A federal judge in Manhattan ruled in May 2026 that the government could not blame ChatGPT for its own decision to terminate more than 1,400 federal grants that the tool had flagged as related to diversity, equity, and inclusion. Staff fed short grant descriptions into the model and asked whether each one related to DEI, then acted on the answers without reading the underlying applications, without defining what DEI meant, and without a single instance of a reviewer disagreeing with the tool. The court treated the prompts and outputs as discoverable evidence, noting that a decision-maker who chooses a tool cannot escape responsibility by blaming it.
For any company building generative or agentic AI into core business functions, the practical points are about governance: who is allowed to write prompts, whether reviewers have the expertise and authority to override an output, and whether the process is documented. AI-generated records can later surface in litigation or regulatory review, accurate or not.
