Why It Matters
Congress's broad power to attach conditions to federal funding has real constitutional limits, and a new Congressional Research Service report maps exactly where those limits lie. The report identifies four constitutional limits on federal funding conditions but does not assess any Trump administration policy. The "power of the purse" belongs to the legislative branch, not the executive, and the report frames that structural tension as a constraint on agency action.
The Big Picture
The Spending Clause gives Congress broad authority to spend for the "general Welfare" and to attach conditions that advance policy goals. In addition, the Necessary and Proper Clause may supplement that authority.
When an agency imposes a condition that arguably exceeds its delegated authority, the report says that condition could face constitutional separation-of-powers challenges or statutory challenges under the Administrative Procedure Act (APA).
Recipients must receive clear notice of required conduct and consequences of noncompliance. The condition must be reasonably related to the funded program's purpose, though the Supreme Court has never struck down a condition as insufficiently related. Congress may not coerce state participation by tying a new requirement to an existing funding source on which a state has come to rely. A condition may not require conduct that violates another constitutional protection, such as free speech or free exercise of religion.
Several recent district court rulings have tested these limits. In Illinois v. FEMA, a court held certain immigration-related conditions were not reasonably related to the grant program's purposes. In City of Chicago v. DOJ, a court found a DEI-related condition on Community Oriented Policing Services (COPS) grants insufficiently related. Appeals remain pending in Metropolitan Transportation Authority v. Duffy (2d Circuit) and American Association of University Professors v. DOJ (1st Circuit).
An earlier round of litigation over immigration conditions in the Edward Byrne Memorial Justice Assistance Grant (JAG) from fiscal 2017 and fiscal 2018 concluded after the Department of Justice agreed to remove the challenged conditions and the parties stipulated to dismiss. Public Law 119-21, enacted July 4, 2025, expressly made compliance with 8 U.S.C. § 1373 a condition of eligibility for the funds it appropriated.
A White House executive order on federal grantmaking oversight directed agency heads to revise terms of existing discretionary grants to the extent permitted by law, to allow or clarify immediate termination to end an agreement at any time for any reason.
The Bottom Line
Congress holds broad constitutional authority to condition federal spending, but the four limits described in the CRS report may affect the legality of any executive order, agency rule, or other executive branch action imposing funding conditions.
The report also outlines unsettled questions about whether district courts can hear APA challenges to grant terminations, citing Department of Education v. California and NIH v. APHA as interim orders, and concludes that neither "squarely addresses" APA challenges to funding conditions.
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