(Reuters) – A U.S. federal judge on Tuesday, February 25, 2025, extended an order preventing the Trump administration from enforcing a broad freeze on trillions of dollars in federal funding, including grants, loans, and other financial assistance programs.
U.S. District Judge Loren AliKhan, in Washington, stated that although some funds had been released since her initial injunction temporarily halting the administration’s spending pause, there remained a significant risk that the administration could attempt to reinstate the freeze.
AliKhan, an appointee of former Democratic President Joe Biden, agreed with nonprofit organizations and small business groups that a preliminary injunction was necessary to prevent further disruptions to federal funding.
“The injunctive relief that defendants fought so hard to deny is the only thing in this case holding potentially catastrophic harm at bay,” the judge wrote.
The lawsuit was filed after the White House’s Office of Management and Budget (OMB) issued a memorandum on January 27, instructing federal agencies to temporarily suspend financial assistance programs. This directive came shortly after Trump commenced his second term as president on January 20.
The administration justified the freeze as necessary to review grants and loans to ensure alignment with Trump’s executive orders, including those terminating diversity, equity, and inclusion (DEI) programs and pausing funding for climate change initiatives.
However, the OMB later withdrew the memo following two lawsuits—one filed in AliKhan’s court by organizations including the National Council of Nonprofits, and another filed in Rhode Island by a coalition of Democratic state attorneys general.
Despite the withdrawal, the plaintiffs argued that the policy itself had not been rescinded. They cited a statement from White House Press Secretary Karoline Leavitt on the social media platform X, where she clarified: “This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo.”
Judge AliKhan referenced this post in her ruling, stating that the case remained relevant and barring the administration from implementing or reinstating the funding freeze under any alternative name.
AliKhan criticized the administration’s approach, calling the freeze “ill-conceived from the beginning.” She noted that the policy would have either abruptly halted up to $3 trillion in federal spending overnight or required federal agencies to review every grant and loan for compliance within 24 hours.
She further ruled that the administration lacked any “clear statutory hook for this broad assertion of power,” and described its actions as “irrational, imprudent, and precipitated a nationwide crisis.”
The White House did not respond to requests for comment.
Skye Perryman, president of the progressive legal advocacy group Democracy Forward, which represented the plaintiffs, welcomed the ruling, stating that it halted “the Trump administration’s lawless attempt to harm everyday Americans in service of a political goal.”
