Yesterday, a federal judge from the Federal District Court for the District of Columbia issued an order blocking the White House from imposing a freeze on federal grants, loans, and financial assistance programs through an order by the White House Office of Management and Budget. Additional hearings have been scheduled on February 7, and a copy of the order can be found here. Last week, in a separate proceeding in the Federal District Court for the District of Rhode Island, a U.S. District Court judge granted a temporary restraining order (TRO) blocking the Trump administration from freezing federal loans, grants and other financial assistance to 22 states. Pursuant to the TRO, the White House “shall not pause, freeze, impede, block, cancel, or terminate [the administration’s] compliance with awards and obligations to provide federal financial assistance to the States, and [the administration] shall not impede the States’ access to such awards and obligations, except on the basis of the applicable authorizing statutes, regulations, and terms.”
The ruling – which was issued by Rhode Island District Court Judge John McConnell Jr. at the urging of 22 Democratic state attorneys general and the District of Columbia – will be in force until the judge can consider the states’ request for a longer injunction. Judge McConnell ordered the states to file the injunction expeditiously.
As expected, Judge McConnell’s TRO was issued despite the fact that the Trump administration took steps earlier in the week to rescind the Office of Management and Budget (OMB) memorandum that ordered the funding freeze (OMB M-25-13). In the January 31 ruling, Judge McConnell noted that the administration’s “alleged rescission of the OMB Directive was in name-only and may have been issued simply to defeat the jurisdiction of the courts.”
Amidst the significant and ongoing confusion over the scope of the OMB memo – and despite the recent intervention of the courts – as of January 31, funding for a number of federal programs remained frozen. In just one example, the Environmental Protection Agency (EPA) paused grants under the $7 billion Solar for All program, citing a need to comply with the president’s executive order entitled “Unleashing American Energy”.
Looking ahead, the National Special Districts Association, of which CSDA is a founding member, will be closely monitoring developments out of Washington, D.C. through our relationship with Paragon Government Relations, and will issue pertinent updates as appropriate.
Rolling History of this Issue
Posted January 29, 2025 — The past 24 hours has been moving at warp speed. The White House Office of Management and Budget (OMB) issued a Directive placing a temporary freeze on all federal grants and loans and later, OMB rescinded it with nuances. There is a State Attorneys General filing and two judicial orders, and we expect to know more in the coming days. We do not want to flood your inbox due to the changing nature of this issue, but please know, the National Special Districts Association and Paragon Government Relations are closely monitoring and will send an alert when appropriate and definitive.
This has and continues to be a moving target. Accordingly, the actual scope of potential impacts are very difficult to reliably assess. Currently, as part of the review, there is no federal guidance regarding the decision-making process. However, because federal funding plays a crucial role in supporting special districts that provide essential services—including water, fire protection, healthcare, transportation, and other critical infrastructure—our association is closely engaged on this issue. While some additional guidance has also been released, there’s still considerable uncertainty about the directive's full implications. That said, Paragon's memo provides the latest analysis of the situation and outlines the potential impacts based on the information currently available.
This transition period brings uncertainty for special districts that rely on federal funding which supports infrastructure improvements, emergency response and recovery efforts, and other community services. As we navigate potential financial and operational impacts, we will continue to provide resources and support to our members. NSDA will continue to closely monitor developments and share updates with its members as we continue to learn more.