OMB places temporary freeze on agency grants, loans, and other financial assistance What we know now
We are analyzing the memo released by the Office of Management and Budget (OMB) on January 27, 2025, which places a temporary freeze on agency grant, loan, and other financial assistance programs. The following is the information we have at this time. We will keep you updated as we receive additional details. In the meantime, please do not hesitate to reach out with questions.
Background
OMB’s memo places a temporary pause on "all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders." The memo states that the pause provides the Administration time to review agency programs and determine the extent to which they are consistent with the law and the President's priorities. The pause becomes effective at 5:00 pm ET on January 28, 2025.
The memo also requires federal agencies to submit to OMB by February 10, 2025 "detailed information on any programs, projects, or activities subject to this pause. Each agency must pause (i) issuance of new awards; (ii) disbursement of Federal funds under all open awards; and (iii) other relevant agency actions that may be implicated by the executive orders, to the extent permissible by law, until OMB has reviewed and provided guidance to [the] agency with respect to the information submitted."
Key considerations
The language in the memo is vague. While the memo states that "nothing in this memo should be construed to impact Medicare or Social Security benefits," the sources of federal financial assistance that could be implicated by these orders is unknown at this time.
Given both the broad scope of the freeze and its immediate implementation timeline, there may be potential legal challenges regarding statutory authority and administrative procedure requirements. We are closely monitoring these developments.
While the memo also does not include a concluding date for the temporary freeze, the February 10, 2025 reporting deadline suggests that the freeze could continue for a few weeks, if not longer. Notably, OMB is seeking information for awards anticipated through March 15, 2025, which coincides with the expiration of the current Continuing Resolution (CR). This timing may signal that the freeze could be connected to broader budget negotiations.
In order to comply with this memo, OMB has sent instructions to agencies seeking additional information on whether each federal “financial assistance” program, including the following, among others:
- Provides funding or support activity overseas
- Imposes an “undue burden on the identification, development, or use of” domestic energy resources
- Is impacted by the revocation and recission of the US International Climate Finance Plan, or
- Supports activities forbidden by Executive Orders released on or after January 20, 2025.
Regardless of the length of the freeze, the memo instructs agencies to take a variety of oversight steps, such as cancelation of awards that may run afoul of the implied boundaries noted in OMB’s instructions above. In that regard, some programs, projects, or other activities might not resume even when the freeze is lifted.
Organizations with existing federal awards or pending applications are encouraged to maintain detailed records of all agency communications during this period and document any programmatic or financial impacts resulting from the freeze. This documentation may be important given the memo's enhanced oversight provisions and investigative authorities.
The memo leaves open the option for OMB to grant exceptions to federal agencies for new awards and other actions "on a case-by-case basis." If you have time-sensitive or critical programs affected by this freeze, we can assist in preparing exception requests that align with the Administration's stated priorities.
The latest
The Washington, DC Circuit Court has ordered an injunction against the Trump Administration’s planned freeze to federal assistance programs, which had been set to kick in at 5:00 pm ET this evening. This temporary injunction expires February 3, 2025 at 5:00 pm ET.
At a White House press briefing earlier today, multiple questions were asked about the funding freeze. Karoline Leavitt, White House Press Secretary, provided these replies:
- “This is not a blanket pause on federal assistance and grant programs from the Trump Administration.”
- Regarding Social Security, Medicare, food stamps, and welfare benefits: assistance going directly to individuals will not be impacted by the pause.
- The purpose for the pause is to “ensure that every penny going out the doors is not conflicting with the EOs President Trump signed” in his first week in office.
- If federal agencies think specific programs are necessary and in line with President Trump’s EOs, the agencies can reach out to OMB for further discussion.
- White House Counsel’s Office believes it is within the President’s power to issue this freeze.
During the press conference, a clarification Q&A document was released which states that, “In addition to Social Security and Medicare, already explicitly excluded in the guidance, mandatory programs like Medicaid and SNAP will continue without pause. Funds for small businesses, farmers, Pell grants, Head Start, rental assistance, and other similar programs will not be paused.”
On January 29, 2025, OMB rescinded the funding freeze memo. A subsequent social media post from White House Press Secretary Karoline Leavitt stated, “This is NOT a recission of the federal funding freeze. It is simply a recission of the OMB memo. Why? To end any confusion created by the court’s injunction. The President’s EOs on federal funding remain in full force and effect and will be rigorously implemented.” This statement implies that though the actual memo was withdrawn, the White House will still conduct a review of potential impact of President Trump’s EOs and is expecting federal government agencies to pause several grant programs in the meantime.
On January 31, the U.S. District Court for the District of Rhode Island issued a temporary restraining order (TRO) in a case filed by over 22 State Attorneys General. The order temporarily prohibits the federal government from pausing or otherwise impeding any award or funding obligations for federal financial assistance to the states. It also prohibits the government from reissuing, implementing, or otherwise giving effect to the OMB memo in any manner, through any agency. The TRO is in effect until further order by the court.
We are also actively monitoring State Attorneys General lawsuits, as well as other developments. To learn more, please contact any of the authors.