Trump’s Freeze on Grant Funding Temporarily Halted by Judge (2)

A federal judge temporarily blocked the Trump administration from enforcing a new directive to halt payments of federal grants, loans and other assistance to an array of programs across the country.

The decision was handed down Tuesday in Washington by US District Judge Loren AliKhan in a lawsuit filed by a group of nonprofits, even as nearly two dozen states filed a separate complaint challenging the directive. Both cases are seeking nationwide injunctions against Trump’s plan.

AliKhan issued her order minutes before the freeze was to take effect. She said the administrative stay was not a ruling on the merits of the case and set a hearing on Feb. 3 to consider whether to order a longer-term block. Her order only applies to funding that federal agencies had already awarded, and would not stop the Trump administration from halting any new grants of money.

The coalition of nonprofit organizations, which sued earlier Tuesday, claimed that even a temporary halt in funding could immediately “deprive people and communities of their life-saving services,” including health care, small business support and programs for the LGBTQ community.

The memo, signed by President Donald Trump’s acting budget director Matthew Vaeth on Monday, was set to take effect Tuesday at 5 p.m. in Washington.

Agencies would have been required to pause “federal financial assistance” and other activities covered by Trump’s early wave of executive actions. Those included limiting foreign aid and federal funding of diversity and equity programs, nongovernmental organizations, “woke” gender-related programming and “green” energy initiatives.

Read More: Trump Administration Sued by Nonprofits Over US Grants Halt

The original memo from the Office of Management and Budget featured broad language, sparking widespread confusion and panic about its scope. The memo stated that direct assistance payments to individuals would continue and that Medicare and Social Security benefits wouldn’t be affected, but it didn’t list other specific carve-outs.

On Tuesday, Democratic state attorneys general reported problems with access to portals used to apply for federal reimbursements from Medicaid, which covers health-care costs for low-income Americans, and the Head Start early childhood development program.

Nearly two dozen state attorneys general filed a joint lawsuit Tuesday evening in federal court in Rhode Island, alleging the policy has caused “immediate chaos and uncertainty for millions of Americans” who rely on federally funded state programs.

New York Attorney General Letitia James said in a statement that “immediately blocking the majority of federal funds to states is unconstitutional and dangerous. Millions of Americans rely on federally funded programs every day to get the health care they need, support their families, and stay safe in their communities.”

The White House budget office circulated a second memo attempting to clarify the reach of the funding pause, saying it was not an “across-the-board” freeze. The OMB said the halt of funds would only affect programs “implicated by” Trump’s executive orders and that Medicaid, Head Start, a nutrition benefits program known as SNAP and other “mandatory programs” would continue to get funding.

The group of nonprofits argued in their lawsuit that OMB lacked legal authority to impose a broad payment stoppage and that the directive violated the US Constitution’s free speech protections because the administration’s goal was to punish “disfavored speakers.”

In the original memo, Vaeth wrote that the “use of federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.”

Agencies were directed to file reports by Feb. 10 on programs or activities that would covered by the funding freeze.

The Justice Department submitted a copy of the second clarification memo to the court and argued it was premature for the judge to intervene “without any meaningful opportunity” to “consider and address the relevant issues.” A government lawyer, Daniel Schwei, argued during the hearing that it wasn’t clear that the nonprofits filing the suit were set to receive federal funds in the coming days or that specific programs would be affected.

AliKhan said she was sympathetic to the government’s argument, but that the lack of details at this point was “in part of the government’s own making,” given the tight turnaround from when the memo was announced to when it was set to take effect.

(Updates with states filing suit over OMB directive.)

To contact the reporters on this story:
Zoe Tillman in Washington at ztillman2@bloomberg.net;
Erik Larson in New York at elarson4@bloomberg.net

To contact the editors responsible for this story:
Ben Bain at bbain2@bloomberg.net

Elizabeth Wasserman, Steve Stroth

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