Judge halts freeze on wide swath of federal spending

A federal judge late this afternoon temporarily blocked a freeze on federal financial assistance and grant programs ordered by the Office of Management and Budget in a memo issued late yesterday.

The OMB memo called for the freeze to take effect at 5 p.m. today, but a U.S. District Court judge paused it until next Monday. The court’s administrative stay, however, applies only to the disbursements of existing programs.

The OMB memo requires federal agencies to identify and “complete a comprehensive analysis” of all federal financial assistance “programs, projects, and activities” to ensure they are “consistent with the President’s policies and requirements.”

“In the interim,” the memo states, “to the extent permissible under applicable law, Federal agencies must temporarily pause 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.”

Federal agencies have until Feb. 10 to submit to OMB “detailed information on any programs, projects or activities subject to this pause.”

The OMB directive could affect a broad scope of loan, grant and financial assistance programs from the federal government, including funds for state and local governments, such as Community Development Block Grants, school meals, and health, education, public safety and climate programs. But a follow-up “Q&A” document provided today by the Office of Management and Budget aims to clarify that the temporary halt in funding is not “across-the-board.”

The document states: “Any program that provides direct benefits to Americans is explicitly excluded from the pause and exempted for this review process. In addition to Social Security and Medicare, already explicitly excluded in the guidance, mandatory programs like Medicaid and SNAP will continue without pause. Funds for small businesses, farmers, Pell grants, Head Start, rental assistance, and other similar programs will not be paused.”

• Download comprehensive list of programs potentially impacted by this freeze

While not legal counsel or advice, the following “guidance” was shared by the National League of Cities:
• The funding pause may cause delays or cancellations of projects and may result in economic uncertainty. Local leaders should carefully review their grant agreements for payment obligations.
• The NLC anticipates legal challenges both for project delays and the broader constitutional implications.
• Grantees should inform their agency contacts about any disruptions and document the related costs or losses (which they may want to share with their members of Congress).

The MMA is working with its partners in state government and fellow municipal leagues to coordinate further response.

Massachusetts Attorney General Andrea Campbell is co-leading a multi-state push to halt the freeze.

As a basis for the action, the OMB memo cites a series of executive orders signed by President Donald Trump since his inauguration on Jan. 20, including Protecting the American People Against Invasion, Reevaluating and Realigning United States Foreign Aid, Putting America First in International Environmental Agreements, Unleashing American Energy, Ending Radical and Wasteful Government DEI Programs and Preferencing, Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government, and Enforcing the Hyde Amendment.