States, nonprofit groups pursue lawsuits to stop grant freeze

Michael Macagnone, CQ-Roll Call on Jan 28, 2025

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WASHINGTON — A group of states and a group of national nonprofits announced separate legal challenges Tuesday to halt the Trump administration’s vast freeze of federal grant funding, arguing that the move violated federal administrative law.

A lawsuit from the National Council of Nonprofits, American Public Health Association, Main Street Alliance and SAGE appeared to be the first of what is expected to be a flood of lawsuits over the Trump administration’s decision to temporarily halt billions of dollars in federal funding effective Tuesday at 5 p.m.

The groups argued that the Office of Management and Budget violated federal administrative law by arbitrarily halting funding that the nonprofits or their members were already qualified to receive.

“Halting this funding would lead to pauses of important community programs, food and safety assistance, and lifesaving research, among other things: even a short pause could be devastating, decimating organizations, costing lives, and leaving neighbors without the services they need,” the lawsuit states.

The fight was triggered by the distribution of a memo from OMB on Monday night seeking to halt all federal grant and loan disbursements, pending review on whether those programs complied with Trump’s executive orders on immigration, abortion and rolling back diversity and discrimination protection efforts.

“In practice, the Memo purports to eradicate essentially all federal grant programs,” the lawsuit states.

The groups asked a federal judge to issue a temporary restraining order to stop OMB from taking any steps to implement the freeze and to eventually set aside the memo as unlawful.

At a news conference announcing a lawsuit from New York and other states, New York Attorney General Letitia James said the pause would ripple across dozens of program, ranging from Head Start to drug interdiction funding.

“There is no question this policy is reckless, dangerous, illegal and unconstitutional,” the Democrat said. “This policy will disrupt the lives of millions of Americans in New York and nationwide.”

James said there was widespread confusion across the country about the programs affected by the pause, including early childhood education in Michigan, childhood development block grants in Maryland and Medicaid reimbursement in numerous states, including New York. James said the states, including California, New York, Illinois, Massachusetts, New Jersey and Rhode Island, would seek a court order to stop implementation of OMB policy and keep funding flowing.

White House press secretary Karoline Leavitt clarified the restrictions Tuesday, saying that the freeze would not apply to any federal programs not covered by the executive orders. A spreadsheet distributed by OMB on Tuesday included some 2,600 programs that may be affected by the review.

The groups argue in their lawsuit that the pause violates federal administrative law, which means major executive decisions should be subject to a normal rule-making process. The lawsuit says that OMB ignored the “catastrophic practical consequences” of a pause to the disbursement of billions of dollars in federal funds, rather than an ongoing review of funds as they go out.

The lawsuit says the Trump administration’s action sought to punish groups with disfavored political viewpoints, like the American Public Health Association.

The Trump administration would “force it to abandon, as a condition of federal funding, its viewpoints and beliefs that working to achieve equity in health status is essential not only to APHA’s own mission but to the discipline of public health itself.”

The memorandum “makes clear that recipients of federal funding who are determined to have expressed or advocated for — or perhaps even merely associated themselves with — political, personal, and moral viewpoints disfavored by the administration will not receive further funding through federal financial assistance programs. For them, the ‘pause’ is anything but,” the lawsuit states.

Trump’s flurry of early executive orders have already hit one courtroom snag, as a federal judge in Washington put a temporary pause on his effort to overturn birthright citizenship through executive order.

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