A federal judge has ruled that the Department of Government Efficiency unlawfully canceled more than $100 million in grants, delivering a sharp rebuke to a cost-cutting effort that leaned on ChatGPT to help decide what counted as diversity, equity, and inclusion.

In a 143-page decision issued Thursday, US District Judge Colleen McMahon found the grant terminations unconstitutional, according to reports on the ruling. The decision grew out of a legal challenge to DOGE’s push to eliminate funding, and it focused not just on the outcome but on how officials reached it. The use of ChatGPT to sort or identify DEI-related material emerged as one of the most striking details in the court’s account.

The ruling turns a fight over government spending into a broader warning about using AI as a shortcut for public power.

Key Facts

  • A federal judge ruled DOGE’s cancellation of more than $100 million in grants was unconstitutional.
  • The decision spans 143 pages and was issued Thursday.
  • Judge Colleen McMahon cited DOGE’s use of ChatGPT in reviewing whether grants related to DEI.
  • The case stems from a challenge to DOGE’s process for eliminating grants.

The ruling lands at a moment when public agencies face growing pressure to automate decisions, trim budgets, and move faster. But this case suggests speed and simplicity can collide with constitutional limits. Reports indicate the court viewed DOGE’s method as more than sloppy administration; it raised basic questions about whether a government office can rely on a general-purpose AI tool when legal rights and public funds sit on the line.

The political fallout could stretch beyond these grants. The decision gives critics of rapid AI adoption in government a concrete example of what can go wrong when officials treat a chatbot like a policy filter. It also puts fresh scrutiny on efforts to target programs tied, or perceived to be tied, to DEI, especially when agencies use blunt tools to make those calls. For supporters of tighter controls on automated decision-making, the ruling offers an early judicial marker.

What happens next matters far beyond one agency or one set of grants. Appeals, compliance fights, and new guidance on AI use in government could follow. However the litigation unfolds, the message already looks clear: if public officials want to cut funding, they need a lawful process they can defend in court, not a shortcut generated on demand.