- News
Trump Admin Memo on Pausing Federal Funds
The Office of Management and Budget (OMB) recently released a memo instructing federal agencies to review existing federal financial assistance programs and temporarily pause certain funds.
By: Brian Egan, Chief Policy Officer, NABL
Last Updated January 29, 2025
On Monday, January 27, 2025, the Office of Management and Budget (OMB) published a memo (M-25-13) instructing the heads of federal executive departments to temporarily pause grant, loans, and other financial assistance programs. While the memo specifically exempts forms of federal assistance provided directly to individuals, it requires each agency to “complete a comprehensive analysis of all of their Federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s executive orders” by February 10.
Until such review, the order requires Federal agencies, “to the extent permissible under applicable law” to temporarily pause “all activities related to obligation or disbursement of all Federal assistance.” The temporary pause was originally effective January 28, at 5:00 PM.
Updates
- [1/29/2025] Order Rescinded: The OMB issued a new Memorandum M-25-14, which states, “OMB Memorandum M-25-13 is rescinded. If you have questions about implementing the President’s Executive Orders, please contact your agency General Counsel.”
- [1/28/2025] Administrative Stay in Place: Later in the day on January 28, U.S. District Judge Loren AliKhan issued an emergency administrative stay to preserve the status quo on federal funding through 5:00pm ET Monday, February 3, on which date the District Court has scheduled a preliminary injunction hearing to further review the complaint. The judge’s ruling applies to federal funding for open awards for grants that would have otherwise been impacted by the OMB’s order. The move averts an immediate threat of any temporary pause in federal funding for these open grant awards. Ongoing litigation challenging the OMB order is likely to work its way to the U.S. Supreme Court who will ultimately determine the outcome of several complaints lodged against the order.
Reference Links
The matrix of impacted programs distributed in the “Instructions” document specifically lists out virtually every form of municipal bonds. The memo’s applicability to municipal bonds remains unclear, however. It also remains unclear how any potential application of the memo differs between tax-exempt bonds, where no money is directly or indirectly distributed by the federal government, and select tax-advantaged bonds where refundable tax credits are made available to taxpayers or in the form of direct payments to issuers. The matrix also includes a significant number of other impacted sources of federal aid to municipal issuers and borrowers that may complicate project finance.
FAQs released on January 28, further clarify that “the pause [in Federal financial assistance funding] does not apply across-the-board. It is expressly limited to programs, projects, and activities implicated by the President’s Executive Orders, such as ending DEI, the green new deal, and funding nongovernmental organizations that undermine the national interest.”
Bond lawyers should be advised that municipal market participants, particularly impacted issuers and borrowers, remain highly concerned about the potential impact of this funding review and pause. NABL continues to monitor this rapidly evolving situation and will keep you up to date as events unfold.
Member-Exclusive Conference
The Institute will be held at the Marriott Marquis San Diego Marina from Thursday, March 20 to Friday, March 21 this year. Each discussion forum is capped at 50 attendees. However, forums will repeat throughout the two-day conference at different times, allowing attendees multiple opportunities to participate.
