Margot Cleveland, an investigative journalist and legal analyst and serves as The Federalist’s senior legal correspondent, breaks it down.
Here’s Your Guide To The Lawsuits Challenging Trump’s Funding Freezes And Terminations
By: Margot Cleveland, The Federalist, March 13, 2025:
Here are the cases trying to derail Trump’s efforts to rein in federal spending.
n Monday, The Federalist ran its first in-depth article covering the lawfare against President Trump’s efforts to implement his American-first agenda. “In Your Guide To The Lawsuits Challenging A President’s Power To Fire Executive Officials,” The Federalist provided a detailed analysis of the litigation launched against the Trump Administration challenging the president’s firing of executive branch officials.
Today’s article provides a deep dive for a second category of lawsuits likely to soon reach the Supreme Court, namely challenges to the Trump Administration’s funding freezes and terminations, and the federal government’s failure to pay for past work performed under grants and contracts.
Lawsuits falling within this bucket include, in chronological order by date of filing:
State of New York v. Trump, in which more than 20 blue states and the District of Columbia sued the Trump Administration, challenging the funding freezes.
National Council of Nonprofits v. Office of Management and Budget, in which associations of non-profit organizations sued the Trump Administration, challenging funding freezes.
Amica Center for Immigration Rights v. United States Department of Justice, in which nine subcontracts providing “legal access programs” for aliens sued the Department of Justice, challenging a stop-work order freezing their funding.
American Federation of Government Employees v. Trump, in which two unions sued the Trump Administration, challenging the alleged dismantling of USAID by, among other things, the canceling of grants and contracts.
AIDS Vaccine Advocacy Coalition v. United States Department of State, in which two non-profits sued the Department of State, challenging the USAID funding freeze.
Global Health Council v. Trump, in which multiple non-profits and associations of non-profits sued the Trump Administration, challenging the USAID funding freeze.
United States Conference of Catholic Bishops v. United States Department of State, in which the United States Conference of Catholic Bishops sued the Department of State, challenging the Trump Administration’s freeze of funding for refugee services.
State of New Mexico v. Musk, in which fourteen blue states sued Elon Musk, challenging, among other things, funding freezes and terminations he supposedly implemented.
National Association of Diversity Officers in Higher Education v. Trump, in which an organization of college diversity officers, the City of Baltimore, and others sued the Trump Administration, challenging the termination of DEI grants.
Pacito v. Trump, in which several non-profits and individuals sued the Trump Administration, challenging the freeze of grants for refugees and freeze of admission for refugees.
The Legal Issues
While there is not a perfect overlap of issues or claims, these lawsuits in general challenge several of President Trump’s executive orders (“EOs”) directing various federal agencies to freeze, review, and terminate various federal grants and contracts that conflict with the Trump Administration’s policies and priorities and the agencies’ efforts to implement those EOs.
Several lawsuits also challenged an Office of Management and Budget directive providing, “Federal agencies must temporarily 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 [diversity, equality, and inclusion], woke gender ideology, and the green new deal.” That OMB directive provided it was effective on January 28, 2025, at 5:00 p.m., however, it was rescinded on January 29, 2025.
The Plaintiffs in these cases typically allege multiple legal theories, seeking to halt the Trump Administration’s freeze and, in many cases, the later termination of the grants and contracts. The most prevalent legal claims presented include the following:
Violation of Constitutional Separation of Powers: This claim alleges the Trump Administration exceeded its Article II authority by refusing to spend money appropriated by Congress.
Violations of the Administrative Procedure Act: Many of the complaints allege multiple Administrative Procedure Act (APA) claims. The APA requires federal agencies to follow specific procedures in issuing what are called “final agency actions.” This federal statute allows individuals injured by a final agency action to sue in federal court under certain circumstances when the final agency action is, among other things, “arbitrary and capricious,” adopted without the requisite notice, or is “in violation of law.”
The lawsuits identified above rely heavily on APA claims, alleging the directives by OMB and various agencies constitute “final agency action.” While various directives are arguably “final agency action” — something far from clear — appellate courts are unlikely to conclude that a decision by an agency to cancel individual grants or contracts is a “final agency action.” And without a “final agency action,” there is no APA claim.
The lawsuits identified above nonetheless argue that freezes and terminations of grants and contracts are final agency action and that the Trump Administration violated the APA because the funding freezes or terminations are “arbitrary and capricious,” adopted without the requisite notice, and “in violation of law.” In arguing the Trump Administration acted “in violation of law,” the complaints generally allege supposed violations of the separation of powers. Other complaints allege the funding freezes or terminations violate the Impoundment Control Act and thus are “in violation of law,” thereby creating an APA claim.
The Impoundment Control Act requires the president to send a “special message” to Congress detailing any proposed “deferral of budget authority.” A “deferral of budget authority” includes: (1) “withholding or delaying the obligation or expenditure of budget authority . . . provided for projects or activities;” or (2) “any other type of Executive action or inaction which effectively precludes the obligation or expenditure of budget authority . . . .”
Under the Impoundment Control Act, the president may only defer spending (1) “to provide for contingencies;” (2) “to achieve savings made possible by or through changes in requirements or greater efficiency of operations;” or (3) “as specifically provided by law.”
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