They Sued Trump Over $25.7 Million in Canceled Internet Grants.
A Federal Judge Just Ruled Trump’s Lawyers Were Right — the Race Criterion Is Unconstitutional.
On July 15, 2026, U.S. District Judge John D. Bates ruled that a piece of the 2021 Digital Equity Act — the requirement that grant recipients serve certain “covered populations,” including racial and ethnic minorities — is unconstitutional. A federal court applying the Supreme Court’s 2023 decision in Students for Fair Admissions v. Harvard to a race-conscious spending criterion is not, by itself, unusual. Who was sitting on which side of the courtroom is.
The case, National Digital Inclusion Alliance v. Trump, was not brought by activists trying to gut the law. It was brought by the National Digital Inclusion Alliance (NDIA), a nonprofit that sued the Trump administration after Commerce Secretary Howard Lutnick canceled its own $25.7 million Digital Equity grant in May 2025. NDIA wanted its money back. Part of the Trump Justice Department’s defense was that the underlying racial criterion was unconstitutional in the first place. Bates, a George W. Bush appointee, just told NDIA’s opponents they were right — on that one claim.
None of this ends the case, and none of it revives NDIA’s grant. Bates found the race criterion severable, meaning the $1.25 billion Competitive Grant Program — one slice of the law’s $2.75 billion total — can keep operating without it. NDIA’s separation-of-powers, Spending Clause, and arbitrary-and-capricious claims over how the shutdown was carried out are still pending. No appeal has been filed. Here is what the ruling actually does, and does not do.
- $2.75 billion — the 2021 Digital Equity Act's total, split across three NTIA grant programs: $60 million for state planning, $1.44 billion for state capacity, and $1.25 billion for the Competitive Grant Program — the only one built on the criterion at issue here — per NTIA program pages
- $1.25 billion — the Competitive Grant Program specifically — not the whole Digital Equity Act, and not the separate $42.45 billion BEAD broadband build-out program the administration also cut — per Sen. Cruz's Nov. 2024 letter to NTIA
- $25.7 million — NDIA's own canceled grant, awarded Jan. 21, 2025 to fund “Digital Navigator+,” meant to reach roughly 30,000 people across 11 states before Commerce terminated it May 9, 2025 — per the Lawyers' Committee's filing
- Nov. 21, 2024 — the date Sen. Ted Cruz (R-TX) first told NTIA in writing that the “covered populations” criterion violated the Fifth Amendment — 19 months before Bates agreed — per Fox News; Senate Commerce Committee
- “Severed, not struck down” — Bates's ruling lets the Competitive Grant Program keep operating without the race factor — the program is not ending — per Community Networks / ILSR
Bates’s 35-page opinion leaned heavily on Students for Fair Admissions v. Harvard, the Supreme Court’s 2023 ruling ending race-conscious college admissions. The Digital Equity Act directs NTIA to prioritize applicants serving “covered populations” — eight groups that include low-income households, veterans, people with disabilities, rural residents, and “individuals who are members of a racial or ethnic minority group.” Bates held that including race among those eight categories triggers strict scrutiny, the toughest constitutional test, and that closing a broad societal gap in internet access does not clear that bar.
“At this stage, what matters is that the Digital Equity Act empowers the government to consider race when allocating federal money.”
Judge John D. Bates (D.D.C.), opinion of July 15, 2026
Quoting the Supreme Court directly, Bates wrote that ameliorating general societal inequalities “does not constitute a compelling interest that justifies race-based state action.” The court found nothing in the record showing racial minorities face documented, specific discrimination in accessing broadband — the same gap Sen. Ted Cruz (R-TX) had flagged in a November 2024 letter demanding NTIA justify the criterion or drop it. Nineteen months and one change of administration later, a federal judge agreed with him, in a case Cruz was never a party to.
Easy to miss in headlines calling this a defeat for “Biden-era” racial preferences: the party that just lost this argument is the same party that sued to get its money back. NDIA, represented by the Lawyers’ Committee for Civil Rights Under Law, filed suit in October 2025 against President Trump, the Commerce Department, NTIA, NIST, and the Office of Management and Budget — not to defend the racial criterion, but to reverse Lutnick’s May 2025 decision terminating every Competitive Grant, including NDIA’s own $25.7 million award. NDIA’s Digital Navigator+ program was thirteen local projects across 11 states meant to help roughly 30,000 people use the internet for job applications, telehealth visits, and online safety.
“NDIA is taking the extraordinary step of suing the federal government for the 30,000 people who were counting on our Digital Navigator+ program to help guide them through submitting job applications, accessing telehealth, attending classes, and staying safe online.”
