On Feb. 25, U.S. District Judge for the District of Columbia Loren AliKhan placed another injunction on President Donald Trump and the White House Office of Management and Budget from pausing any federal funding to departments and agencies pending review of federal contracts and other financial assistance awards that depend on executive branch approval to see if they comply with federal law and executive orders issued by Trump.
According to the injunction, the plaintiffs in the case — the National Council on Non-Profits, who represent a consortium of non-profit organizations that were receiving and depend on federal funding to operate — would suffer “irreparable” harm if any funding freeze were left in place, including being unable to meet payroll.
This came after the White House Office of Management and Budget (OMB) rescinded a Jan. 27 memorandum to departments and agencies ordering a “Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs” that were barred by the orders, a memorandum that had an injunction immediately placed upon it by the D.C. District Court on Jan. 28.
In an X post on Jan. 29, White House Press Secretary Leavitt stated that while the memo had been rescinded, the executive orders, which require a review of whether funding is in accordance with the law, remained in place: “This is NOT a rescission of the federal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 initial injunction had applied to OMB’s direction for a pause on “all open awards” but did not apply to the “issuance of new awards” or “other relevant agency actions that may be implicated by the executive orders.”
Rather than fight out in court whether OMB could issue a pause for open awards — a process that would likely take longer than the time remaining in the fiscal year that ends Sept. 30 — the White House simply opted to rescind the memo while continuing implementation of the executive orders.
But, the court slapped back, citing Leavitt’s X post, and emphasizing that the President’s executive orders remained in place — effectively enjoining those orders from taking effect wholesale.
Blasting the judge’s decision was Americans for Limited Government President Rick Manning in a Feb. 25 statement, saying AliKhan had “taken upon herself to stop the elected President of the United States from enacting his policies because she doesn’t agree with them,” adding, “This local federal judge’s activism which she presumes to inflict on the entire country is an exact case study for the Supreme Court to finally act and end the lowest federal court judges from imposing their views nationwide, effectively wielding more power than individual Supreme Court Justices.”
At issue are contracts that had been put into place by former President Joe Biden’s administration earlier this fiscal year before Trump was sworn into office.
Here’s the twist. When the current fiscal year ends, none of it will matter. Come Sept. 30, a whole new round of contracts will be submitted but given the freeze for all new awards, might never be approved by the Trump administration. Eventually the spending will get cut. Again, the current fight appears to be over what funding remains for this fiscal year.
It’s important to note that Congress never explicitly authorized the expenditures to the non-profits in many cases, instead, it had delegated to departments and agencies discretionary funding authority to let the contracts. When the contracts expire, the organization or other entity needs to resubmit a request for funding, which can then be approved or denied by the executive department or agency.
In other words, Judge AliKhan is trying to run out the clock on the current fiscal year, compelling the Trump administration to continue paying the contracts — even if it turns out they were violating federal law or otherwise deviating from Trump administration policy in the executive orders. All the federal court needs to do is slow walk the court case until Sept. 30 and all the monies will end up being spent.
In the meantime, the entities receiving the funding are acting like there was no freeze or review of their contract being undertaken, continuing rendering the services and then submitting the bill to taxpayers.
That’s kind of like showing up to work after getting fired, doing stuff and demanding to still be paid. But come Sept. 30, it will end anyway. The outcome is inevitable. The only question is whether fiscal year 2025 with the Biden-approved contracts can be cut by Trump, OMB and the White House Department of Government Efficiency (DOGE).
That is, unless the courts then come back in the upcoming fiscal year and attempt to compel the Trump administration to renew the contracts as well. Can you imagine?
It’s just a speed bump. Fiscal year 2026 will be a rout for these contractors when the contracts, especially those the Trump administration finds run afoul of say civil rights and immigration laws, are simply not renewed. In the meantime, Congress, which is considering the budget right now, might still simply enact the cuts to the contracts now being implemented by the Trump administration. As usual, it’s simply a question of how much discretion Congress wishes to give the executive branch in letting new contracts — and reviewing existing contracts. Either way, it’s only a matter of time before the cuts happen. Stay tuned.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government Foundation.
