Second federal judge set to block Trump federal funding freeze

WASHINGTON (CN) — A federal judge on Monday indicated that she would place a temporary restraining order on the Trump administration’s controversial move to freeze all federal funding, expressing concern that nonprofit organizations are still struggling to receive vital funding despite prior court intervention.

U.S. District Loren AliKhan rejected the Justice Department’s argument that the case should be considered moot after a Rhode Island federal judge issued a similar order on Friday, noting that she had received declarations as recent as Sunday indicating continued difficulties in accessing funding.

Monday’s hearing comes less than a week after the Joe Biden appointee placed a temporary stay on the White House’s Office of Management and Budget’s memo directing a federal funding freeze following an emergency hearing, halting the move just minutes before it was set to go into effect.

A federal judge in Rhode Island, U.S. District Judge Jack McConnell, granted a temporary restraining order sought by 23 state attorneys general and the District of Columbia on Friday.

The White House rescinded the memo on Wednesday, which the Justice Department argued to McConnell should make the litigation moot. The Barack Obama appointee disagreed, finding the reversal was “in name only” and seemed to have been issued intentionally to sink such lawsuits.

In his order, McConnell barred the Trump administration from “reissuing, adopting, implementing or otherwise giving effect to the OMB directive under any other name or title or through any other defendants.”

However, the scope of McConnell’s order was unclear.

AliKhan said that, in her reading of McConnell’s order, it appeared to only apply to federal funding going to the states and Washington.

Justice Department attorney Daniel Schwei said the government understood the order to cover all sorts of federal funding, and further reason that a restraining order from AliKhan would be inappropriate.

Democracy Forward attorney Kevin Friedl, representing the National Council of Nonprofits, the American Public Health Association, the Main Street Alliance and LGBTQ care group SAGE, argued that the order cannot be all-encompassing because advocacy groups continued to face difficulties just this weekend.

Friedl specifically cited a declaration filed on Sunday by an unnamed nonprofit that provides support to people with disabilities to remain in their homes rather than be placed in an institution, which was still unable to receive funds from the federal Payment Management System.

The nonprofit said that because of the funding freeze, it was forced to lay off three of its five employees and drastically reduce treatments, which presented a “dire situation” to their clients.

While the nonprofit had enough money to continue operating for up to three weeks, it would no longer be able to provide services like driving an 86-year-old woman to dialysis treatments, providing employment coaching to a 19-year-old man with intellectual disabilities or giving assistance to a 63-year-old woman with orthopedic, hearing and intellectual disabilities.

Schwei argued the order made clear that the OMB was simply directing agencies to review any programs that would implicate President Donald Trump’s executive orders related to diversity, equity and inclusion policies, foreign aid, environmental justice and “woke gender ideology."

He added that any funding frozen outside the parameters specified in the memo are actions taken by independent agencies, and thus the agencies, not the OMB, should be targeted with lawsuits to challenge their funding decisions.

AliKhan appeared to reject that argument, noting that the agencies acted following the OMB’s directions last week rather than immediately after several of Trump’s other executive orders that implicated federal spending.

In support of the temporary restraining order, Friedl argued the freeze is a clear violation of the First Amendment, targeting federal grantees not for their activities, but for their political stances which the administration has deemed “woke.”

“The memo is and has been understood by clients and members as a threat, as to the things they’ve said and people they’ve associated with, as reasons funding may be rescinded,” Friedl said.

The funding freeze, which would impact an estimated $3 trillion, was first revealed late on Jan. 27 in a leaked memo from the OMB.

The memo, written by acting OMB Director Matthew Vaeth, instructed federal agencies to pause activities that might implicate Trump’s executive orders related to foreign aid, nongovernmental organizations, DEI policies, “woke gender ideology” and the Green New Deal.

Vaeth wrote in the memo that the agencies would have to submit reports by Feb. 10, detailing each program affected by the pause and could not issue any new grants, disburse any federal funds under active grants, or any “relevant agency actions” that may be implicated by Trump’s executive orders.

“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,” Vaeth wrote.

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