On January 27, the White House ordered a temporary pause, via an internal memorandum, 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

OMB has stated that any program that is not implicated by the above-referenced Executive Orders is not subject to the funding freeze. The temporary pause was set to take effect January 28, 2025, at 5 PM EST, but was stayed by U.S. District Court Judge Loren AliKhan until February 3, 2025, at 5 PM EST. Judge AliKhan issued the stay in order to maintain the status quo while further litigation plays out. The original pause would have temporarily impacted the National Telecommunications and Information Administration’s (NTIA) Broadband, Equity, Access, and Deployment (BEAD) Program and the Federal Communications Commission’s (FCC or Commission) USF Programs, including the Lifeline Program while those programs are reviewed.

Bottom Line: The White House was set to temporarily paused federal financial assistance programs that are implicated by certain Executive Orders. However, U.S. District Court Judge AliKhan issued an administrative stay of the temporary pause until February 3, 2025, at 5 PM EST. As we await clarification from the FCC and NTIA, as well as the courts, it is unclear the extent to which this funding freeze will last if it is implemented after February 3. In the short term, it may temporarily impact the funding stream of the federal broadband programs such as the FCC’s USF Programs, the Secure Networks Act Reimbursement Program, and NTIA’s BEAD Program. But luckily for USF recipients, Universal Service Administrative Company (USAC) payments will be processed this Friday, January 31, 2025, before the temporary funding freeze is implemented. Federal agency reports are currently still due by February 10, 2025, but OMB has noted that the temporary pause for certain programs could be as short as a day depending on the agency’s ability to coordinate with OMB. Furthermore, OMB states that any payment required by law will be paid without interruption or delay.

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.

Federal Funding Freeze

The White House issued a temporary funding freeze on all federal financial assistance programs until federal agencies have determined the impact of President Trump’s Executive Orders on such programs, effective January 28, 2025, at 5 PM EST.² Specifically, under the now-stayed White House memorandum, each federal agency is required to complete and submit a comprehensive analysis to the Office of Management and Budget (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 would also apply to all activities associated with open Notices of Funding Opportunity, such as conducting merit review panels.

The White House memorandum explains that this temporary funding freeze will provide the Administration time to review federal agency programs and “best uses of the funding for those programs consistent with the law and the President’s priorities.” But before conducting their analysis, federal agencies must identify any legally mandated obligations for their assistance programs that will arise during the temporary pause and report such information to OMB. The funding freeze would remain intact for federal agencies until OMB has reviewed the submitted information and provided guidance to such agency.

Federal Agency Review

In conducting the comprehensive analysis, federal agencies for each federal financial assistance program must assign responsibility and oversight of the analysis to a senior political appointee to ensure that the financial assistance conforms to Administration priorities. In addition, each federal agency must: (1) review any currently pending programs to ensure that Administration priorities are addressed; (2) modify in accordance with Administration priorities any unpublished financial assistance announcements, subject to statutory authority; and (3) withdraw any announcements already published consistent with Administration priorities. Federal agencies have also been directed to initiate investigations when warranted to identify any underperforming federal financial assistance recipients and cancel awards that are in conflict with Administration priorities.

Exceptions

The memorandum states that OMB is allowed to grant exceptions to this temporary freeze, on a case-by-case basis, for federal agencies to issue new awards or take other actions. It is possible that the USF program and Secure Networks Act Reimbursement Program will fall under this exception. Furthermore, to the extent required by law, federal agencies would be allowed to continue certain activities such as the closeout of Federal awards, pursuant to 2 C.F.R. 200.344, or maintaining certain recording obligations.

Additional OMB Guidance

OMB issued additional guidance noting that any program not implicated by the following Executive Orders is 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). While reports are due to OMB by February 10, 2025, from each federal agency, OMB will continue to work with federal agencies to determine whether certain federal financial assistance programs are implicated by the above-referenced Executive Orders. Thus, funding pause for a particular program could be as short as a day. OMB has 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 Funding Freeze

U.S. District Court Judge AliKhan has issued an administrative stay of the White House’s temporary funding freeze that was set to be effective January 28, 2025. However, Judge AliKhan’s administrative stay will 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.”

Impact on 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 OMB 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. At the least during any temporary funding freeze, because States and Territories are not subject to the Executive Order, state and territory broadband offices should be able 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 funding freeze as reimbursements do not clearly fall within the federal regulation’s definition of federal financial assistance.³ However, the temporary freeze could have delayed the receipt of funds for recipients of the FCC’s USF Programs that depend on frequent disbursements from USAC given that the next one is scheduled for January 31, 2025, but such recipients got a reprieve due to the temporary stay and lasting at least until Monday, February 3.

We will provide updates as they become available.

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 does note that this pause does 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 will not be paused.
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…”).