A Federal court judge in Rhode Island issued a temporary restraining order (TRO) on Jan. 31 that blocks the Trump administration and the Office of Management and Budget (OMB) from freezing payments of trillions of dollars from government grant and loan programs – at least as it regards the 22 states and the District of Columbia that petitioned the court to do so.
On Jan. 27, OMB declared a freeze on most Federal grant and loan program payments with an aim to defund Federal programs that don’t align with President Trump’s policy agenda – creating nearly universal confusion as agencies and funding recipients alike scrambled to fall into compliance with the order and understand how it would impact them.
OMB rescinded the memo on Jan. 29, although White House Press Secretary Karoline Leavitt insisted that “the President’s EO’s [executive order] on federal funding remain in full force and effect, and will be rigorously implemented.” OMB’s withdrawal of the instructions that put the freeze into effect followed the states’ petition to the court.
John McConnell, Jr., chief judge of the U.S. District Court for the District of Rhode Island, said the TRO will remain in effect until the court rules on a forthcoming motion from the states for a preliminary injunction to block the OMB funding freeze.
He said the states shall file that motion for a preliminary injunction “expeditiously,” along with evidence to support it. The court said it will hold a preliminary hearing on the preliminary injunction “shortly at a day and time that is convenient to the parties and the Court.”
While the TRO remains in effect, the judge said OMB “shall not pause, freeze, impede, block, cancel, or terminate” the states’ “compliance with awards and obligations to provide federal financial assistance to the States,” and that OMB “shall not impede the States’ access to such awards and obligations, except on the basis of the applicable authorizing statutes, regulations, and terms.”
The judge also called out the White House’s insistence that the funding freeze policy remained in effect, saying that OMB cannot reissue or implement the freeze “under any other name or title” or through any other agency controlled by defendants – which include President Trump and numerous Federal agencies – “such as the continued implementation identified by the White House Press Secretary’s statement of January 29, 2025.”
The states filing the suit are New York, California, Illinois, Rhode Island, New Jersey, Massachusetts, Arizona, Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland, Michigan, Minnesota, Nevada, North Carolina, New Mexico, Oregon, Vermont, Washington, and Wisconsin.
Court’s Thinking Supports States
In issuing the TRO, Judge McConnell wrote that the states “are likely to succeed on the merits of some, if not all, their claims.”
The states’ complaint, the court said, states five counts against the Trump administration.
The first of those claims is that the funding freeze violated the Administrative Procedures Act (APA) “because Congress has not delegated any unilateral authority to the Executive to indefinitely pause all federal financial assistance without considering the statutory and contractual terms governing these billions of dollars of grants.”
The second count alleges that “the Executive’s actions violate the APA because the failure to spend funds appropriated by Congress is arbitrary and capricious in multiple respects.”
The third count alleges “that the failure to spend funds appropriated by Congress violates the separation of powers because the Executive has overridden Congress’ judgments by refusing to disburse already-allocated funding for many federal grant programs.”
The fourth alleges a violation of the Spending Clause in the Constitution.
And the fifth alleges that the freeze violates the presentment, appropriations, and take care clauses of the Constitution, the latter, the court said, stating that the Executive must “take care that the laws be faithfully executed …”
Judge McConnell showed little sympathy for the Trump administration’s funding freeze, saying that “the Executive’s action unilaterally suspends the payment of federal funds to the States and others simply by choosing to do so, no matter the authorizing or appropriating statute, the regulatory regime, or the terms of the grant itself. The Executive cites no legal authority allowing it to do so; indeed, no federal law would authorize the Executive’s unilateral action here.”
The judge continued, “Congress has instructed the Executive to provide funding to States based on stated statutory factors – for example, population or the expenditure of qualifying State funds. By trying to impose certain conditions on this funding, the Executive has acted contrary to law and in violation of the APA.”
“The Executive Orders threaten the States’ ability to conduct essential activities and gave the States and others less than 24 hours’ notice of this arbitrary pause, preventing them from making other plans or strategizing how they would continue to function without these promised funds,” the judge said.
“Congress appropriated many of these funds, and the Executive’s refusal to disburse them is contrary to congressional intent and directive and thus arbitrary and capricious,” he continued. “Congress has not given the Executive limitless power to broadly and indefinitely pause all funds that it has expressly directed to specific recipients and purposes and therefore the Executive’s actions violate the separation of powers,” the judge said.
He added that the states “put forth sufficient evidence at this stage that they will likely suffer severe and irreparable harm if the Court denies their request to enjoin enforcement of the funding pause,” and that they supplied numerous examples of programs ranging from “highway planning and construction, childcare, veteran nursing care funding, special education grants, and state health departments” that would be impacted by the freeze.
The judge further noted that the funding freeze would “hurt current disaster relief efforts” in North Carolina and California.
Moot Claim Rejected
Finally, the court rejected the Trump administration’s claim that the court action is moot because OMB rescinded its funding freeze memo. “The evidence shows that the alleged rescission of the OMB Directive was in name-only and may have been issued simply to defeat the jurisdiction of the courts. The substantive effect of the directive carries on.”
“Based on the Press Secretary’s unequivocal statement and the continued actions of Executive agencies, the Court finds that the policies in the OMB Directive that the States challenge here are still in full force and effect and thus the issues presented in the States’ TRO motion are not moot,” the judge said.
