Democratic AGs Secure Order Blocking Federal Funding Freeze

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  • A coalition of 23 Democratic AGs, led by California AG Rob Bonta and New York AG Letitia James, has secured a temporary restraining order blocking a directive from the  Office of Management and Budget (OMB) that would withhold federal funding to states.
  • The lawsuit seeks declaratory and injunctive relief and vacatur of the OMB directive, which ordered federal agencies to pause most federal assistance funding and loans to states. The court held that the AGs had a substantial likelihood of success on their claims that the directive was contrary to law, violated the APA; threatened states’ ability to conduct essential activities, was arbitrary and capricious, and violated separation of powers principles. The court ordered that the temporary restraining order remain in effect until the court rules on the AGs’ forthcoming motion for a preliminary injunction.
  • The court rejected the Trump administration’s argument that the matter was moot because it had rescinded the OMB directive, finding that the evidence demonstrated that the rescission was in name only and that the substantive effect of the directive continued.
  • We have previously reported on the AGs’ lawsuit, as well as an administrative stay of the OMB directive filed by another federal district court in response to a separate challenge by nonprofit organizations that receive federal funding.
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