Judge orders Trump administration to restore funding after states sue

Al Drago/Bloomberg

A Rhode Island district court judge Monday said the Trump administration has violated his order to resume the flow of federal funds to states after 23 Democratic states filed a motion Friday saying certain funds, including infrastructure dollars, remain frozen.

District Judge John McConnell's Monday order requiring the Trump administration to immediately restore federal funds is the latest fallout from a controversial Jan. 27 Office of Management and Budget memo that froze all federal funding to states and cities. It's also part of a growing number of court actions aimed at halting the Trump administration's efforts to restrict federal spending allocated under the Biden administration.

A national coalition of nonprofits also sued over the federal funding freeze, and Democratic states have filed another lawsuit over expanded access to the Treasury Department's payroll and data systems. Three unions last week sued the administration over its efforts to persuade millions of federal employees to resign.

After widespread confusion and shock, OMB rescinded its memo two days later but not before the Democratic state attorneys general filed suit and McConnell issued a temporary restraining order pausing the freeze.

The language in his TRO was "clear and unambiguous," McConnell said in his Monday order.

"The defendants now plea that they are just trying to root out fraud," McConnell, an appointee of former President Barack Obama, wrote. "But the freezes in effect now were a result of the broad categorical order, not a specific finding of possible fraud. The broad categorical and sweeping freeze of federal funds is, as the court found, likely unconstitutional and has caused and continues to cause irreparable harm to a vast portion of this country." The administration can request "targeted relief from the [original] temporary restraining order]" in specific instances if they can show they're acting with authority, he added.

The judge ordered the administration to immediately resume the flow of funds and restore withheld funds, including those under the Inflation Reduction Act and the IIJA.

Among President Donald Trump's first actions was to sign an executive order canceling funds that support the so-called Green New Deal, which includes money for clean energy in the Inflation Reduction Act and the IIJA. The states Friday that the administration continued to block funds for certain IRA and IIJA programs, like the $7 billion Solar for All grants and $5 billion Climate Pollution Reduction grants.

On Saturday, U.S. District Judge Paul A. Engelmayer restricted access to the Treasury Department's payment and data systems by the advisory group Department of Government Efficiency, run by Elon Musk, after 19 Democratic state attorneys general filed a lawsuit on Friday. DOGE has been combing through government payments to flag what it considers fraudulent or wasteful spending.

"President Trump does not have the power to give away Americans' private information to anyone he chooses, and he cannot cut federal payments approved by Congress," said New York Attorney General Letitia James in a statement. "Musk and DOGE have no authority to access Americans' private information and some of our country's most sensitive data."

Engelmayer ruled that political appointees and "special government employees" should not have access to Treasury's system.

On Monday, The Treasury Department asked Engelmayer to "immediately" dissolve his order. "This is a remarkable intrusion on the Executive Branch that is in direct conflict with Article II of the Constitution, and the unitary structure it provides," the government said. "There is not and cannot be a basis for distinguishing between 'civil servants' and 'political appointees'."

A hearing is set for Feb. 14.