As PilieroMazza has been tracking in our recent alerts here and here, the Trump administration is attempting to block federal funding through a freeze outlined in the now-rescinded OMB Directive M-25-13 (Directive). The Directive and the broad policies contained therein were temporarily blocked by the U.S. District Court for the District of Columbia (D.D.C.) when it issued a temporary restraining order on January 28, 2025. However, since the issuance of that TRO, the administration continues to implement the freeze and deny contractors access to previously allocated federal funds. Accordingly, plaintiffs in that case requested the TRO be converted to a preliminary injunction, which would remain in effect until the case can be fully litigated on the merits. In a 39-page memorandum opinion issued yesterday, Judge AliKhan of the D.D.C. granted plaintiffs’ motion and issued a preliminary injunction that blocks the Trump administration “from implementing, giving effect to, or reinstating under a different name” the blanket, nationwide freeze on disbursement of federal funds outlined in the Directive. This ruling could impact all contractors that have been affected by the nationwide funding freeze.
The court rejected defendants’ argument that the Directive was limited to activities covered by seven discrete executive orders and was not intended to create a blanket funding freeze. According to the court, the Directive’s primary goal was a temporary pause targeting “all activities related to [the] obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders[.]” As the court explained, “the freeze was ill-conceived from the beginning. 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.”
Notably, the Court also dismissed the argument that the Directive itself did not pause federal financial assistance, explaining that it would be “a remarkable—and unfathomable—coincidence” that countless federal agencies suddenly decided to exercise their discretion to suspend funding at exactly the same time the Directive was issued.
The Court found clear irreparable harm to the plaintiffs in the absence of a preliminary injunction. Indeed, the TRO only bought plaintiffs a few additional weeks of funding, which to the Court “means nothing if the spigot is shut off again.” The Court explained that many, if not all, the plaintiff organizations “need weekly injections of federal funds in order to continue operating[,]” and “[s]ome have employees who ‘live paycheck to paycheck, meaning that a single missed payment could prevent them from buying groceries or paying rent.’”
Judge AliKhan explained that injunctive relief was especially warranted in this case because the Trump administration has already violated other TROs intended to block the funding freeze. Simply put, the Court found the “Defendants cannot convincingly tell this court that there is no longer a need for injunctive relief after they were found to be in violation of another court’s order.”
This ruling provides yet another basis to challenge the ongoing federal funding freeze that so many federal contractors are facing.
If you have questions about this ruling or President Trump’s EOs, please contact Sam Finnerty, Ryan Boonstra, or another member of PilieroMazza’s REAs, Claims, and Appeals or Government Contracts practice groups. Also visit our Government Contract Executive Orders resource center for additional coverage.
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