Appeals court rejects Trump administration push to reinstate spending freezes on grants and loans

[February 12, 2025]  By LINDSAY WHITEHURST

WASHINGTON (AP) — A federal appeals court on Tuesday rejected a Trump administration push to reinstate a sweeping pause on federal funding, a decision that comes after a judge found the administration had not fully obeyed an earlier order.

The Boston-based 1st U.S. Circuit Court of Appeals turned back the emergency appeal, the latest in a string of court losses that is increasingly frustrating top administration officials as it slows President Donald Trump’s wide-ranging agenda.

The appeals court also said it expected the lower court judge to clarify his original order. The Trump administration quickly pushed to withhold Federal Emergency Management Agency money sent to New York City to house migrants, saying it had “significant concerns” about the spending under a program appropriated by Congress.

The Justice Department had previously asked the appeals court to let it implement sweeping pauses on federal grants and loans, calling the lower court order to keep promised money flowing “intolerable judicial overreach.”

U.S. District Court Judge John McConnell in Rhode Island is presiding over a lawsuit from nearly two dozen Democratic states filed after the administration issued a boundary-pushing memo purporting to halt all federals grants and loans, worth trillions of dollars. The plan sparked chaos around the country.

The administration has since rescinded that memo, but McConnell found Monday that not all federal grants and loans had been restored. He was the first judge to find that the administration had disobeyed a court order.

Money for things like early childhood education, pollution reduction and HIV prevention research has remained tied up even after his Jan. 31 order halting the spending freeze plan, the states said.

McConnell, who was appointed by former President Barack Obama, ordered the Trump administration to “immediately take every step necessary” to unfreeze all federal grants and loans.

President Donald Trump speaks with reporters as Elon Musk listens in the Oval Office at the White House, Tuesday, Feb. 11, 2025, in Washington. (Photo/Alex Brandon)

He also said his order blocked the administration from cutting billions of dollars in grant funding from the National Institutes of Health, a move announced last week.

The Justice Department said McConnell's order prevents the executive branch from exercising its lawful authority, including over discretionary spending or fraud.

“A single district court judge has attempted to wrest from the President the power to ‘take care that the laws be faithfully executed.’ This state of affairs cannot be allowed to persist for one more day,” government attorneys wrote in their appeal.

The states, meanwhile, argued that the president can’t block money that Congress has approved, and the still-frozen grants and loans are causing serious problems for their residents. They urged the appeals court to keep allowing the case to play out in front of McConnell.

Judges have also blocked, at least temporarily, Trump’s push to end birthright citizenship for anyone born in the U.S., access to Treasury Department records by billionaire Elon Musk’s Department of Government Efficiency and a mass deferred resignation plan for federal workers.

The Republican administration previously said the sweeping funding pause would bring federal spending in line with the president’s priorities, including increasing fossil fuel production, removing protections for transgender people and ending diversity, equity and inclusion efforts.

A different federal judge in Washington has also issued a temporary restraining order against the funding freeze plan and since expressed concern that some nonprofit groups weren’t getting their funding.

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