Blog

On January 27, 2025, the White House Office of Management and Budget ("OMB") issued a memorandum, Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs, that will have a sweeping impact on federal grant and assistance programs and recipients.

The memorandum provides that federal financial assistance programs should be "dedicated to advancing Administration priorities" and thus directs federal agencies to "termporarily pause all activities" regarding federal assistance obligations and dispursements that relate to any of the Administration's executive orders. This, according to the memorandum, will provide the new Administration with sufficient time to "to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities."

While sweeping in scope, the memorandum exempts Medicare or Social Security benefits programs from the temporary pause. However, with regard to the President's priorities, the memorandum calls out several executive orders which may serve as a guide to agency officials and federal assistance recipients as to the sheer magnitude of the temporary pause.

The memorandum cites the following executive orders as examples of the Administration's priorities:

• Protecting the American People Against Invasion (Jan. 20, 2025)

• Reevaluating and Realigning United States Foreign Aid (Jan. 20, 2025)

• Putting America First in International Environmental Agreements (Jan. 20, 2025)

• Unleashing American Energy (Jan. 20, 2025)

• Ending Radical and Wasteful Government DEI Programs and Preferencing (Jan. 20, 2025)

• Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government (Jan. 20, 2025)

• Enforcing the Hyde Amendment (Jan. 24, 2025)

The memorandum states that the temporary pause will take effect today, January 28, 2025, at 5:00 pm, but states that OMB may grant exceptions to the pause on a case-by-case basis.

For each program, the memo requires federal agencies to: (1) assign oversight to a senior political appointee; (2) review pending federal assistance announcements for harmony with Administration priorities; and (3) ensure adequate oversight of federal assistance programs and initiate investigations to "identify underperforming recipients, and address identified issues up to and including cancellation of awards."

Takeaway

Given the breadth of this temporary pause, federal grantees and other recipients of federal assistance should closely follow how the temporary pause unfolds. To be sure, because the memorandum calls out so many of the Administration's executive orders but nevertheless remains unbounded, it is possible that federal agency officials may elect to pause most federal assistance programs to sort out the true scope of the directive.

Still, in light of the fact that the memo concludes with a call to initiate investigations and to potentially cancel awards, impacted parties may benefit from reviewing existing federal agreements and engaging with outside counsel to help navigate the process. And, because it is possible that this pause ultimately may lead to the impoundment of funds, this situation also may give rise to litigation under the Impoundment Control Act, which requires approval from Congress before a President can rescind funds. The President's position, however, is that the Act is unconstitutional.