Federal Grants Paused: White House Rescinds Directive Amid Legal Challenges

The White House, under President Donald Trump, has temporarily paused all federal grant and loan programs related to seven executive orders. The move, aimed at ensuring compliance with these orders, has sparked legal challenges and clarifications on excluded programs. Agencies must analyze and report on affected programs by February 10.

The Office of Management and Budget (OMB) issued a memorandum on January 27, 2025, directing all federal departments and agencies to pause activities related to the obligation or disbursement of federal financial assistance. This directive, which took effect partially on January 28, 2025, at 5:00 p.m. ET, aims to ensure compliance with seven executive orders signed by President Trump since January 20, 2025.
The pause affects programs that implicate any of the seven executive orders, including those related to foreign aid, nongovernmental organizations, diversity, equity, and inclusion (DEI), and the green new deal. However, the memo explicitly excludes mandatory spending programs and any program that provides direct benefits to Americans, such as Medicaid and school lunch programs.
Organizations affected by the memo have already filed suit, and an administrative stay was issued on January 28, 2025, preventing the Trump administration from blocking the disbursement of federal funds under open awards until at least February 3, 2025. The OMB requires agencies to complete a comprehensive analysis of all federal assistance programs by February 10, 2025, to identify any funding implicated by the executive orders.

1. What is the purpose of the OMB’s directive?
   The directive aims to ensure that all federal obligations and disbursements comply with seven executive orders announced by President Trump.
2. Which programs are excluded from the pause?
   Programs that provide direct benefits to Americans, such as Medicaid and school lunch programs, are excluded.

3. What is the timeline for agencies to report on affected programs?
   Agencies must provide a list of all programs subject to the pause by February 10, 2025.

4. What is the current legal status of the directive?
   The directive has been challenged in court, and an administrative stay has been issued to prevent the Trump administration from blocking disbursements until February 3, 2025.

5. What are the implications of the executive orders on federal funding?
   Programs that have a nexus with one of the executive orders will have their funding frozen, while those without a nexus will continue as usual.

The temporary pause on federal grants and loan programs is a significant move aimed at ensuring compliance with President Trump’s executive orders. However, it has sparked legal challenges and clarifications on excluded programs. The outcome of these challenges will determine the long-term impact on federal funding and program operations.