Labor & Employment Law Daily Wrap Up, LITIGATION NEWS, TRENDS—In federal-aid freeze showdown, First Circuit rejects Trump Administration’s bid for administrative stay of district court’s TRO, (Feb 12, 2025)

By Marjorie Johnson, J.D.

“[T]he defendants do not cite any authority in support of their administrative stay request or identify any harm related to a specific funding action or actions that they will face without their requested administrative stay.”

In the legal battle over a memo issued by President Trump’s Office of Management and Budget (OMB) ordering a temporary freeze of federal aid—which two separately filed lawsuits say violates the Administrative Procedure Act and the constitutional separation of powers—the First Circuit yesterday, in a per curiam order, rejected the Trump Administration’s bid for an administrative stay pending resolution of their bid for a stay of a Rhode Island federal judge’s order of enforcement of a temporary restraining order (TRO) barring the freeze. The appeals court did not address the Administration’s separate bid for a full stay pending appeal and has allowed the parties to submit further briefing on their positions until February 13, 2025.

OMB memo orders funding freeze. On January 27, President Trump’s Office of Management and Budget (OMB) issued the controversial memorandum, M-25-13 (the memo), instructing federal agencies that they “must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”

D.C. district court proceedings. The next day, several nonprofit groups filed a lawsuit in the District of Columbia against the challenging the memo’s constitutionality. That same day, the D.C. district court entered an administrative stay barring until February 3 the implementation of OMB Memorandum M-25-13 with respect to the disbursement of Federal funds under all open awards. On February 3, the court granted the plaintiff’s bid for a TRO, and on February 11, the plaintiffs filed a motion seeking a preliminary injunction.

RI district court proceedings. On the same day that the nonprofit groups filed their lawsuit, attorneys general for 22 states and the District of Columbia filed their own lawsuit in the Rhode Island federal district court also challenging the OMB memo. On January 29, the Trump Administration told the court that it had rescinded the order, but that same day White House spokesperson Karoline Leavitt said in a tweet, “This is NOT a rescission of the federal funding freeze.” On January 31, the Rhode Island judge issued an order granting the plaintiffs' motion for a TRO.

Enforcement of TRO. On February 10, the Rhode Island district court granted the plaintiffs' motion for enforcement of the TRO. The court found that the states had presented evidence that the Trump Administration, “have continued to improperly freeze federal funds and refused to resume disbursement of appropriated federal funds.” Though the Administration claimed they were “just trying to root out fraud,” the court explained that “the freezes in effect now were a result of the broad categorical order, not a specific finding of possible fraud. The broad categorical and sweeping freeze of federal funds is, as the Court found, likely unconstitutional and has caused and continues to cause irreparable harm to a vast portion of this country.”

Trump’s appeal. The Trump Administration appealed to the First Circuit, and, in particular, filed two motions seeking: (1) a stay pending appeal, which they asked the appeals court to resolve by February 14, and (2) an administrative stay pending resolution of their motion for a stay pending appeal. In the per curiam order issued on February 11, the First Circuit only addressed the Administration’s motion for an administrative stay.

The appeals court first noted that it “has not addressed whether or when an administrative stay of the sort being requested here may be issued, and there is well-recognized uncertainty as to what standards guide the decision to issue one or not.” Of particular note, the Administration sought a stay pending appeal from the district court that had not yet ruled on their motion. “Moreover, a centerpiece of the dispute between the parties in this appeal concerns the proper way to construe the February 10 Order.”

No specific harm cited. “Finally, insofar as we have jurisdiction to consider this request for an administrative stay arising out of a temporary restraining order … the defendants do not cite any authority in support of their administrative stay request or identify any harm related to a specific funding action or actions that they will face without their requested administrative stay.”

District court’s role. Denying the motion without prejudice, the appeals court stated it was confident the district court would “provide any clarification needed with respect to, among other things, the defendants' contention that the February 10 Order ‘bars both the President and much of the Federal Government from exercising their own lawful authorities to withhold funding without the prior approval of the district court.’” In response to this argument, the states argued that the February 10 Order “does not stop defendants from limiting access to funds without any 'preclearance' from the district court 'on the basis of the applicable authorizing statutes, regulations, and terms.'"

The case is No. 25-1138.

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