A federal judge ruled late last week that the Trump administration had acted illegally last summer when it cut millions in federal grant money. 

U.S. District Judge Indira Talwani in the District of Massachusetts ruled on Friday that the White House’s Office of Management and Budget does not have the authority to revoke grants on a whim. OMB had argued that a line in the federal regulations gave the White House authority to cancel grants to account for shifts in priorities. 

Talwani found that the agency couldn’t cancel grants to achieve priorities that were announced after the grants had been awarded. 

Wisconsin was joined by 22 other states and Washington D.C. in filing a lawsuit against OMB pulling back grant funds. The Wisconsin Department of Justice noted in a press release that the state had lost tens of millions of dollars in federal grant funding meant to help provide Wisconsin-grown food to local food banks, modernize the state’s unemployment system and fund research at UW-Madison. 

“The Trump administration has been recklessly attempting to slash funding that supports important programs,” said Attorney General Josh Kaul. “This decision shuts down an unlawful avenue that the Trump administration was using to try to impose those cuts.”

The Wisconsin Ethics Commission has dismissed a complaint alleging Attorney General Josh Kaul violated state rules when the Department of Justice hired out of state lawyers on contract to enforce the state’s environmental regulations. 

The complaint was dismissed by the commission late last month in a closed session and released to the public last week. The issue has been highlighted by Republican legislators eager to land blows on Kaul, who is running for re-election against Fond du Lac County District Attorney Eric Toney, a Republican. 

Faced with a limited budget from the GOP-controlled Legislature and increased scrutiny on the DOJ since the enactment of the Republican lame duck laws in 2018, Kaul hired the out-of-state lawyers to assist with the enforcement of the state’s environmental regulations. 

The lawyers were given fellowships to work as special assistant attorneys general through a New York University program tied to former New York Mayor Michael Bloomberg. The attorneys were paid by the NYU program and officially classified as volunteers under the state employment system yet given the powers of an assistant attorney general.

In a statement to the Wisconsin Examiner, Kaul said the dismissal of the complaint confirms that Republicans were only trying to score partisan points against him. 

“This unambiguous dismissal from the bipartisan Ethics Commission makes it even clearer that the Senate Oversight Committee is a partisan stunt,” Kaul said. “The Wisconsin Department of Justice will not be deterred from effectively enforcing our laws.”

The complaint over the fellows was made to the ethics commission in February 2025, alleging Kaul engaged in a quid pro quo by hiring the fellows to work on specifically environmental litigation. 

This February, the newly established Committee on the Oversight of the Department of Justice held a multi-day hearing in which Kaul and other DOJ officials were grilled about the program. In March, the committee released a report detailing the Republican belief that hiring the fellows amounted to Kaul putting the department up for sale and letting state litigation strategy be determined by an outside interest group. 

Leading the testimony against the DOJ during the February hearing were a representative from Wisconsin Manufacturers and Commerce, the state’s largest business lobby and a powerful GOP ally, and a dairy farmer who was subject to an enforcement action by the state after he operated his factory farm without a permit for six years. The committee was chaired by Sen. Mary Felzkowski (R-Tomahawk), who has a legislative history of opposing environmental initiatives. 

In the report, Republicans allege that the arrangement was “not authorized” by Wisconsin statutes, that the DOJ violated state law by not immediately administering the attorneys oaths of office, exposes concerns about the state’s system for adjudicating ethics complaints, opens the state up to influence from outside interests and that the DOJ did not fully cooperate with records requests filed by the committee. 

The report recommends that the DOJ immediately terminate the agreements that facilitated the hiring of the attorneys. It also recommends that the Legislature pass a resolution declaring the hirings unlawful, more strictly manage the processes through which the DOJ is funded and pass legislation that only state employees can conduct prosecutions. Additionally the report states that government attorneys should take their oaths of office before conducting any work for the state and that the state Ethics Commission should be subject to faster timelines for adjudicating complaints.

