A federal judge on Tuesday indefinitely blocked the Trump administration’s freeze of federal funding, dealing a stark blow to President Trump’s sweeping efforts to realign government spending with his agenda.
U.S. District Judge Loren AliKhan enjoined the government from “implementing, giving effect to, or reinstating under a different name” the White House budget office’s directive to freeze federal assistance while the court reviews the spending.
“In the simplest terms, the freeze was ill-conceived from the beginning,” AliKhan wrote. “Defendants either wanted to pause up to $3 trillion in federal spending practically overnight, or they expected each federal agency to review every single one of its grants, loans, and funds for compliance in less than twenty-four hours. The breadth of that command is almost unfathomable.”
A coalition of nonprofits challenged the Office of Management and Budget’s (OMB) directive last month. Though the memo that spurred the lawsuit was rescinded, the coalition has argued that the administration maintains an interest in carrying out the same policy as part of its broader efforts to dramatically reshape the federal government.
“It’s an administrative priority to end wokeness, and they’re backing that with this cudgel of withholding billions — perhaps trillions — in funding,” Kevin Friedl, a lawyer for the plaintiffs, said during a hearing on the preliminary injunction last week.
The lawsuit was filed by the National Council of Nonprofits; SAGE, a pro-LGBTQ advocacy organization for older adults; the American Public Health Association; and small-business group Main Street Alliance. They are represented by Democracy Forward, a left-leaning legal organization that has frequently battled Trump in the courts.
AliKhan previously blocked the administration from keeping disbursements paused while she weighed whether to issue a preliminary injunction.
On Tuesday, she said the plaintiffs had “more than met their burden” for further relief.
“Many organizations had to resort to desperate measures just to stay operational,” AliKhan wrote. “The pause placed critical programs for children, the elderly, and everyone in between in serious jeopardy. Because the public’s interest in not having trillions of dollars arbitrarily frozen cannot be overstated, Plaintiffs have more than met their burden here.”
The challengers argued that more extensive relief is necessary because none of the concerns present when the judge entered a temporary restraining order have gone away, pointing to Trump’s continued interest in realigning government spending with his goals.
The Justice Department, however, said the case is moot because the memo was rescinded.
“A general interest in carrying out a policy is not enough to keep a case alive,” DOJ lawyer Daniel Schwei said at the hearing.
Schwei called it speculative to assume the nonprofits would lose future funding if the judge’s block was lifted and hypothetical that any additional freezes would be put in place, pointing to the fact that the plaintiffs’ funding is now available to them.
He contended that it’s “rational” for a new administration to temporarily pause funding while assessing its priorities.
“It’s a remarkable assertion to say the Office of Management and Budget cannot help agencies manage their budget,” Schwei said.
The nonprofits forcefully objected to the idea that OMB could execute the sweeping freeze without an executive order from Trump, purporting it would be “quite a large elephant in a small mouse hole.”
The nonprofits’ lawsuit is one of three challenges to the OMB memo that sparked widespread confusion by ordering agencies to pause federal grants and loans.
After the memo was rescinded, White House press secretary Karoline Leavitt cautioned on social media that the administration’s rescission only referred to the memo itself, not the entire freeze, spurring more confusion.
The Justice Department has also argued the administration still plans to freeze some funds in accordance with Trump’s flurry of executive orders that target issues such as gender identity, foreign aid, and diversity, equity and inclusion initiatives.
A coalition of Democratic state attorneys general, led by New York Attorney General Letitia James (D), took legal action against the White House budget office over the directive.
In that lawsuit, a different federal judge ordered the government to unfreeze federal grants, and after finding the administration had not abided by his directive, ordered compliance. He cited Leavitt’s post as evidence the reversal was “in name only.” The Justice Department appealed those rulings.
Pennsylvania Gov. Josh Shapiro (D) also sued the Trump administration, saying the federal government is still suspending grants to his state despite court orders in the other two cases. He has not yet sought any emergency relief.