Federal Court Allows Federal Agencies to Continue Making Grant Disbursements Through Next Monday
Minutes before the federal Office of Management and Budget (OMB) memo to federal agencies pausing federal grants and loans was to take effect yesterday, a federal court issued an “administrative stay” that will allow federal agencies to continue to make disbursements to existing grantees through next Monday, February 3 at 5 p.m.
As we shared yesterday, the OMB memo requires all federal agencies to pause issuing new grant awards, disbursement of funds under existing grants, and other relevant agency actions related to their grant programs. It also requires agencies to review their grant programs and report to OMB by February 10 on grants that are inconsistent with President Trump’s Executive Orders. The grants pause was set to take effect at 5 p.m. yesterday. The court’s administrative stay means that federal agencies can continue to make disbursements on existing grants through Monday, February 3 at 5 p.m. while the court reviews the merits of the case. Federal agencies may not, however, issue new grant awards for the time being.
For the latest on the OMB grants pause and its impact on North Carolina nonprofits, check out the Center’s resource page, which we'll update regularly. Here are answers to questions nonprofits have been asking the Center (some of which have been updated since yesterday afternoon’s update):
Which federal funding streams are affected? Potentially, the pause applies to all (or at least most) federal grants to nonprofits and to state and local governments. The memo directs agencies to “pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” Because several of these terms are not clearly defined, it is possible that some or all federal agencies may interpret the memo to require a pause in virtually all of their grants to nonprofits. The memo does not apply to federal aid to individuals, including Social Security, Medicare, Medicaid, Supplemental Nutrition Assistance Program (SNAP), Pell grants, and rental assistance, so these payments should continue. OMB has the authority to grant exceptions to allow agencies to grant new awards or make payments on a case-by-case basis.
How long will the pause be in effect? The memo is unclear on how long the pause in grants will be in effect.
Could this lead to the cancellation of existing grants? Potentially, yes.
Is there anything nonprofits with federal grants can do before the pause takes effect? The pause on grants doesn’t take effect until 5 p.m. on Monday, February 3. Some federal agencies may be willing to make advance payments to nonprofits before that time. If your nonprofit has a federal grant and is expecting a disbursement in the next few weeks, you may want to reach out to your grant administrator to find out whether you may be able to get your next disbursement before 5 p.m. on Monday, February 3.
What is the status of court challenges? The National Council of Nonprofits (NCN), along with small business and public health advocates, filed a lawsuit yesterday asking the U.S. District Court for the District of Columbia to stop the implementation of the OMB memo. The lawsuit alleges that OMB’s memo is not allowed under the Administrative Procedures Act because it is: (a) arbitrary and capricious; (b) in violation of the First Amendment to the U.S. Constitution; and (c) beyond OMB’s statutory authority. The NCN lawsuit seeks a temporary restraining order and preliminary injunction that would immediately stop the implementation of the memo, along with a permanent injunction that would invalidate the memo. Shortly before the pause was set to take effect on January 28, the court issued an administrative stay delaying the implementation of parts of the memo until Monday, February 3 at 5 p.m. As the court explained in its ruling, “[a]n administrative stay ‘buys the court time to deliberate’ when issues are not 'easy to evaluate in haste.’” The administrative stay ensures that federal agencies may continue to make disbursements to existing grantees through Monday, but it does not allow for the awarding of new grants. The parties to the lawsuit will submit additional briefs to the court this week so that the court can make a ruling on the merits of the case on Monday to determine whether to issue a preliminary injunction and temporary restraining order that would stop the implementation of the grants pause beyond Monday. It is likely that some state and local governments will file similar actions in federal court.
How can my nonprofit share the impact of the grants pause on our organization? To help understand the impact of the pause on federal grants, the Center is asking nonprofits with federal funding to respond to this quick survey. Your responses will help us best advocate for solutions to provide for continuity of federal funding.
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