NEH Terminations Ruling Impacted by Use of AI
It was only a matter of time. While there are certain benefits that can be had using artificial intelligence (AI) when it comes to managing financial assistance, sometimes using AI can prove extremely troublesome — particularly when it’s relied on to terminate grants.
A recent ruling by the U.S. District Court in New York determined that the National Endowment for the Humanities’ (NEH) mass termination in April 2025 of some 1,400 grants worth about $100 million is deemed unlawful. The terminations stemmed from a Department of Government Efficiency (DOGE) evaluation of the grants to determine whether they were related to diversity, equity and inclusion (DEI); diversity, equity, inclusion and accessibility (DEIA); environmental justice; and gender ideology. According to the ruling, DOGE used ChatGPT — an artificial-intelligence tool that generates text in response to user prompts — to create “DEI rationales” that might pertain to the grants.
“The record reflects that these ChatGPT determinations were generated without any additional context beyond the cursory spreadsheet descriptions themselves,” the court explained. “Given what courts now know about the hallucinatory propensities of ChatGPT and similar generative-AI tools, it would hardly be surprising if ChatGPT inferred … reasons why grants could be characterized as DEI — and therefore terminable — and supplied ‘rationales’ simply in order to satisfy the user’s perceived demand. There is not a scintilla of evidence that [DOGE employees], having obtained a DEI rationale from ChatGPT, undertook any meaningful review of whether that rationale made sense.”
The court added that “there can be no serious dispute that the review process implemented by DOGE did not conform to, or even resemble, NEH’s ordinary grant-review process, which itself was designed to comply with the mandates of its authorizing statute.” It also noted that once grants have been awarded, the National Foundation on the Arts and the Humanities Act does not authorize a wholesale post-award revocation based on new ideological criteria. Rather, it provides for post-award evaluation, financial and project reporting, and potential termination only when the recipient has substantially failed to satisfy the purposes for which the assistance was provided or the applicable statutory criteria.
“Because Congress vested NEH funding authority in the NEH Chairperson and addressed postaward consequences through specific, chair-centered mechanisms, DOGE had no power to identify, select or direct the termination of NEH grants; no power to override the statutory decisionmaker; and no power to substitute its own criteria for those Congress prescribed,” according to the court.
Some stakeholders note that this ruling established an important precedent that the government’s use of AI does not excuse unconstitutional conduct. If other grant terminations stemmed from the use of AI to provide ‘rationales,’ courts may rule in a similar way as in this instance. Technology can be useful – but only if used properly.
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