Federal Court Issues Partial Administrative Stay of Office of Management and Budget’s “Pause” in Federal Financial Assistance

01.29.2025

Update (January 29, 2025, afternoon):  Subsequent to the publication of this alert this morning, the OMB issued Memorandum M-25-14 dated January 29, 2025, addressed to heads of federal Executive Departments and agencies, and stating in its entirety: “OMB Memorandum M-25-13 is rescinded. If you have questions about implementing the President’s Executive Orders, please contact your agency General Counsel.”  It is uncertain at this time whether the administration may issue any new or different directives with respect to review and/or “pause” of federal financial assistance, or whether lawsuits that were filed to oppose the original OMB memo (which has now been rescinded) will move forward.  In this regard, the original OMB memo stated that its purpose was to require a review of federal financial assistance programs for consistency with the President’s policies and priorities as expressed in various executive orders.  The new OMB memo does not give any suggestion that the underlying executive orders and policy direction of the administration have changed.


President Trump has issued numerous executive orders since his inauguration on January 20, 2025, to advance various policy objectives.  On January 27, 2025, the federal Office of Management and Budget issued OMB Memorandum M-25-13, directing a temporary pause to federal financial assistance programs in order for federal agencies to review programs in light of the executive orders.

The OMB memorandum stated:

“To implement these [executive] orders, each [federal] agency must complete a comprehensive analysis of their Federal financial assistance programs to identify programs, projects and activities that may be implicated by any of the President’s executive orders.  In the interim, to the extent permissible under applicable law, Federal agencies must temporarily pause 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, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”

The precise scope of this directive is not clear at this time.

On January 28, 2025, the National Council of Nonprofits and other plaintiffs filed a complaint in federal court in Washington D.C., challenging the OMB memo as unlawful and seeking a temporary restraining order and injunction to prohibit OMB and its officers, employees, and agents “from taking any steps to implement, apply, enforce” the OMB memo.

In response, and also on January 28, 2025, the federal court issued an Order for an “administrative stay” of portions of the OMB memo.  More specifically, the Order states that the administrative stay applies only to “OMB’s direction that agencies ‘pause… disbursement of Federal funds under all open awards.’”  Under the Order, the administrative stay “does not affect OMB’s memorandum as it pertains to ‘issuance of new awards,’ or ‘other relevant agency actions that may be implicated by executive orders.’”

The Order states further, “During the pendency of the stay, [OMB] shall refrain from implementing OMB Memorandum M-25-13 with respect to the disbursement of Federal funds under all open awards.”  By the terms of the Order, the administrative stay is in effect until February 3, 2025, at 5:00 p.m.  Between now and then, the court has ordered further briefing and a hearing to be held on February 3, 2025.

At this point, there are more questions than answers concerning the interpretation of the OMB memo, the administration’s actions to implement the OMB memo, and the course of litigation with respect to the OMB memo. 

For the time being, educational institutions, public agencies, and other recipients of federal funds would be well advised to consult legal counsel regarding compliance with directives from specific federal agencies, to consider and consult counsel regarding potential impacts of interruptions in federal funding, including the impact on employees, contractors, and service recipients, and to make contingency plans accordingly.  We intend to closely monitor developments relating to the OMB memo and will provide periodic updates.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

© 2025 Atkinson, Andelson, Loya, Ruud & Romo

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