The ruling by U.S. District Judge John McConnell in Providence, Rhode Island, came at the behest of Democratic attorneys generals from 22 states and the District of Columbia and despite the White House saying it was rescinding Monday's memo from its budget office detailing the policy.
New York Attorney General Letitia James, who helped lead the litigation, hailed the decision, saying it would “block the White House's chaotic pause on federal funding.”
The order, which is in effect pending a further ruling from McConnell, comes after a judge in Washington, D.C., issued a shorter administrative stay pausing the policy in response to a separate legal challenge by several nonprofit groups. A hearing in the Washington case is scheduled for Monday.
McConnell, an appointee of Democratic former President Barack Obama, said Congress had not granted the president “limitless power to broadly and indefinitely pause all funds that it has expressly directed to specific recipients and purposes.”
Trump has already issued orders that aim to stop foreign aid, freeze hiring, shutter diversity programs across dozens of agencies, and reclassify federal workers to make them easier to fire while offering financial incentives to millions more to resign to shrink the government's size.
The memo directed that funds be put on hold while the administration reviewed grants and loans to ensure they are aligned with Trump's priorities, including executive orders he signed ending diversity, equity and inclusion programs.
A 1974 law called the Impoundment Control Act established procedures designed to restrict a president from not spending money appropriated by Congress.
OMB then fully withdrew its memo on Wednesday, shortly before a hearing in the lawsuit before McConnell. But the state attorneys general argued all the administration had done was rescind a “piece of paper,“ not the underlying policy.
They pointed to a post on X by White House Press Secretary Karoline Leavitt shortly before the hearing concerning the memo’s withdrawal that declared: “This is NOT a rescission of the federal funding freeze.”
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