First Circuit Hands Important Win to Trump Administration in Federal Funding Freeze Case
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The First Circuit Court of Appeals has issued a significant ruling in New York v. Trump, the high-profile challenge to the Trump Administration’s efforts to review and realign federal financial assistance programs with the President’s Executive priorities. While the ruling is mixed, a genuine and important victory is buried inside – and the ACLJ has been fighting alongside the Administration since the very beginning.
Shortly after President Trump took office in January 2025, his Office of Management and Budget issued a memo directing federal agencies to temporarily pause disbursements of federal financial assistance that might conflict with several of the President’s Executive orders – covering priorities like immigration enforcement, the Hyde Amendment, and energy policy. A coalition of 22 states and the District of Columbia immediately sued in federal court in Rhode Island, claiming the pause violated the Administrative Procedure Act (APA). The district court sided with the states, issuing a sweeping preliminary injunction ordering the Administration to unfreeze funds and resume payments. The Administration appealed, and today the First Circuit Court of Appeals weighed in – affirming parts of the injunction, but delivering a meaningful legal victory on a critical jurisdictional question.
The ACLJ filed a crucial amicus brief in this case. We argued two core points: First, that the states’ lawsuit was moot because it targeted a now-rescinded OMB memo; and second, that the OMB memo itself simply directed agencies to analyze their programs and pause funding only where legally permissible – not the kind of final, reviewable agency decision the states were claiming it was.
We also emphasized what remains critically important today: This case has direct implications for the Hyde Amendment and the President’s authority to ensure that not one taxpayer dollar funds abortion in violation of federal law. Today’s ruling is the next chapter in that fight. (You can read our amicus brief here.)
The First Circuit agreed – consistent with arguments we have advanced throughout this litigation – that the district court exceeded its jurisdiction by ordering the federal government to affirmatively release and transmit specific disbursements on awarded grants and executed contracts.
Citing the Supreme Court’s recent decisions in Department of Education v. California and NIH v. American Public Health Association, the court vacated that portion of the injunction. The Court of Federal Claims is the proper venue for what are essentially contractual payment disputes. This is a meaningful jurisdictional guardrail that limits how aggressively lower courts can weaponize injunctions to force open the federal Treasury.
This matters enormously for future cases. Activist district courts cannot simply order the Executive Branch to cut checks under the guise of APA review. That boundary has now been firmly reaffirmed at the appellate level.
That being said, the court got a lot wrong. It affirmed the core of the preliminary injunction, agreeing that the states were likely to succeed in showing the funding pause was “arbitrary and capricious.” The mootness arguments – that OMB’s rescission of the memo ended the controversy – also failed to carry the day. The separation of powers questions at the heart of this case are far from resolved. Can federal courts routinely second-guess the President’s management of Executive Branch spending priorities? The answer should be no. As we argued in our brief, this kind of judicial interference is lawfare – a direct assault on the Constitution’s original design for a unitary Executive with meaningful control over how federal funds are administered.
This ruling shows the Supreme Court’s recent decisions are beginning to rein in judicial overreach, and that is a foundation we intend to keep building on. The ACLJ will continue fighting in courts across America to defend the President’s constitutional authority and ensure the judiciary does not become a tool for blocking a lawfully elected President from governing.