OMB’s Freeze on Federal Funding on Hold for Now

Court Issues Temporary Restraining Orders Against Federal Funding Freeze in Response to OMB Memorandum M-25-13

On January 27, 2025, Acting Director of the Office of Management and Budget (“OMB”) Matthew J. Vaeth issued memorandum M-25-13 directing federal agencies to “temporarily pause all activities related to [the] obligation or disbursement of all Federal financial assistance, and other relevant agency acti[vities] that may be implicated by the [President’s] executive orders, including, but not limited to, financial assistance for foreign aid,  nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” The pause was to become effective on January 28, 2025.

Shortly before the temporary pause was to take effect, Judge Loren L. Alikhan of the US District Court for the District of Columbia, issued an order temporarily enjoining (“TRO”) the federal funding pause in an action filed that date by several nonprofit organizations against OMB and Acting Director Vaeth (“Non Profits’ Action”) arguing that OMB’s action violated the Administrative Procedure Act, 5 U.S.C. § 701 et seq.  U.S.D.C., Dist. of Columbia, Civil Action No. 25 - 239 (LLA).  The TRO prohibited the defendants, including President Trump, acting OMB Director Vat and several federal agencies “from implementing OMB Memorandum M-25-13 with respect to the disbursement of Federal funds under all open awards” until 5:00 p.m. on February 3, 2025. The court also set a hearing on plaintiffs’ TRO motion for 11:00 a.m. on February 3, 2025.

On January 29, the day after the court in the Non-Profits’ Action entered its administrative stay, OMB issued a new memorandum (M-25-14) that purported to rescind M-25-13. The new memorandum consisted of two sentences: “OMB Memorandum M-25-13 is rescinded. If you have questions about implementing the President’s Executive Orders, please contact your agency General Counsel.”  Shortly after this “rescission” was issued, White House Press Secretary Karoline Leavitt announced from her official social media account that the new memorandum was “NOT a rescission of the federal funding freeze.” Karoline Leavitt, X (formerly Twitter) (Jan. 29, 2025), https://perma.cc/99C4-5V6G. Instead, she stated that “[i]t [was] simply a rescission of [OMB memorandum M-25-13].” Id. She further explained that the purpose of the rescission was “[t]o end any confusion created by the court’s injunction.”

On the same day the Non Profits’ Action was filed, and several hours before the OMB memorandum’s pause was to go into effect, twenty-two states and the District of Columbia filed suit in the U.S. District Court for the District of Rhode Island also seeking a TRO to halt implementation of OMB memorandum M-25-13. See Compl., New York v. Trump, No. 25-CV-39 (D.R.I. Jan. 28, 2025), ECF No. 1. The district court scheduled a hearing for January 29 at 3:00 p.m.  Following the hearing, which took place after OMB had “rescinded” memorandum M-25-13, the court granted the States’ request and issued a TRO on January 31, 2025.  The TRO prohibited the defendants from “paus[ing], freez[ing], imped[ing], block[ing], cancel[ing], or terminat[ing] [their] compliance with awards and obligations to provide federal financial assistance to the [plaintiff] States.”  The order also prohibited the defendants “from reissuing, adopting, implementing, or otherwise giving effect to the [OMB memorandum M-25-13] under any other name or title, . . . such as the continued implementation identified by the White House Press Secretary’s statement of January 29, 2025.”

Finally, at the scheduled February 4, 2025 hearing to consider the TRO on the Non Profits’ Action, Judge Alikhan entered an order further extending the TRO against the temporary funding freeze.  Among other orders, the court enjoined defendants “from implementing, giving effect to, or reinstating under a different name the directives in OMB Memorandum M-25-13 with respect to the disbursement of Federal funds under all open awards”.  The court further ordered the parties to meet and confer and file a joint status report proposing a preliminary injunction briefing schedule on or before February 7, 2025.  A full copy of the order is available here.  Any extension of the injunction implemented by the February 3rd TRO will be considered at the preliminary injunction hearing to be set at a future date.