A federal judge in Rhode Island has once again ordered the Trump administration to restore frozen federal grants and loans, citing noncompliance with a previous court directive. U.S. District Judge John McConnell issued the ruling on Monday, February 10, following allegations from 22 states and the District of Columbia that the administration had failed to reinstate funding as mandated by a temporary restraining order (TRO) issued on January 31.

Background on the Funding Freeze

In January 2025, Trump directed federal agencies to pause grants, loans, and other forms of federal assistance. The freeze was part of a broader policy review aimed at aligning federal spending with the administration’s ideological priorities, including reversing initiatives related to environmental justice, diversity, equity, and inclusion. The Office of Management and Budget (OMB) initially rescinded its memo outlining the freeze but maintained that certain funding restrictions would remain in effect.

The freeze affected trillions of dollars in federal programs, including critical funding for medical research through the National Institutes of Health (NIH), infrastructure projects, and educational initiatives. Plaintiffs argued that the freeze jeopardized jobs, public health research, and essential services across the country.

The First Ruling

On Feb. 3, judge, Loren L. AliKhan of the Federal District Court for the District of Columbia issued a temporary restraining order (TRO) against the Office of Management and Budget (OMB) and its Acting Director, halting the Trump administration’s recent freeze on federal financial assistance to nonprofit organizations. The order prevents the OMB from implementing or reinstating Memorandum M-25-13, which directed federal agencies to temporarily pause activities related to the obligation or disbursement of federal funds.

“Defendants have offered no rational explanation for why they needed to freeze all federal financial assistance—with less than twenty-four-hours’ notice—to ‘safeguard valuable taxpayer resources.’ If Defendants intend to conduct an exhaustive review of what programs should or should not be funded, such a review could be conducted without depriving millions of Americans access to vital resources. As Defendants themselves admit, the memorandum implicated as much as $3 trillion in financial assistance. That is a breathtakingly large sum of money to suspend practically overnight. Rather than taking a measured approach to identify purportedly wasteful spending, Defendants cut the fuel supply to a vast, complicated, nationwide machine—seemingly without any consideration for the consequences of that decision. To say that OMB “failed to consider an important aspect of the problem” would be putting it mildly.

The court also raised concerns about the potential violation of the separation of powers, noting that the Executive Branch may have encroached upon Congress’s constitutional power over federal spending.

The Second Lawsuit

Key Allegations:

• Non-Compliance with TRO: The states claim that despite the TRO, they continue to be denied access to federal funds. 
• Shifting Justifications: The states argue that the federal government has offered various and inconsistent explanations for the continued funding delays, including claims that certain funds (specifically those under the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA)) are outside the scope of the TRO.
• “Green New Deal” Funds: The states take issue with the government’s position that it can continue to freeze funds under the guise of the “Unleashing American Energy” Executive Order, which targets funds supporting the “Green New Deal.” They assert that this is a violation of the TRO, which prohibits implementing the funding freeze “under any other name or title.”
• Administrative Delays: The states dismiss the government’s excuse of “operational and administrative reasons” for the delays, arguing that the speed with which the funding freeze was initially implemented demonstrates the ability to restore the funds quickly.
• Specific Examples of Disrupted Funding: The document provides specific examples of federal funding that remains inaccessible, including:
  • Climate Pollution Reduction Grants
  • Air monitoring grants
  • Home Electrification and Appliances Rebates Program
  • Solar for All program
  • NIH grants for dementia care research
  • Head Start programs
  • Global HIV prevention work

Relief Sought:

The states request that the court:

• Enforce the TRO and order the defendants to immediately restore the frozen funds.
• Order the defendants to take all necessary steps to effectuate the order, including clearing any administrative, operational, or technical hurdles.
• Order compliance with the existing TRO, prohibiting any pauses based on pronouncements incorporated into the OMB Directive, such as Section 7(a) of the Unleashing Executive Order and the OMB Unleashing Guidance.

McConnell’s Ruling

Judge McConnell reaffirmed that the funding freeze was likely unconstitutional and had caused “irreparable harm to a significant portion of this nation.” He noted that despite his January order prohibiting the suspension of federal funds, the administration continued to withhold payments for programs funded under laws like the Inflation Reduction Act and bipartisan infrastructure legislation.

In his latest ruling, McConnell instructed the Trump administration to “immediately restore frozen funding” and take all necessary steps to comply with the TRO. This includes clearing any administrative or technical barriers preventing disbursement. The judge emphasized that his order applied to all funding affected by the freeze, rejecting arguments from Justice Department attorneys who claimed certain funds were exempt.