Skip to main content

Federal Judge Moves to Temporarily Block White House from Imposing Funding Freeze  -NSDA's  rolling updates

January 31, 2025 - This afternoon, a U.S. District Court judge granted a temporary restraining order (TRO) blocking the Trump administration from freezing federal loans, grants and other financial assistance to 22 states. Pursuant to the TRO, the White House “shall not pause, freeze, impede, block, cancel, or terminate [the administration’s] compliance with awards and obligations to provide federal financial assistance to the States, and [the administration] shall not impede the States’ access to such awards and obligations, except on the basis of the applicable authorizing statutes, regulations, and terms.”

The ruling – which was issued by Rhode Island District Court Judge John McConnell Jr. at the urging of 22 Democratic state attorneys general and the District of Columbia – will be in force until the judge can consider the states’ request for a longer injunction. Judge McConnell ordered the states to file the injunction expeditiously.

Notably, today's TRO is the second of two such orders. The first was issued by a separate federal judge earlier this week and is slated to expire next Monday, February 3. At that time, the court is expected to issue a more permanent decision, though the scope of the forthcoming action remains unclear, particularly in light of today’s legal decision.

As expected, Judge McConnell’s TRO was issued despite the fact that the Trump administration took steps earlier this week to rescind the Office of Management and Budget (OMB) memorandum that ordered the funding freeze (OMB M-25-13). In today’s ruling, Judge McConnell noted that the administration’s “alleged rescission of the OMB Directive was in name-only and may have been issued simply to defeat the jurisdiction of the courts.”

Amidst the significant and ongoing confusion over the scope of the OMB memo – and despite the recent intervention of the courts – funding for a number of federal programs remains frozen. In just one example, the Environmental Protection Agency (EPA) has paused grants under the $7 billion Solar for All program, citing a need to comply with the president’s executive order entitled “Unleashing American Energy”.

Looking ahead, Paragon Government Relations will be closely monitoring developments out of Washington, D.C. and will issue pertinent updates, as appropriate.

 

January 29, 2025 — The past 24 hours has been moving at warp speed. As you know, the White House Office of Management and Budget (OMB) issued a Directive placing a temporary freeze on all federal grants and loans (see attached) and today, OMB rescinded it with nuances.  There is a State Attorneys General filing and  two judicial orders,  and we expect to know more in the coming days.  We do not want to flood your inbox due to the changing nature of this issue, but please know, Paragon is closely monitoring and we will send an alert when appropriate and definitive.

Rescission Memo: https://pbs.twimg.com/media/GieqDK6XsAAEdyS.jpg?name=orig

Temporary Pause of Agency Grant, Loan, and Other financial Assistance Programs_1.27.25_OMB.pdf

The Paragon team is closely watching this and has provided a summary memo. (see attached)

Paragon Memo - OMB Directive on Federal Financial Assistance - NSDA - January 28.pdf

This has and continues to be a moving target. Accordingly, the actual scope of potential impacts are very difficult to reliably assess. Currently, as part of the review, there is no federal guidance regarding the decision-making process. However, because federal funding plays a crucial role in supporting special districts that provide essential services—including water, fire protection, healthcare, transportation, and other critical infrastructure—our association is closely engaged on this issue. While some additional guidance has also been released, there’s still considerable uncertainty about the directive's full implications. That said, Paragon's memo provides the latest analysis of the situation and outlines the potential impacts based on the information currently available. 

This transition period brings uncertainty for Special Districts that rely on federal funding which supports infrastructure improvements, emergency response and recovery efforts, and other community services. As we navigate potential financial and operational impacts, we will continue to provide resources and support to our members. NSDA will continue to closely monitor developments and share updates as we learn more on our website and through our Alert System.

 

Join our mailing list