First Circuit keeps Trump funding freeze on ice

(CN) — A First Circuit panel denied the Trump administration’s motion to stay a preliminary injunction on its broad federal funding spending freeze, which was outlined in a January memo from the White House’s budget office.

A federal judge had issued the preliminary injunction, which prevents the Trump administration from enforcing the funding freeze, after 23 states sued the federal government.

In a 48-page decision issued late Wednesday night, the panel denied Trump’s motion to stay the injunction pending appeal, finding that the president failed to demonstrate he is likely to succeed on the merits of his appeal.

In its motion for a stay, the Trump administration argued that the states leveraged their challenge against the funding freeze into “broad-based relief against innumerable funding decisions at 23 federal agencies” and that such broad challenges were impermissible.

But the panel disagreed, finding the states’ claims challenge discrete final agency actions collectively referred to as the “federal funding freeze” imposed by the Trump administration.

“The claims themselves, like the motion, assert that the discrete final agency actions are the decisions by the agency defendants to implement broad, categorical freezes on obligated funds,” U.S. Circuit Chief Judge David Barron, a Barack Obama appointee, wrote for the panel.

The panel also found the states have endured substantial harms as a result of the funding freeze including the obligation of new debt, the inability to pay existing debt, and impediments to planning and hiring.

According to the panel, the Trump administration failed to show in its motion how and when the states could recoup from the loss of these funds.

“Even if we were to set aside the harms to the plaintiff-states’ residents, the district court still found a number of harms that the plaintiff-states themselves would irreparably suffer,” Barron wrote.

The Trump administration’s directive to broadly freeze federal funding came via a Jan. 27 memo from the White House’s budget office that ordered federal agencies to “temporarily pause all activities related to obligation or disbursement of all federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the Green New Deal.”

The memo caused a panic among state governments, leading a coalition of 23 state attorneys general to file the lawsuit in Rhode Island federal court to block the freeze. The states say funding for several Inflation Reduction Act and Infrastructure Investment and Jobs Act programs were among the programs blocked by the Trump administration.

This includes, the states say, the Climate Pollution Reduction Grant — a $5 billion EPA initiative that supports states, tribes and local governments in planning and implementing greenhouse gas reduction measures.

While two preliminary injunctions have been ordered by federal judges on Trump’s widespread funding freeze — including in Rhode Island and the District of Columbia — many organizations and state governments say they are still locked out of federal funding.

U.S. Circuit Judge Lara Montecalvo and U.S. Circuit Judge Julie Rikelman, both Joe Biden appointees, joined the decision.

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