On Monday, February 10, 2025, U.S. District Judge John J. McConnell Jr. released a ruling stating that the Office of Management and Budget (OMB) has “continued to improperly freeze federal funds and refused to resume disbursement of appropriated federal funds.” The OMB appealed this ruling later the same day, requesting a “stay of this Court’s Orders pending appeal, including an immediate administrative stay.”
The district ruling came after McConnell issued the original temporary restraining order (TRO) on January 31, ordering that the OMB “shall not pause, freeze, impede, block, cancel, or terminate Defendants’ compliance with awards and obligations to provide federal financial assistance to the States, and Defendants shall not impede the States’ access to such awards and obligations, except on the basis of the applicable authorizing statutes, regulations, and terms.”1
The states argued that “in some cases (the OMB) has continued to improperly freeze federal funds and refused to resume disbursement of appropriated federal funds.” The OMB responded by stating it was “just trying to root out fraud.”2 McConnell ultimately ruled that “freezes in effect now were the result of the broad categorical order, not a specific finding of possible fraud” and that pauses in funding “violate the plain text of the TRO.”3
As such, McConnell issued the following orders:4
- The Defendants must immediately restore frozen funding during the pendency of the TRO until the Court hears and decides the Preliminary Injunction request.
- The Defendants must immediately end any federal funding pause during the pendency of the TRO.
- The Defendants must immediately take every step necessary to effectuate the TRO, including clearing any administrative, operational, or technical hurdles to implementation.
- The Defendants must comply with the plain text of the TRO not to pause any funds based on pronouncements pausing funding incorporated into the OMB Directive, like Section 7(a) of the Unleashing Executive Order, and the OMB Unleashing Guidance. The TRO requirements include any pause or freeze included in the Unleashing Guidance.
- The Defendants must immediately restore withheld funds, including those federal funds appropriated in the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. The directives in OMB M-25-11 are included in the TRO.
- The Defendants must resume the funding of institutes and other agencies of the Defendants (for example, the National Institutes for Health) that are included in the scope of the Court’s TRO.
Our team will continue to monitor the order. If you have any questions related to this ruling or ongoing guidance, please reach out to a professional at Forvis Mazars.
- 1 “United States District Court, District Court of Rhode Island: Case 1:25-cv-0039-JJM-PAS,” rid.uscourts.gov, January 30, 2025.
- 2“United States District Court, District Court of Rhode Island: Case No. 25-cv-39-JJM-PAS,” ecf.rid.uscourts.gov, February 10, 2025.
- 3“United States District Court, District Court of Rhode Island: Case No. 25-cv-39-JJM-PAS,” ecf.rid.uscourts.gov, February 10, 2025.
- 4“United States District Court, District Court of Rhode Island: Case No. 25-cv-39-JJM-PAS,” ecf.rid.uscourts.gov, February 10, 2025.