* Background from yesterday…

A Federal district court judge in Rhode Island is continuing to weigh the legality of the Trump administration’s move earlier this week to freeze trillions in congressionally approved Federal funding despite the administration’s action on Wednesday to rescind the order that authorized the freeze effort.

On Monday, the Office of Management and Budget (OMB) declared a freeze on most Federal grant and loan program payments with an aim to defund Federal programs that don’t align with the president’s agenda – creating nearly universal confusion as agencies and funding recipients alike scrambled to fall into compliance with the order and understand how it would impact them.

Subscribers had access to the proposed TRO from the various state attorney general plaintiffs as well as the response from the federal government.

* Chief Judge John J. McConnell, Jr. of the United States District Court for the District of Rhode Island today…

In Count I, the States allege that the Executive’s actions by the Office of Management and Budget (“OMB”) violate the Administrative Procedure Act (“APA”) because Congress has not delegated any unilateral authority to the Executive to indefinitely pause all federal financial assistance without considering the statutory and contractual terms governing these billions of dollars of grants.

In Count II, the States allege that the Executive’s actions violate the APA because the failure to spend funds appropriated by Congress is arbitrary and capricious in multiple respects.

In Count III, the States allege that the failure to spend funds appropriated by Congress violates the separation of powers because the Executive has overridden Congress’ judgments by refusing to disburse already-allocated funding for many federal grant programs.

In Count IV, the States allege a violation of the Spending Clause of the U.S. Constitution. U.S. Const. art. I, § 8, cl. law 1.

And in Count V, the States allege a violation of the presentment (U.S. Const. art. I, § 7, cl. 2), appropriations (U.S. Const. art. I, § 7), and take care clauses (U.S. Const. art. II, § 3, cl. 3) (the Executive must “take care that the laws be faithfully executed . . .”)

* More…

The Court finds that, based on the evidence before it now, some of which is set forth below, the States are likely to succeed on the merits of some, if not all, their claims. The reasons are as follows:

• The Executive’s action unilaterally suspends the payment of federal funds to the States and others simply by choosing to do so, no matter the authorizing or appropriating statute, the regulatory regime, or the terms of the grant itself. The Executive cites no legal authority allowing it to do so; indeed, no federal law would authorize the Executive’s unilateral action here.

• Congress has instructed the Executive to provide funding to States based on stated statutory factors—for example, population or the expenditure of qualifying State funds. By trying to impose certain conditions on this funding, the Executive has acted contrary to law and in violation of the APA.

• The Executive Orders threaten the States’ ability to conduct essential activities and gave the States and others less than 24 hours’ notice of this arbitrary pause, preventing them from making other plans or strategizing how they would continue to function without these promised funds.

• Congress appropriated many of these funds, and the Executive’s refusal to disburse them is contrary to congressional intent and directive and thus arbitrary and capricious.

• Congress has not given the Executive limitless power to broadly and indefinitely pause all funds that it has expressly directed to specific recipients and purposes and therefore the Executive’s actions violate the separation of powers.

* Reasoning…

The Executive’s statement that the Executive Branch has a duty “to align Federal spending and action with the will of the American people as expressed through Presidential priorities,” (ECF No. 48-1 at 11) (emphasis added) is a constitutionally flawed statement. The Executive Branch has a duty to align federal spending and action with the will of the people as expressed through congressional appropriations, not through “Presidential priorities.” U.S. Const. art. II, § 3, cl. 3 (establishing that the Executive must “take care that the laws be faithfully executed . . .”). Federal law specifies how the Executive should act if it believes that appropriations are inconsistent with the President’s priorities–it must ask Congress, not act unilaterally. The Impoundment Control Act of 1974 specifies that the President may ask that Congress rescind appropriated funds.3 Here, there is no evidence that the Executive has followed the law by notifying Congress and thereby effectuating a potentially legally permitted so-called “pause.” […]

Justice Brett Kavanaugh wrote when he was on the D.C. Circuit:

Like the Commission here, a President sometimes has policy reasons (as distinct from constitutional reasons, cf. infra note 3) for wanting to spend less than the full amount appropriated by Congress for a particular project or program. But in those circumstances, even the President does not have unilateral authority to refuse to spend the funds. Instead, the President must propose the rescission of funds, and Congress then may decide whether to approve a rescission bill. […]

The Court finds that the record now before it substantiates the likelihood of a successful claim that the Executive’s actions violate the Constitution and statutes of the United States.

