Acting OMB Director Vaeth issued Memo M-25-13, ordering immediate freeze of all federal grants and loans pending executive-order compliance review

On January 27, 2025, acting Office of Management and Budget Director Matthew Vaeth issued Memorandum M-25-13, directing all federal executive branch agencies to immediately pause all activities related to the obligation or disbursement of federal financial assistance—including grants, loans, and other financial assistance programs—effective 5:00 p.m. EST on January 28. The directive covered programs "potentially implicated" by Trump's recently issued executive orders, which the memo described as encompassing foreign aid, NGO funding, DEI programs, and climate and green energy initiatives. Federal agencies were directed to report all potentially affected programs to OMB by the same deadline.

The Appropriations Clause of the Constitution (Art. I, §9, cl. 7) grants spending authority to Congress, not the executive branch, and the Impoundment Control Act of 1974 was enacted specifically to prohibit the executive from impounding or withholding congressionally-appropriated funds without statutory authorization. Memorandum M-25-13 did not cite any specific statutory authority for the pause, instead invoking Trump's executive orders as the basis for the compliance review. The memo's sweep—nominally covering an estimated $3 trillion in annually appropriated federal funds—created immediate disruption at nonprofit organizations, state agencies, research universities, and healthcare providers dependent on federal funding.

U.S. District Judge Loren L. AliKhan issued an administrative stay on January 28 blocking implementation with respect to disbursements under open awards. OMB rescinded the memo on January 29, but White House press secretary Karoline Leavitt declared the rescission was "simply a rescission of the OMB memo"—not the funding freeze itself—and stated the freeze "remains in full force and effect."

Updates

February 25, 2025: Judge AliKhan issued a preliminary injunction in National Council of Nonprofits v. OMB, enjoining OMB from "implementing, giving effect to, or reinstating under a different name" the directives of M-25-13 with respect to disbursement of federal funds under all open awards. The court found the administration's claimed power was "breathtaking" in scope and "attempted to wrest the power of the purse away from the only branch of government entitled to wield it."

March 6, 2025: U.S. District Judge John J. McConnell Jr. of the District of Rhode Island issued a second preliminary injunction, ruling that the "categorical freeze of appropriated and obligated funds fundamentally undermines the distinct constitutional roles of each branch of our government."