In the dismissal of the ethics complaint, the commission found that Kaul doesn’t gain any personal benefit by hiring low-level attorneys to handle litigation.

“As an elected official, [Kaul] is vested with significant discretion in what his agency focuses its efforts on,” the dismissal states. “It is, in fact, possible that, as a result of the acceptance of the legal services of the fellow, the DOJ will be able to participate in more environmental litigation or other official actions related to the environment. It is also possible that the DOJ might be able to shift a paid staff member to other work. However, the statutory influence clause is not concerned with whether accepting the service of the legal fellow could reasonably be expected to influence the

DOJ’s actions. It is concerned with whether it could reasonably be expected to influence the state public official’s actions. By naming only the Attorney General, the question is whether acceptance of the free services could reasonably be expected to influence the Respondent’s official actions, not others in the Department of Justice.” 

The dismissal also noted that the state has an interest in hiring interns and fellows to complete the necessary work of state government.

“Accepting unpaid interns and unpaid fellows is a benefit to the agency in which they work and to the State more generally,” the dismissal states. “Absent additional facts, unpaid interns and unpaid fellows are not a benefit to a specific state public official. This is true in every case where an unpaid intern or unpaid fellow works. Moreover, the services of an unpaid intern or fellow, are generally of the nature and type that it is not reasonable for a person to expect it to influence the elected head of a large agency, in the absence of other facts.” 

Additionally, the dismissal states that the commission “is aware that the Legislature is concerned” about the issue and noted that the ethics statutes aren’t the proper venue for handling the question. 

“The ethics laws were not intended to cover discretionary decisions where there is no personal benefit to officials or more than a theoretical potential impact or influence on an official’s decision,” it states. “As noted above, the ethics laws are not intended to apply to agencies; they are intended to apply to individual officials. Whether an agency should accept the services of someone that is provided by or paid by an outside organization, is a question of policy that can be addressed by the Legislature. Indeed, it is the body politic that is best suited for that purpose.”

The Wisconsin Supreme Court ruled Friday that the Wisconsin Attorney General can determine where to send money the Department of Justice receives through settlement agreements. 

The 5-2 decision — which includes a partial concurrence from Justice Brian Hagedorn — strikes down a measure enacted by the Republican-controlled Legislature to take power from executive branch agencies after the elections of Democratic Gov. Tony Evers and Attorney General Josh Kaul in 2018. 

During that lame duck period at the end of a Republican administration, the Legislature enacted a law that requires the attorney general to deposit settlement money into the state’s general fund, which is largely controlled by the Legislature. However within the general fund are many sub-accounts through which many of the state’s programs and services are rendered. State law distinguishes between depositing money into the general fund and crediting money to specific programs. 

Since the lame duck law’s enactment, Kaul has put settlement earnings into the general fund and then credited the money to DOJ programs within the fund. The Legislature has argued that Kaul has been purposefully flouting the intent of the law, which was to give control over the money to legislative Republicans. 

The legal dispute in the case, including at the oral arguments in March, has flipped the usual script in which Republicans argue for laws to be interpreted strictly, following exactly what a statute says. 

“[The statute] entitled “Deposit of settlement funds,” provides in its entirety that ‘[t]he attorney general shall deposit all settlement funds into the general fund,’” Justice Rebecca Dallet wrote in the majority opinion. “This simple, declarative sentence identifies a class of state money (‘settlement funds’) and imposes a single, narrow restriction on where that money must be deposited (into the state treasury, specifically ‘the general fund’). It says nothing whatsoever about where that money may or must be credited after it is deposited.”

Dallet continued that the Court wasn’t buying the Legislature’s argument that a deeper meaning should be read into the language.

Quoting the Court’s precedent, Dallet wrote, “The problem with these arguments is that ‘we interpret the statutory language the legislature enacted, and will not read into a statute language that it does not contain or reasonably imply.’” 

