a targeting directive operative at all federal agencies, at least at this stage (and without the relevant discovery), is akin to a “programmatic challenge,” which is beyond the court’s jurisdiction under the APA.