First Circuit Court Blocks Trump Administration Funding Freeze

The U.S. Court of Appeals for the First Circuit upheld lower court decisions blocking the Donald Trump administration's effort to freeze trillions of dollars in federal loans and grants to states. In a unanimous ruling released Monday, the court determined that the Office of Management and Budget acted arbitrarily and capriciously when it directed federal agencies in early 2025 to pause funding to ensure consistency with presidential policies.

The court largely affirmed a March 2025 preliminary injunction and two April 2025 orders specifically targeting the Federal Emergency Management Agency. The panel agreed with U.S. District Judge John McConnell that the administration's attempt to withhold congressionally appropriated funds usurped the balance of power. While the Office of Management and Budget eventually withdrew the initial January 2025 directive, the court found evidence that funds remained frozen.

New York Attorney General Letitia James led the primary lawsuits, alleging the freeze violated the U.S. Constitution and the Administrative Procedure Act. The appeals court vacated one requirement for the government to disburse money specifically for awarded grants based on Supreme Court jurisdiction precedents, but otherwise maintained that the government's arguments lacked merit.