/>iOn January 29, the Office of Management and Budget (OMB) announced that it had rescinded its earlier memo, issued on January 27, which ordered a temporary pause on certain federal grant and loan disbursements, creating widespread confusion and pending legal challenges across the country. The memo had ordered a temporary pause on certain grants and loans disbursed by the federal government in order for each federal agency to review their federal financial assistance programs to identify if any of those programs have been impacted by President Trump’s Executive Orders.[1] However, even with the rescinded memo, the White House has stated that the issued Executive Orders on funding reviews remain in full force and effect, casting uncertainty on programs related to financial assistance for foreign aid, nongovernmental organizations, DEI, “woke gender ideology,” and the “green new deal.”
Background
Since being sworn into office, President Trump has issued a series of executive orders covering various issues such as trade, immigration, U.S. foreign aid, energy, civil rights, and federal worker requirements, and health care. While some of the executive orders are more symbolic, others do have immediate policy impacts.
OMB Funding Freeze Memo
On January 27, 2025, the OMB issued a temporary funding freeze on all federal financial assistance programs, which was set to be effective January 28, 2025, at 5 PM EST, until federal agencies determined the impact of President Trump’s Executive Orders on such programs.[2] Specifically, under the OMB memo, each federal agency was required to complete and submit a comprehensive analysis to the OMB by February 10, 2025, identifying programs, projects and activities that may be implicated by any of President Trump’s Executive Orders, including “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” This temporary freeze was also supposed to apply to all activities associated with open Notices of Funding Opportunity, such as conducting merit review panels. The memo stated that OMB was allowed to grant exceptions to the temporary freeze, on a case-by-case basis, for federal agencies to issue new awards or take other actions.
Additional OMB Guidance
After the release of the OMB memo, OMB issued additional guidance noting that any program not implicated by the following Executive Orders was not subject to the funding pause: (1) Protecting the American People Against Invasion (Jan. 20, 2025); (2) Reevaluating and Realigning United States Foreign Aid (Jan. 20, 2025); (3) Putting America First in International Environmental Agreements (Jan. 20, 2025); (4) Unleashing American Energy (Jan. 20, 2025); (5) Ending Radical and Wasteful Government DEI Programs and Preferencing (Jan. 20, 2025); (6) Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government (Jan. 20, 2025); and (7) Enforcing the Hyde Amendment (Jan. 24, 2025). OMB also stated its intent to continue working with federal agencies to determine whether certain federal financial assistance programs are implicated by the above-referenced Executive Orders. In addition, OMB noted that it had already approved an undisclosed number of federal financial assistance programs to continue their funding processes even before the pause would have gone into effect.
Administrative Stay of OMB Memo
On January 28, 2025, prior to OMB’s memo becoming effective, U.S. District Court Judge AliKhan issued an administrative stay of the temporary funding freeze. However, Judge AliKhan’s administrative stay was set to expire on February 3, 2025, at 5 PM EST. Judge AliKhan reasoned that the administrative stay was necessary to maintain the status quo while further litigation on the White House’s funding freeze is ongoing.
Nonprofit and public health organizations had argued that the funding freeze could result in devastating outcomes for people who rely on federal funds and intruded on First Amendment rights by seeking to block funding for groups that engage in DEI programs. In response, the U.S. government argued that the organizations failed to show that they needed an immediate halt to the temporary pause on federal financial assistance and that the OMB’s additional guidance alleviated concerns about cutting off essential programs. Nonetheless, Judge AliKhan ruled that the temporary pause on federal financial assistance has a “specter of irreparable harm.”
Rescission of OMB Memo
OMB has rescinded its memo ordering a temporary pause on certain grants and loans disbursed by the federal government that was stayed until February 3, 2025, by U.S. District Court Judge Loren AliKhan. This comes in the wake of a federal judge ready to consider a temporary restraining order filed by 22 mostly Democratic-led states and the District of Columbia that would have further blocked the temporary pause.
Although OMB rescinded the memo, the White House reiterated that the Executive Orders issued by the President remain in full force and effect and will be implemented by all federal agencies. It is the White House’s stated understanding that as a result of OMB rescinding the its memo, the pending litigation is moot and the U.S. government can focus on controlling federal spending.
Impact on Broadband-Related Programs
This rescission of the OMB memo and the White House’s subsequent statement still casts doubt on the impact of the President’s Executive Orders on federal broadband-related programs. We note that after President Trump’s separate Executive Order titled Unleashing American Energy, which directed federal agencies to pause Inflation Reduction Act and Infrastructure Act funding related to the energy sector, OMB provided guidance on January 21, 2025 that this Executive Order only applies to certain energy projects, not broadband-related spending.
We believe further guidance will also be forthcoming from NTIA and the FCC. However, it appears that the DEI Executive Order will impact Infrastructure Act programs such as NTIA’s State Digital Equity Planning Grant Program, State Digital Equity Capacity Grant Program, and Digital Equity Competitive Grant Program which all have DEI elements. Since the BEAD Program is separately funded under the Infrastructure Act from the broadband-related State Digital Equity programs, the DEI aspects of those programs will not impact the BEAD Program. But there are certain DEI initiatives required under the BEAD NOFO, such as requiring that states and territories coordinate with their local communities, Tribal governments, and worker organizations to ensure full representation by underrepresented communities throughout the planning and deployment process, that could be impacted by NTIA’s review. Any potential funding freeze for the BEAD Program would not significantly impact the ability of State and Territory broadband offices (which are not subject to the Executive Orders) to continue conducting their BEAD Program-related processes until federal funding is needed to award selected broadband projects. It is also unclear whether other NTIA programs such as the Tribal Broadband Connectivity Program will be impacted by President Trump’s Executive Orders due to what may be characterized as DEI goals. Arguably, this program is geographic based and provides benefits to anyone living on Tribal land regardless of ethnicity.
Regarding the FCC’s federal financial assistance programs, without clarification from the Commission, it is unclear how President Trump’s Executive Orders will impact the FCC’s funding programs. It is especially unclear whether programs such as the Secure Networks Act Reimbursement Program will even be subject to the Executive Orders as reimbursements do not clearly fall within the federal regulation’s definition of federal financial assistance.[3]
1The listed Executive Orders include Protecting the American People Against Invasion (Jan. 20, 2025), Reevaluating and Realigning United States Foreign Aid (Jan. 20, 2025), Putting America First in International Environmental Agreements (Jan. 20, 2025), Unleashing American Energy (Jan. 20, 2025), Ending Radical and Wasteful Government DEI Programs and Preferencing (Jan. 20, 2025) (“DEI”), Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government (Jan. 20, 2025), and Enforcing the Hyde Amendment (Jan. 24, 2025).
2The White House memorandum did note that the pause did not affect assistance programs that provide funds directly to individuals, such as Social Security, Medicare, Medicaid, and SNAP. In addition, funds for small businesses, farmers, Pell grants, Head Start, rental assistance, and other similar programs were purportedly not impacted by the pause.
3See 2 C.F.R. 200.1 (“Federal financial assistance means: (1) Assistance that recipients or subrecipients receive or administer in the form of: (i) Grants; (ii) Cooperative agreements; (iii) Non-cash contributions or donations of property (including donated surplus property); (iv) Direct appropriations; (v) Food commodities; and (vi) Other financial assistance…”).
