Responding to the petition of several state Attorneys General, U.S. District Judge John “Jack” McConnell Jr. issued an Enforcement Order on Monday, February 10, clarifying the scope of a Temporary Restraining Order (TRO) issued on January 29, and ordering the Trump Administration to the release federal funds to comply with the earlier order.
Federal grant programs that remained frozen after Judge McConnell’s TRO included a slew of funds from the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA), such as the Climate Pollution Reduction Grant, Solar for All, Drinking Water State Revolving Funds, and Home Electrification and Appliance Rebates Program. Programs in at least nine other agencies were also frozen. On Tuesday, a federal appeals court denied the Trump Administration’s request to stay the TRO.
How We Got Here
Within the first few hours of his presidency, President Trump signed a flurry of executive orders, directing federal agencies to freeze all obligations and disbursements and undertake funding reviews, including the Unleashing American Energy executive order, which specifically ordered a pause on fundings appropriated through the IRA. The Office of Management and Budget (OMB) quickly published a memo to heads of federal agencies ordering a pause on disbursement of funding under the IRA and IIJA, consistent with the Unleashing American Energy executive order.
A week later, the OMB published another memo ordering a temporary pause “all activities related to obligation or disbursement of all Federal financial assistance” consistent with the slew of executive orders and enforceable within 24 hours; however, before the OMB memo took effect, U.S. District Court Judge Loren AliKhan issued an administrative stay of the temporary funding freeze, and the OMB subsequently rescinded its memo. In the immediate aftermath, the White House reiterated that the executive orders remained in “full force and effect” and will be implemented by all federal agencies.
In a separate lawsuit brought by 22 states and the District of Columbia, Judge McConnell issued a TRO preventing the Trump Administration from freezing federal spending. He argued the TRO was necessary because even though the OMB memo had been rescinded, “The evidence shows that the alleged rescission of the OMB directive was in name only and may have been issued simply to defeat the jurisdiction of the courts…The substantive effect of the directive carries on.” As evidence, he pointed to the White House’s statements and an email from an Environmental Protection Agency (EPA) official that said, “until further notice, funds will not be available for this grant.” The EPA email explained that the agency was working to align with President Trump’s priorities and the will of the American people; thus, “the agency is temporarily pausing all activities related to the obligation or disbursement of EPA Federal financial assistance at this time.”
The Administration’s Response to the TRO
By instruction of the TRO, the Department of Justice circulated a Notice of Court Order to federal agencies that they are prohibited from pausing, freezing, impeding, blocking, canceling, or terminating “any awards or obligations on the basis of the OMB Memo, or on the basis of the President’s recently issued Executive Orders.” However, the DOJ instructions provided that agencies could exercise their own discretion to freeze funding.
Reporting suggests that at least some federal accounts, particularly related to the IRA and within the EPA, remained frozen in the last week. For example, Colorado’s governor and senators reported more than $570 million of obligated funds being withheld from private and public entities within the state. Additionally, there was reports of abnormal delays and in some instances funding was entirety inaccessible coming from agencies such as the EPA, Department of Energy (DOE), Department of Transportation, and Commerce Department, according to the Motion for Enforcement.
The Enforcement Order
Based on evidence that federal accounts were still frozen, on Monday, February 10, Judge McConnell issued an Enforcement Order, instructing the Administration to immediately restore frozen funding, end any federal pause, and stop any pause or freeze. The Enforcement Order specifically directs the Administration to release any withheld funds appropriated by the Inflation Reduction Act, which were frozen under the Unleashing American Energy executive order.
The TRO is set to expire on Feb. 21, 2025, at which point, the court will hold a hearing to consider imposing a preliminary injunction, which could be ordered when the TRO expires and may last until the judge enters a final judgment in the case.
Remaining Compliance Questions
Some legal experts are beginning to opine on what happens if the Administration ignores a court order based on recent notable statements about executive authority. Ahead of the Judge’s ruling, en route to the Super Bowl, President Trump weighed in on another judicial decision in relation to DOGE’s activities, calling the ruling “a disgrace” and told reporters, “No judge should, frankly, be allowed to make that kind of a decision.”
Likewise, over the weekend, Vice President J.D. Vance said on social media “judges aren’t allowed to control the executive’s legitimate power.” “If a judge tried to tell a general how to conduct a military operation, that would be illegal,” Vance posted on X. “If a judge tried to command the attorney general in how to use her discretion as a prosecutor, that”s also illegal. Judges aren’t allowed to control the executive’s legitimate power.”
Conclusion
For the purposes of federal funding freezes, the Trump Administration has been ordered to release the grant funds until at least through Feb. 21, or be in violation of the Enforcement Order. In remains to be seen what the ultimate outcome will be.
If your organization is not able to access obligated funds, it may be time to evaluate both political and legal options.
To assess legal options, first look to the four corners of the agreement to understand available options. Administrative remedies remain available, either as directed by the agreement or other legal provisions. Lastly, consider a court challenge, weighed against political considerations and business realities. Finally, we strongly recommend engaging with your elected representatives to keep them abreast of the situation and to cultivate champions.