In a dissent, Justice Rebecca Bradley, partially joined by Annette Ziegler — both of whom signed off on many of the lame duck laws and their specific intent to disempower Democrats — argued that the Court’s majority was only aiming to give a legal victory to an elected Democrat in an election year.

“The majority refuses to apply the law, which favors the Republican-controlled legislature over Democrat Attorney General Josh Kaul. Lady Justice wears a blindfold, not blinders,” Bradley wrote in an opinion that also cited the 2004 film “Dodgeball.” “This is not the first time justice has taken a back seat to political interests. The members of the majority extend the Democrats’ almost unbroken winning streak in litigation against the Republican legislature since the progressives took control.”

Twenty-five Democratic-led states plus the District of Columbia have sued the Trump administration over its new work requirements for people who get their health insurance through Medicaid.

At issue is a “medically frail” designation that the states say is too narrow and will make it too difficult for ill and disabled people to remain on Medicaid.

They’re challenging the administration’s guidance on who can be exempt from the work requirements included in the so-called One Big Beautiful Bill Act, the broad tax and spending measure President Donald Trump signed a year ago.

Medicaid is the publicly-funded health insurance for people with low incomes. Under the One Big Beautiful Bill Act, states that have expanded Medicaid eligibility to more adults under the Affordable Care Act — 40 states plus the District of Columbia — must require those adults to prove they’re working, going to school or serving their communities for at least 80 hours a month to receive Medicaid. Georgia, Tennessee, and Wisconsin, which have used federal waivers to expand their Medicaid programs, are also subject to the new work rules.

The new lawsuit specifically targets new federal guidance that narrows the definition of who can qualify as “medically frail,” a key exemption used to excuse Medicaid recipients from work requirements if they have serious disabilities or illnesses. The guidance came in the form of an interim final rule published this month by the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services (CMS).

The Democratic attorneys general and governors who are plaintiffs in the suit claim the feds surprised them with this new rule months after they’d already been working with CMS on how to implement the work requirements.

“This eleventh-hour attempt to further narrow protections for medically frail Medicaid recipients seeks to punish those who cannot fend for themselves,” said Rhode Island Attorney General Peter Neronha, a Democrat, in a statement.

“Further, this Administration is once again attempting to sidestep Congress by unlawfully reinterpreting the law, and coercing the states to rush to implement their last-minute changes or face penalties,” he said.

To qualify as “medically frail” and therefore exempt from work requirements, the new guidance says, a Medicaid recipient must have a significant health condition and be significantly impaired in their ability to work. It’s a distinction the states say Congress did not make in the One Big Beautiful Bill Act.

The states also claim the new guidance violates federal law by ignoring evidence that work requirements cause people to lose coverage due to red tape.

For example, Arkansas tried instituting work requirements for Medicaid recipients in 2018, during Trump’s first term. A federal judge halted the policy less than a year later, after 18,000 adults had lost coverage. Studies later found that Arkansas’ work requirements didn’t increase employment. A recent analysis from the Urban Institute projects that 3-7 million people could lose coverage because of the new work requirements.

Supporters of the new work rules say they are sufficiently flexible and that the category of who qualifies as “medically frail” remains broad.

“This rule helps Americans build skills and independence through work, education, job training, or community service, creating new opportunities for themselves and their families,” said Dr. Mehmet Oz, director for the Centers for Medicare & Medicaid Services, in a statement earlier this month announcing the new guidance.

The lawsuit says states have already invested significant resources into implementing the new work requirements based on the original law’s language and prior federal guidance. They’re staring down an August 31, 2026, deadline for notifying Medicaid recipients about changes to the “medically frail” designation, a timeline the states say is not workable. They face financial penalties for not meeting the deadline.

States are expected to put the new work requirements into place by January 1, 2027, though the feds could choose to grant them temporary extensions through 2028.

The lawsuit was filed by the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and Wisconsin, as well as the governors of Kentucky and Pennsylvania.

Stateline reporter Anna Claire Vollers can be reached at avollers@stateline.org.