Federal judges double down on temporarily halting Trump’s funding freeze

A U.S. district court judge again halted the Trump administration’s efforts to freeze federal funding while litigation moves forward, noting that the nonprofits and small business owners who brought the suit “paint a stark picture of nationwide panic in the wake of the funding freeze.”
The Monday order from U.S. District Judge Loren AliKhan was issued as her previous weeklong administrative stay on the Trump administration’s efforts to halt disbursement of federal funding was set to expire. It adds to another temporary restraining order issued Friday by a federal district judge in Rhode Island that stopped the Trump administration’s funding freeze for the coalition of 22 states and D.C. that brought the suit.
In both cases, the federal district judges have requested information from the plaintiffs over forthcoming requests for preliminary injunctions, which are longer-term pauses on specific activities that courts may issue.
The legal actions came after a now-rescinded White House Office of Management and Budget memo (M-25-13) issued on Jan. 27 directed federal agencies to put a temporary pause on federal grants, loans and other assistance and gave agencies roughly 24 hours to comply. While AliKhan halted that directive right before it was set to take effect Jan. 28 and OMB has since revoked the memo, there is still confusion over the status and scope of the administration’s efforts to stop funding.
Shortly after the memo was rescinded, White House press secretary Karoline Leavitt said in a post on X that rescinding the document was “NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo. Why? To end any confusion created by the court’s injunction.” As a result, the government argued both cases were moot.
In a hearing prior to the Monday order out of the U.S. District Court for the District of Columbia, Daniel Stephen Garrett Schwei, a Justice Department lawyer representing OMB, argued that the government is carrying out actions to stop funding as they relate to President Donald Trump’s executive orders, and the case is fundamentally about the president’s ability to carry out that kind of activity.
AliKhan, however, questioned whether a broad funding freeze had actually stopped, pointing to Leavitt’s post that indicated a freeze was still in effect.
Schwei noted that Leavitt’s statement isn’t an official action but defended its accuracy, saying it’s clear that it references the executive orders. He said the OMB memo had become a “sideshow,” which is why it was withdrawn. If the plaintiffs believe that agencies aren’t following the law, Schwei argued they should challenge the actions by those individual agencies.
But a lawyer for the nonprofit, small business, and health care professional organizations that brought the lawsuit said the policy in the memo “clearly” went beyond what was in the executive orders and it remains in effect.
Although the government appears to be arguing that the memo didn’t do anything, Kevin E. Friedl, a lawyer with Democracy Forward Foundation who represents the plaintiffs, said the memo went further by freezing all funds and making clear that the purpose was for an ideological review of funding.
Specifically, the now-rescinded memo instructed agencies to halt “all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”
Friedl also said there have already been real harms from the action, pointing to examples the plaintiffs submitted to the court before the hearing. Those included instances of disrupted funding related to the Environmental Protection Agency and the National Science Foundation.
At the end of that hearing, AliKhan indicated that she was leaning toward finding the claims were not moot, pointing to persistent issues accessing funding platforms that aren’t related to the executive orders. She also said she was inclined to issue the temporary restraining order after reviewing the briefing.
In her order later that day, AliKhan said the rescission of the memo appeared to be an attempt by OMB “to overcome a judicially imposed obstacle without actually ceasing the challenged conduct. The court can think of few things more disingenuous.”