The Court now moves on to the remaining three injunction considerations.

Irreparable Harm

The States have put forth sufficient evidence at this stage that they will likely suffer severe and irreparable harm if the Court denies their request to enjoin enforcement of the funding pause. […]

Balance of the Equities and Public Interest

As the Court considers the final two factors, the record shows that the balance of equities weighs heavily in favor of granting the States’ TRO. […]

Mootness

The Defendants now claim that this matter is moot because it rescinded the OMB Directive. But 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.

“Quoting Kavanaugh was genius,” said a pal today.

* Conclusion…

Consistent with the findings above, and to keep the status quo, the Court hereby ORDERS that a TEMPORARY RESTRAINING ORDER is entered in this case until this Court rules on the States’ forthcoming motion for a preliminary injunction, which the States shall file expeditiously.

During the pendency of the Temporary Restraining Order, Defendants 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.

If Defendants engage in the “identif[ication] and review” of federal financial assistance programs, as identified in the OMB Directive, such exercise shall not affect a pause, freeze, impediment, block, cancellation, or termination of Defendants’ compliance with such awards and obligations, except on the basis of the applicable authorizing statutes, regulations, and terms.

Defendants shall also be restrained and prohibited from reissuing, adopting, implementing, or otherwise giving effect to the OMB Directive under any other name or title or through any other Defendants (or agency supervised, administered, or controlled by any Defendant), such as the continued implementation identified by the White House Press Secretary’s statement of January 29, 2025.

Defendants’ attorneys shall provide written notice of this Order to all Defendants and agencies and their employees, contractors, and grantees by Monday, February 3, 2025, at 9 a.m. Defendants shall file a copy of the notice on the docket at the same time.

Defendants shall comply with all notice and procedural requirements in the award, agreement, or other instrument relating to decisions to stop, delay, or otherwise withhold federal financial assistance programs.

The TRO shall be in effect until further Order of this Court. A preliminary hearing, at which time the States will have to produce specific evidence in support of a preliminary injunction, will be set shortly at a day and time that is convenient to the parties and the Court.

*** UPDATE 1 *** Speaker Chris Welch…

The Trump administration’s unlawful order should never have been issued. I’m grateful to Attorney General Raoul’s leadership in this fight for the resources families need to make ends meet, afford rent, put food on the table, and get ahead.

*** UPDATE 2 *** Gov. JB Pritzker…

As I’ve said since it was released and as was previously supported by Tuesday afternoon’s action in court, these cuts were a blatantly illegal power grab intended to cripple programs that provide essential services for millions of the most vulnerable Americans. This ruling specifically calls out the falsehood told by the White House Press Secretary that the retraction of the order does not affect the intent to cut funding. I’m grateful to Illinois Attorney General Raoul and the other Attorney’s General who brought this action, and I pledge to continue to fight unlawful and harmful authoritarian actions like these on behalf of Illinoisans

*** UPDATE 3 *** Comptroller Mendoza…

Millions of Illinois residents, young and old, urban and rural, Republican and Democrat, who receive federally funded state services can be thankful that a federal judge today blocked the Trump administration’s confusing, unconstitutional and dangerous funding freeze.

The constitution empowers the president to align federal spending with Congressional appropriations, not presidential priorities, the judge wrote.

Veterans and poor people who need health care in all 102 counties of Illinois, college students trying to finish their semesters, and school kids in Head Start programs should not be held hostage to political games.

Even as presidential staff try to backpedal, this week has been filled with panic for our most vulnerable residents. These actions create chaos rather than stability and predictability, putting American lives at risk.

My office is closely monitoring the situation and will keep getting payments out as fast as we can.