A federal judge issued a preliminary injunction Tuesday blocking the Trump administration from implementing the type of sweeping freeze on grant and loan programs proposed in a memo the Office of Management and Budget released in late January.

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District Judge Loren L. AliKhan of the U.S. District Court of the District of Columbia wrote in the order that the Trump administration couldn’t implement or reinstate the proposed pause on trillions of dollars of programs envisioned in the now-rescinded OMB memo.

AliKhan also told the organizations that filed the lawsuit and the Department of Justice to “confer and file a joint status report proposing next steps in this proceeding on or before February 28.”

In a memorandum opinion accompanying the order, AliKhan wrote that the Trump administration’s proposed pause was “irrational, imprudent, and precipitated a nationwide crisis.”

“In the simplest terms, the freeze was ill-conceived from the beginning,” she wrote. “Defendants either wanted to pause up to $3 trillion in federal spending practically overnight, or they expected each federal agency to review every single one of its grants, loans, and funds for compliance in less than twenty-four hours. The breadth of that command is almost unfathomable.”

‘Significant confusion and fear’

AliKhan wrote the organizations that filed the lawsuit — the National Council of Nonprofits, American Public Health Association, Main Street Alliance and SAGE — showed a preliminary injunction was necessary to protect the public interest.

“Nonprofits and organizations across the country were left adrift as they scrambled to make sense of the memorandum and its effects. Entire funding portals were taken offline with no rhyme or reason, generating significant confusion and fear,” AliKhan wrote. “Many organizations had to resort to desperate measures just to stay operational. The pause placed critical programs for children, the elderly, and everyone in between in serious jeopardy.”

AliKhan declined a request from the Department of Justice to have the organizations that filed the case put up a bond, or financial guarantee.

“In a case where the government is alleged to have unlawfully withheld trillions of dollars of previously committed funds to countless recipients, it would defy logic—and contravene the very basis of this opinion—to hold Plaintiffs hostage for the resulting harm,” AliKhan wrote. “That is especially so when Defendants—OMB and its director—will personally face no monetary injury from the injunction.”

President Joe Biden nominated AliKhan and she was confirmed following a Senate vote of 51-50, with the vice president breaking the tie.

Memo issued January 27

This case and another lawsuit filed by Democratic attorneys general began when the Office of Management and Budget issued a two-page memo on January 27 instructing departments and agencies throughout the federal government to pause payments on grants and loans the next day at 5:00 p.m.

A footnote in the document said the pause wasn’t to impact Medicare or Social Security, but it didn’t mention programs relied on by tens of millions of Americans, like Medicaid or the Supplemental Nutrition Assistance Program.

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The administration put out guidance the next day that the freeze wouldn’t impact “any program that provides direct benefits to Americans” and specifically exempted Medicaid and SNAP.

Later that day, Judge AliKhan issued a short-term administrative stay that was intended to block the freeze from taking effect, though several departments and agencies had already begun implementing the pause.

The following day the Office of Management and Budget rescinded the memo, but a social media post from White House press secretary Karoline Leavitt caused confusion about what that meant in reality — especially as some organizations continued reporting they couldn’t access their federal grants or loans.

“This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo,” Leavitt wrote. “Why? To end any confusion created by the court’s injunction. The President’s EO’s on federal funding remain in full force and effect, and will be rigorously implemented.”

AliKhan issued a temporary restraining order February 3, shortly after the Chief Judge John J. McConnell Jr. of the U.S. District Court in Rhode Island, who is overseeing the case filed by the Democratic attorneys general, issued a TRO on January 31.

AliKhan held a hearing last week, February 20, over whether to issue a preliminary injunction in the case.

McConnell held a hearing February 21 over whether to issue a preliminary injunction in that case, but hadn’t released his decision as of Tuesday afternoon.

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