Angela Siefer, NDIA Executive Director, on filing suit, October 2025
The Justice Department’s motion to dismiss argued the lawsuit should be tossed — but part of that argument was that the covered-populations provision underlying NDIA’s own grant was itself unconstitutional. At a June 11, 2026 hearing, a DOJ attorney told Bates the racial classification “is severable” from the statute and that, if it fell, the government “would obviously apply the grant program without considering race” going forward. Bates sounded skeptical of the timing: the administration had suspended the entire Competitive Grant Program, race criterion and all, more than a year before making that argument. When NDIA’s attorneys said the position was new to them, Bates replied, “You and me both.”
Judge John D. Bates (D.D.C.) — George W. Bush appointee; ruled July 15, 2026.
Angela Siefer — NDIA Executive Director; the nonprofit's public face in the suit.
Commerce Secretary Howard Lutnick — ordered the May 9, 2025 grant terminations.
Sen. Ted Cruz (R-TX) — first raised the constitutional argument in writing, Nov. 2024.
President Trump — declared the program unconstitutional and "racist" on Truth Social, May 8, 2025.
The legal theory Bates just accepted was not new. Cruz, then the incoming Senate Commerce Committee chairman, wrote NTIA in November 2024 that the Competitive Grant Program’s covered-populations criterion “does not serve a compelling governmental interest” and demanded the agency withdraw the guidance or justify it by mid-December. NTIA left the program in place through the end of the Biden administration.
Trump inherited the argument and went further. On May 8, 2025, he posted on Truth Social that the law was a racist giveaway and that he was ending it immediately.
I have spoken with my wonderful Secretary of Commerce, Howard Lutnick, and we agree that the Biden/Harris so-called 'Digital Equity Act' is totally UNCONSTITUTIONAL. No more woke handouts based on race! The Digital Equity Program is a RACIST and ILLEGAL $2.5 BILLION DOLLAR giveaway. I am ending this IMMEDIATELY, and saving Taxpayers BILLIONS OF DOLLARS!
Trump's post, one day before Commerce terminated every Competitive Grant Program award. PolitiFact rated the 'unconstitutional' claim False at the time — no court had yet ruled. (His post cited $2.5B; the program's actual total is $2.75B.)
Commerce moved the next day, May 9, 2025, terminating every Competitive Grant Program award, NDIA’s included. Siefer called the move wrong on the facts and the law: “Calling the Digital Equity Act unconstitutional is not only incorrect — it hurts millions of Americans who need digital navigation support and home internet.” More than a year later, when Sen. Patty Murray (D-WA) pressed Lutnick on whether any court had actually found the law unconstitutional, he did not claim one had. “It will go through the courts and the courts will decide,” he told her. Bates’s ruling was the first court test of that prediction, and it landed as a split verdict: a court did eventually agree the racial criterion could not stand, but the ruling does not vindicate shutting down the entire program NDIA sued to restore.
Severability means the Competitive Grant Program itself survives Bates’s ruling. Reporting on the decision indicates the administration plans to reinstate the program without the covered-populations race factor — running the same $1.25 billion pot through the same eight-category list, minus one category. NDIA’s own $25.7 million award is not automatically restored: Bates ruled on the constitutional question, not on whether Commerce’s termination of that specific grant was lawful.
Does: find the Digital Equity Act's race-based "covered populations" criterion unconstitutional under strict scrutiny; hold that criterion severable from the rest of the statute.
Doesn’t: restore NDIA's $25.7 million grant; resolve NDIA's separation-of-powers, Spending Clause, or APA claims; end the lawsuit; function as a final judgment.
That remaining question — along with NDIA’s separation-of-powers and Spending Clause claims, and its Administrative Procedure Act challenge to how abruptly Commerce ended the program — is still in front of Bates. No appeal of the July 15 ruling had been filed as of this writing, and the case is roughly one day old at the constitutional stage. This is a motion-to-dismiss ruling on a single claim, not a final judgment on whether NDIA and its Digital Navigator+ partners are owed anything.
A nonprofit sued Trump to get its internet money back. A Bush-appointed judge just ruled that the law’s race-based criterion — the one Ted Cruz flagged in writing 19 months before Trump acted on it — cannot survive strict scrutiny. That is a real, if partial, win for the administration’s legal position. It is not a win for NDIA, whose $25.7 million grant remains canceled, and it is not the last word: the program can now run without race as a factor, but whether Commerce’s shutdown of it was itself lawful is still an open question in the same courtroom.
