Federal Judge Issues Restraining Order Halting Federal Spending Freeze

On Jan. 31, 2025, a federal district court in Rhode Island entered a temporary restraining order (“TRO”) prohibiting all federal agencies from pausing, canceling or terminating any awards or obligations as directed by an Office of Management and Budget (“OMB”) Memorandum published by the Trump administration on Jan. 27, 2025. The TRO applies to all federal financial assistance programs and requires such agencies to comply with the TRO immediately.

A summary of the key terms is provided below:

1. Federal agencies cannot pause, freeze, impede, block, cancel or terminate any
   awards or obligations on the basis of the OMB Memorandum, or on the basis of the
   President’s recently issued Executive Orders.
2. This prohibition applies to all awards or obligations — not just those involving the
   plaintiff states in the above-referenced case — and also applies to future assistance (not just current or existing awards or obligations).
3. Agencies may exercise their own authority to pause awards or obligations, provided
   agencies do so purely based on their own discretion — not as a result of the OMB
   Memorandum or the President’s Executive Orders — and provided the pause complies with all notice and procedural requirements in the award, agreement, or other
   instrument relating to such a pause.

If the OMB Memorandum is allowed to proceed once the TRO expires, the Trump administration would be allowed to freeze funding that had already been approved by Congress. The freeze would not include assistance received directly by individuals such as Medicare, Social Security Benefits or Section 8 vouchers, but would include all assistance in the form of grants, loans, cooperative agreements, funding for housing construction, preservation of affordable housing, community development programs and many more.

It is important to note the temporary nature of this order, as the litigation is ongoing. We advise all agencies and recipients of federal financial assistance to seek guidance from legal counsel with any questions about the impact of this OMB Memorandum and TRO.