Second judge says he plans to block Trump federal funding freeze after Democratic state attorney generals file suit

John Annese, New York Daily News on Jan 29, 2025

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A second federal judge said he plans to put a hold on President Donald Trump’s federal funding freeze that sparked chaos and panic across the U.S.

The move comes after a lawsuit filed Tuesday by 22 Democratic state attorney generals, including New York’s Letitia James, argued the bombshell memo by the Office of Management and Budget requiring federal agencies to freeze Congress-approved federal funds violates the Constitution.

The Trump administration said it rescinded the OMB memo Wednesday after a public outcry, and argued that the attorney generals’ request for a temporary restraining order is unnecessary as a result.

But Rhode Island Federal Court Judge Jack McConnell on Wednesday said statements by White House Press Secretary Karoline Leavitt undermined that argument, and asked the AGs to prepare a proposed temporary restraining order for him to rule on.

Sarah Rice, a lawyer for the Rhode Island attorney general, said the delays and confusion triggered by the OMB memo are ongoing, and pointed to a post on X by Leavitt on Wednesday reading, “This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo.”

Rice also highlighted statements made at a White House press conference.

“The only thing that has been changed is whether or not there is a piece of paper,” Rice said. “There’s contrary indication through these public statements that the policy has not changed … and that policy is ‘freeze first, ask questions later.’”

Justice Department lawyer Daniel Schwei countered that the AGs were trying to get the court to block several Trump executive orders in one swoop. “What the plaintiffs are essentially asking this court to do is broaden their lawsuit and change it,” he said. “I think the breadth of the relief that plaintiffs are seeking is extraordinary.”

Schwei also tried to argue that the OMB memo was merely “guidance” offered to federal agency heads on how to operate — despite language in the document ordering that agency heads “must temporarily pause” federal funding.

McConnell said the AGs convinced him that the memo’s effects were ongoing, and said, “That hasn’t changed, based on comments by the president’s press secretary. And so I’m inclined to grant the restraining order.”

A federal judge in D.C. has already issued a temporary restraining order after a lawsuit by the National Council of Nonprofits.

In their suit, the AGs said Trump’s freeze violates the “central tenet of our constitution” — the separation of powers doctrine — by steamrolling “the careful judgments of Congress by refusing to disburse funding for innumerable federal grant programs — some of which are even formula grants dictated by precise statutory formula.”

They also argued that the way Trump enacted the freeze — giving the states no notice, and setting a 24-hour deadline before the directive goes into effect — puts the lie to White House claims that funding would only be halted as permissible by law, with grants being reviewed on a case-by-case basis.

“The OMB Directive provides no time for federal agencies either to make supported requests for case-by-case exceptions to the Directive’s directives or to assess adequately whether halting particular grants would or would not be permissible under law,” the lawsuit states.

The OMB memo, which was first brought to light by independent reporter Marisa Kabas at The Handbasket, left state agencies, nonprofits, hospitals and citizens alike trying to figure out if vital federal funds had been turned off.

Dozens of states, including New York, were reporting the Medicaid reimbursement portal was not working Tuesday. Leavitt blamed an “outage” and claimed that no payments were affected.

The director of the National Head Start Association said their early education grant recipients also weren’t able to receive reimbursements Tuesday — though their service was restored shortly after an afternoon guidance from the Trump administration specified Head Start was exempt from the order.

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