The Trump administration’s Office of Managemet and Budget said Wednesday it had rescinded its controversial freeze on federal funding that could have potentially impacted nonprofits, small businesses, manufacturers, universities, healthcare, transportation and many other job creators.
However, that message seemed to be undercut hours later by the White House press secretary who tweeted, “This is NOT a rescission of the federal funding freeze.”
The U.S. Office of Management and Budget issued a two-sentence directive stating it had rescinded its Jan. 27 memo, which had sparked lawsuits by nonprofits, small business advocacy organizations and nearly half the nation’s attorneys general. The original order had directed a temporary freeze on funding for federal grants, loans and financial assistance programs to ensure they aligned with President Donald Trump’s recent executive orders. These EOs ended Diversity Equity & Inclusion (DEI) programs and impacted clean energy, immigration, climate change policies, health and medical research, and more.
The freeze was supposed to take effect on Tuesday, Jan. 28 at 5 p.m., but minutes before the deadline a federal judge in Washington, D.C. ordered the Trump administration not to block any “open awards,” or funds that were already slated to be disbursed, until at least Monday Feb. 3. Judge Loren L. AliKhan has scheduled a hearing on that date in the lawsuit filed by the National Council of Nonprofits, the Main Street Alliance, and other groups.
Separately, the attorneys general for 22 states, including New Jersey, also sued the Trump administration over the spending freeze, saying the OMB directive has “now sown chaos and confusion around whether States can continue to receive disbursements of funding already obligated to them and whether any further funding will ever be obligated.”
The attorneys general filed their lawsuit in U.S. District Court in Rhode Island just minutes before Judge AliKhan in Washington, D.C. issued her order in the case brought by the Council of Nonprofits and other plaintiffs seeking to stop OMB’s directive.
Late Wednesday afternoon, the judge in the case brought by the attorneys general asked them to draft an order for him to sign that would protect states and other organizations from losing the already approved funding that they are relying on, according to a report from the Providence Journal and other news organizations.
The Justice Department attorney argued that the lawsuit was now moot because OMB had rescinded its directive a few hours before Wednesday’s court proceeding, but U.S. District Court Judge John McConnell agreed with the attorneys general from 22 states and the District of Columbia that the administration’s underlying policy of eliminating the federal funding was still likely to occur, news reports said.
The judge noted the adminstration was sending mixed signals because White House Press Secretary Karoline Leavitt had tweeted, “This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo. 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.”
NJBIA Chief Government Affairs Officer Christopher Emigholz said a federal funding freeze could have an unfortunate impact om a wide range of programs in New Jersey that are run by nonprofits, as well already approved federal grants for workforce development training, university research, transportation projects and other programs.
“Finding government efficiencies is a worthwhile pursuit, but there are many federal investments that are critical to our state economy,” Emigholz said.
Federal support for the Manufacturing Extension Partnership (MEP), which is part of the Commerce Department’s National Institute of Standards and Technology (NIST), could also be affected. Peter Connolly, the CEO of New Jersey Manufacturing Program (NJMEP), told Newsweek on Tuesday that grant recipients were “navigating a period of significant uncertainty” after the OMB original Jan. 27 announcement.
This story was updated with the latest developments at 5 p.m. on Jan. 29.
