Two national associations have won an immediate temporary restraining order from a federal district court of an announced plan by the acting head of the federal Office of Management and Budget for a “temporary pause” of all federal funds beginning at 5 p.m. on Jan. 28 that are
related to Trump administration executive orders announced after the president’s Jan. 20
inauguration.

U.S. District Court Judge Loren L. AliKhan temporarily blocked the
funding freeze outlined in an agency memo released on Jan. 27 by OMB acting director Mathew Vaeth from taking effect after the American Public
Health Association and the National Council of Nonprofits sought and won the court order to halt the action that could affect federal support programs, including small business loans and state and local government
grants and loans, as well as aid to nonprofits
and institutions.

A number of Democratic state attorneys general also plan a lawsuit against the OMB freeze and Trump administration—including New York, California, Illinois, Massachusetts, New Jersey and Rhode Island. Arizona, Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, Vermont, Washington, Wisconsin and the District of Columbia. 

New York Attorney General Letitia James said the funding pause was unconstitutional. Other state attorneys said it undermines the authority of Congress. 

Trump “does not get to wake up in the morning or after an afternoon nap and
direct his entire government to stop funding critical services that
Congress has duly authorized and appropriated,” said New Jersey Attorney General Matt Platkin, Other groups representing those affected by the funding freezes could also have legal standing to sue, reports say.

The U.S. Dept. of Defense said its contract awards would continue in a statement released late Jan. 28. “The Department continues to award new contracts to fulfill validated mission needs,” it said. “While we are not aware of any specific contracts or other activities affected, it is possible that activities may be paused if they are determined to fall within the bounds of the guidance. DOD said it would provide more details “as they develop and become available.”

Democratic leaders also called for a hold on the nomination of Russell Vought, an architect of the ultra-conservative Project 2025 policy agenda, to lead the OMB until the Trump administration releases the freeze on already appropriated federal funding.

Vaeth had described the hold as necessary to provide the new administration enough time “to review agency programs and determine the best use of the funding for those programs consistent with the law and the president’s priorities.” 

In a Jan. 28 press briefing, Democratic Senate leader Chuck Schumer (N.Y.) described the action as a “dagger in the heart of the average American family in Red states, Blue states, in cities, in suburbs.”

Impact on Construction

The impact on construction projects already underway or contracted out is not yet understood, and construction groups on Jan. 28 were uncertain how broad the effects would be. 

“We are reaching out to all our contacts within various agencies to get a
sense of what the memo means,” Brian Turmail, vice president of public affairs and workforce at the Associated General Contractors, said. “The short answer is we are working to
clarify its potential impacts. At the same time, we are communicating
with the administration that any significant delay in funding will
impact construction projects, negatively.”

Zack Perconti, vice president of government affairs for the National Utility Contractors Association, added: “Absent specific direction, this memo is so broad everything we are working on is potentially paused until it is clarified. Climate resilience projects are likely paused under both the Unleashing American Energy executive order and the OMB memo, but other projects like water, broadband and general surface transportation may end up being exempted.” 

Sean McGarvey, president of North America’s Building Trades Unions, said he expects “pretty massive layoffs of construction workers around the country based on the actions of the administration so far.” He said state transportation department officials and others have said “they will be shutting the funding down, which in turns means the contractors will be putting off those projects and laying our workers off.” He described the offshore wind industry as “dead.” 

White House Press secretary Karoline Leavitt said Jan. 28 that federal assistance to individuals—including Social Security benefits, food stamps, Medicare and welfare assistance—would not be affected. “However, it is the responsibility of this president and this administration to be good stewards of taxpayer dollars,” she said.

Leavitt said OMB would review programs related to diversity, equity and inclusion programs and so called “green new deal social engineering policies,” as Trump rhetoric in comments and social media posts have referred to them. She added that nominated OMB director Vought would be open to reviewing agency requests to continue supporting “programs that are necessary and in line with the president’s priorities.” 

But Sen. Patty Murray (D-Wash.) Appropriations Committee vice chair, said it is not up to the president or OMB to overrule congressional law, including appropriations bills, which are typically passed through extensive bipartisan negotiation. “Republicans should not advance [Vought’s] nomination out of the committee until the Trump administration follows the law … and makes sure the nation’s spending laws are implemented as Congress intended,” she said. 

Some Republicans have said they support the funding pause, with Budget Committee Chair Lindsey Graham (R-S.C.) releasing a statement that he would move forward with a committee vote on Vought’s nomination on Jan. 30.