Judge orders federal agencies to release billions of dollars from two Biden-era initiatives

McElroy concluded that the seven nonprofits demonstrated that the freeze was “arbitrary and capricious” and that the powers asserted by the federal agencies, including the White House’s Office of Management and Budget, in halting the payouts were not found in federal law.

“Agencies do not have unlimited authority to further a President’s agenda, nor do they have unfettered power to hamstring in perpetuity two statutes passed by Congress during the previous administration,” she wrote.

Diane Yentel, the president and CEO of the National Council of Nonprofits and a plaintiff in the lawsuit, welcomed the decision. It is the second legal victory for the organization, after a judge in February prevented the administration from issuing a broad freeze on all federal grants and contracts.

The nonprofits said that an executive order issued by Trump resulted in projects funded by these two laws being put on hold. As a result, funding from many federal agencies has been frozen for everything from urban forestry projects to weatherization programs to lead pipe remediation and has resulted in “serious and irreversible harm” to many groups.

“This funding freeze has already caused serious harm in communities, as nonprofits that provide critical services to our country’s most vulnerable have been forced to scale back operations, cancel projects, and consider laying off staff,” Yentel said. “This injunction offers much-needed relief and a path forward."

Plaintiffs argued the freeze violated the Administration Procedure Act and contradicts a directive from the budget office that said the pause in funding in the executive order didn't apply to all the funding. They also said there is no statutory provision that allows the federal agencies to freeze the funding.

Lawyers for the federal government responded that Congress gave agencies broad latitude to select recipients for the funding and that the plaintiffs failed to show that three of the seven agencies they sued have caused them any harm. They also argued that plaintiffs couldn’t seek relief through this lawsuit since they are already pursuing a similar challenge in a different court.

The 2021 Infrastructure Investment and Jobs Act provided $550 billion in new infrastructure investments, but is set to expire in 2026. Another $30 billion came from the 2022 Inflation Reduction Act, including for projects focused on clean energy and climate change.

Administration officials have said the decision to halt loans and grants funded by these two laws and others was necessary to ensure that spending complies with Trump’s recent blitz of executive orders. The Republican president wants to increase fossil fuel production, remove protections for transgender people and end diversity, equity and inclusion efforts.

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