On January 28, 2025, a complaint was filed by 22 states and the District of Columbia1 with the U.S. District Court for the District of Rhode Island alleging the Office of Management and Budget (OMB) Directive,2 also known as OMB Memorandum M-25-13, violates the Administrative Procedure Act (APA) and is unconstitutional. The APA governs the way administrative agencies of the federal government propose and establish regulations.
On January 31, 2025, Judge John J. McConnell, Jr. issued a temporary restraining order (TRO) ordering that, “Defendants3 shall not pause, freeze, impede, block, cancel, or terminate Defendants’ compliance with awards and obligations to provide federal financial assistance to the States, and Defendants shall not impede the States’ access to such awards and obligations, except on the basis of the applicable authorizing statutes, regulations, and terms.”
On February 3, 2025, a Notice of Compliance certifying compliance with TRO notification compliance was filed.
The TRO notification summarizes the TRO’s key terms as follows below:
- Federal agencies cannot pause, freeze, impede, block, cancel, or terminate any awards or obligations on the basis of the OMB memo, or on the basis of the president’s recently issued executive orders.
- 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).
- 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 memo 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.
- Out of an abundance of caution, all federal agencies (even those not named as defendants in the case) should comply with the above-referenced terms.
How Forvis Mazars Can Help
Our Grants Management Services team is staying apprised of the pause in federal funding. We‘ll be publishing alerts as the situation continues to evolve. Understanding the intricacies of the funding helps equip you with the knowledge and confidence to make informed decisions, even when faced with uncertainty. By grasping the intricacies involved, you can navigate challenges more effectively and feel more secure in your choices. This deeper comprehension not only empowers you to tackle current issues but also prepares you for future developments so you can remain adaptable and resilient in an ever-evolving landscape. If you have questions or need assistance, please reach out to a professional at Forvis Mazars.
- 1New York, California, Illinois, Rhode Island, New Jersey, Massachusetts, Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Hawai’i, Maine, Maryland, Michigan, Minnesota, Nevada, North Carolina, New Mexico, Oregon, Vermont, Washington, and Wisconsin.
- 2The “OMB Directive,” better known as OMB issued Memorandum M-25-13, dated January 27, 2025, announcing a temporary pause on Federal financial assistance programs, including grants, loans, and other financial support.
- 3The defendants include Donald Trump, in his official capacity as President of the United States; the U.S. Office of Management and Budget; Matthew J. Vaeth, in his official capacity as Acting Director of the U.S. Office of Management and Budget; the U.S. Department of the Treasury; Scott Bessent, in his official capacity as Secretary of the Treasury; Patricia Collins, in her official capacity as Treasurer of the U.S.; the U.S. Department of Health and Human Services; Dorothy A. Fink, M.D., in her official capacity as Acting Secretary of Health and Human Services; the U.S. Department of Education; Denise Carter, in her official capacity as Acting Secretary of Education; the U.S. Federal Emergency Management Agency; Cameron Hamilton, in his official capacity as Acting Administrator of the U.S. Federal Emergency Management Agency; the U.S. Department of Transportation; Judith Kaleta, in her official capacity as Acting Secretary of Transportation; the U.S. Department of Labor; Vince Micone, in his official capacity as Acting Secretary of Labor; the U.S. Department of Energy; Ingrid Kolb, in her official capacity as Acting Secretary of the U.S. Department of Energy; the U.S. Environmental Protection Agency; James Payne, in his official capacity as Acting Administrator of the U.S. Environmental Protection Agency; the U.S. Department of Homeland Security; Kristi Noem, in her official capacity as Secretary of the U.S. Department of Homeland Security; the U.S. Department of Justice; James R. McHenry III, in his official capacity as Acting Attorney General of the U.S. Department of Justice; the National Science Foundation; and Dr. Sethuraman Panchanathan, in his official capacity as Director of the National Science Foundation.