Second judge prepares to block Trump’s federal grant freeze

A second federal judge signaled she will block the Trump administration from implementing an across-the-board pause on federal grants later Monday.

U.S. District Judge Loren AliKhan at the conclusion of a 90-minute hearing in Washington, D.C., expressed concern the plan is still in force despite the rescission of the Office of Management and Budget (OMB) memo.

The Justice Department, which is representing the Trump administration, disputed that the funds targeted in the OMB memo were being restricted, arguing instead that the only funds that remain frozen are those included in President Trump's executive orders.

Still, the judge said the plaintiffs had proven certain funding sources outside of executive order parameters were inaccessible.

“I don't want to hide the ball. I will note that I am leaning in favor of finding this not moot, because we do have, as recently as last night, individuals who are unable to access funding platforms,” AliKhan said.

She asked the nonprofits and health organizations suing to propose language for the scope of her order by early Monday afternoon, which they quickly did, and the government to respond within three hours. AliKhan said she expects to sign off before her current order that preserves the status quo expires at 5 p.m. EST.

"Until my order issues, don't take anything to the bank or to the payment portal, as it may be,” AliKhan cautioned.

Her order would add to an existing block issued Friday by a judge in favor of 22 Democratic-led states. Both lawsuits challenge last week’s OMB memo that sweepingly instructed federal agencies to pause grants and loans.

The Justice Department has sought to stave off the two lawsuits by arguing the cases are moot now that the memo has been rescinded.

Justice Department attorney Daniel Schwei said at Monday’s hearing that any remaining funding freezes are instead derived from Trump’s executive orders, not from OMB’s memo, pointing to provisions that freeze federal aid for 90 days and pause certain grants that support migrants.

“Just because funding may be paused, that does not mean that it is attributable to the now-withdrawn OMB memo,” Schwei said.

The plaintiffs raised alarm that the widespread pause is still moving ahead. They pointed to a statement from the White House press secretary and sworn affidavits from individuals and businesses expressing issues retrieving funds from agencies like the National Science Foundation.

“Her small business does, you know, scientific research and development,” said Kevin Friedl, senior counsel at Democracy Forward, a left-leaning legal group that represents the plaintiffs and is involved in four other pending lawsuits challenging Trump’s recent executive actions.

“The government has never suggested that basic physics research is somehow connected with wokeness or Marxist equity, or any of the other targets of the OMB memo, and they've never come forward with any other explanation for that or many other of the freezes that we’ve documented extensively,” Friedl continued.

The judge cited those declarations as she previewed her ruling, signaling the challengers had met the four-factor test courts use when granting such requests for emergency relief.

“Organizations that have nothing to do with the executive orders, that do things like install wheelchair ramps or support small businesses, have seen a risk of laying people off and potentially completely collapsing because they're not receiving the funds. And I think that is sufficient,” AliKhan said.

Schwei acknowledged some of the problems but insisted the agencies had promptly corrected course. He stressed the plaintiffs couldn’t seek the courts’ intervention over the now-rescinded memo, contending they instead would need to directly sue over Trump’s executive orders by challenging a specific agency’s decision to freeze funding.

“It would at least be a manageable lawsuit,” he said.

“Here, they are challenging the precursor memo and saying, because we challenged the memo, this court now has authority to compel disbursement of federal financial assistance throughout the entire federal government. And that is not a tenable position,” Schwei added.

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