The Office of Management and Budget (OMB) declared an abrupt reversal today of its Jan. 27 order to freeze trillions of dollars worth of Federal grant and loan program payments after the short-lived order created nearly universal confusion over and drew opposition from several states who successfully petitioned a Federal judge to block the order from taking effect.
The attempted freeze was set to take effect at 5 p.m. on Jan. 28 to ensure that government grant and loan programs were compliant with recent executive orders from President Trump.
A two-page memo sent out Monday night by OMB directed agencies to “complete a comprehensive analysis of all of their Federal financial assistance programs” to identify programs that could conflict with a string of executive orders issued by the president during his first week in office.
OMB also told Federal agencies to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance.”
While the memo said that the freeze aimed to prevent aid to programs that supported “nongovernmental organizations, DEI [diversity, equity, and inclusion], woke gender ideology, and the green new deal,” it left agencies and Federal aid recipients unsure of whether their funding would be cut, and of next steps.
A Federal judge on Jan. 29 temporarily blocked the funding freeze pending an additional hearing on Feb. 3 to determine what will happen next. It’s not clear whether today’s action to rescind the funding freeze makes that Feb. 3 hearing moot.
Here’s a look at what some Federal agencies are doing following OMB’s aid freeze instruction.
The Department of Veterans Affairs said that all 44 of its financial assistance programs and operations would continue without interruption.
The National Science Foundation (NSF), however, said it was pausing all review panels, new awards and payments of funds under open awards until the agency could complete a review and analysis of its programs.
“All NSF grantees must comply with these executive orders, and any other relevant executive orders issued, by ceasing all non-compliant grant and award activities,” said NSF in an update on its new webpage to disseminate information on carrying out EOs.
Review panels will be scheduled to a “future date as appropriate,” an NSF spokesperson told MeriTalk, adding that the delay will allow the agency to “make the best use of everyone’s time and resources as we continue to develop guidance to ensure compliance.”
The Cybersecurity and Infrastructure Security Agency (CISA) told MeriTalk that it was deferring to the White House regarding continued funding for its programs.
Dozens of programs and initiatives funded by the Federal government are used to bolster cyber defenses, build the cyber workforce, and support research and development in emerging technologies such as artificial intelligence and quantum computing.
Several Federally funded cyber-related programs are up for review, according to a spreadsheet by OMB which directs agencies to complete and add their review results by Feb. 10. Programs to be reviewed include the Department of Defense’s (DoD) Information Security Grants, GenCyber Grants Program, and the CyberSecurity Core Curriculum.
Programs overseen by the Department of Homeland Security (DHS) – which includes CISA – are the CISA Cyber Security Awareness Campaign, and the State and Local Cybersecurity Grant Program and the Tribal Cybersecurity Grant Program.
The Department of Energy’s Energy Security & Emergency Response (CESER) program – which leads the department’s efforts to fortify cyber resiliency and security of U.S. energy infrastructure – is also on the list.
One major pipeline for tech-related Federal funding has been through the CHIPS and Science Act approved by Congress in 2022, and the subject of President Biden’s subsequent Executive Order 14080.The CHIPS and Science Act made $52 billion of funding available to incentivize semiconductor manufacturers to establish new manufacturing operations in the United States.
While President Trump has already rolled back several Biden executives orders including one governing government’s approach to AI tech, the EO related to the CHIPS Act has remained intact so far, despite Trump’s promises on the campaign trail to get rid of the program.
However, the funding freeze threatens to prevent the program from continuing after the program was left on the chopping block by OMB, which listed it as a program requiring review.
Arizona State University (ASU) Research Park was named earlier this month by the Department of Commerce and its Natcast nonprofit as the third location in the United States for the establishment of a CHIPS for America research and development center. No announcements had been made about ASU receiving a specific amount of funding before this week’s proposed freeze.
“ASU is aware of the federal government’s recent announcement of a temporary pause on certain federal financial assistance programs,” an ASU spokesperson told MeriTalk. “The university will continue to actively evaluate the impact of the temporary pause on federal financial assistance as it unfolds.”
Tech Hubs – also authorized under the CHIPS and Science Act – are overseen by the Department of Commerce’s Economic Development Administration (EDA) and aim to develop clusters of businesses, communities, and higher education institutions focused on accelerating technology deployment across America.
“We are aware of the federal grant funding freeze and are closely monitoring these developments at this time,” a Southern Research Institute spokesperson told MeriTalk. The Southern Research Institute was one of six recipients selected by the EDA earlier this month to share approximately $210 million in funding for the designated Tech Hubs.
U.S. District Judge Loren AliKhan ordered the Trump administration to not block “open awards” until at least Feb. 3, noting that her temporary ruling was intended to “maintain the status quo,” and doesn’t prevent the administration from freezing funding to new programs or restarting funding to programs that have already ended.
The funding freeze sparked outcry from legislators and legal experts who called the move unconstitutional and said that the action overstepped the president’s authority to override congressionally passed appropriations, which is considered unlawful under the Impoundment Control Act of 1974. The act was passed after former president Richard Nixon attempted to withhold congressionally appropriated funds.
“Donald Trump, during his first term, offered a unique interpretation of Article Two, the portion of the Constitution dealing with the presidency, he said, and I just about quote, Article Two means that I can do whatever I want,” said William Galston, a senior fellow and Ezra K. Zilkha chair for Governance Studies, at the Center for Effective Public Management, during a Brookings event on Jan. 29 held to discuss the current Trump presidency.
“I don’t think he’s changed his mind about that, however, there are other pieces of the political system that may have something to say about it,” he said.
