A federal judge temporarily blocked a White House effort to implement a broad freeze on federal grant and loan programs, including clean energy programs, implicated by President Donald Trump's executive orders.

Judge Loren AliKhan granted a restraining order through Feb. 3 during a hearing for a lawsuit filed Jan. 28 in the US District Court for the District of Columbia by a national nonprofit organization and public health groups. The federal funding pause was set to take effect at 5 p.m. ET on Jan. 28.

Congressional Democrats and attorneys general representing blue states asserted that the freeze, outlined Jan. 27 in a two-page memo, violates separation of powers principles and runs afoul of the Impoundment Control Act of 1974.

The memo, signed by Matthew Vaeth, acting director of the White House Office of Management and Budget, directs federal agencies to complete a "comprehensive analysis" by Feb. 10 of all federal financial assistance programs affected by Trump's executive orders.

Trump's early actions included an order declaring a national energy emergency and another order intended to "unleash" American energy by boosting the production of oil and gas, which are already at record levels. Trump also ordered the US Environmental Protection Agency to review for rescission signature Biden-era emissions rules and directed a halt to all federal leasing activities for onshore and offshore wind energy development, among other measures.

In the interim, the Jan. 27 OMB memo orders agencies to pause the issuance of new awards and the disbursement of federal funds under all open awards "to the extent permissible by law" pending further review.

Among potentially implicated programs, the memo specifically mentioned "the green new deal" — a non-binding climate and energy resolution introduced by progressive Democratic lawmakers in 2019 that never gained much support. The measure ultimately failed to advance to a full vote in the US Senate.

The use of federal resources to advance "green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve," Vaeth wrote.

California Attorney General Rob Bonta and New York Attorney General Letitia James separately led a 23-state coalition in suing to block the implementation of the OMB memo, citing immediate harm to their states. The lawsuit, filed Jan. 28 in the US District Court for the District of Columbia, argues that Congress has not delegated any unilateral authority to OMB to indefinitely pause all federal financial assistance under any circumstance.

White House Press Secretary Karoline Leavitt told reporters Jan. 28 that the White House Counsel's Office believes the pause is "within the president's power," and "therefore he's doing it."

'A constitutional crisis'

One of the orders Trump issued last week directed a pause on any new financial commitments through the Inflation Reduction Act of 2022 and the Infrastructure Investment and Jobs Act of 2021. The two laws included historic levels of climate and energy infrastructure funding.

However, Democratic appropriators said the Jan. 27 memo, combined with Trump's executive orders, "have sown immense confusion across the country, with some reports indicating that they could immediately halt all federal funding for any grant or loan."

"This administration's actions will have far-reaching consequences for nearly all federal programs and activities, putting the financial security of our families, our national security, and the success of our country at risk," Senator Patty Murray, Democrat-Washington, and Representative Rosa DeLauro, Democrat-Connecticut, said in a letter to Vaeth.

During a Jan. 28 press conference, Senator Jeff Merkley, Democrat-Oregon, ranking member on the Senate Budget Committee, called the pause on financial disbursements "a constitutional crisis."

Merkley noted the Impoundment Control Act of 1974 requires US presidents to formally submit a request to Congress to rescind appropriated funding. If the request is not approved within 45 days, the president is legally obligated to spend the appropriated funds.

Russell Vought, nominated by Trump for OMB director, said during a Jan. 22 confirmation hearing that "the president ran on the notion that the Impoundment Control Act is unconstitutional, and I agree with that." The Senate Budget Committee is scheduled to hold a Jan. 30 business meeting to vote on Vought's nomination.

Energy sector impacts

Michael Catanzaro, a senior associate at the Center for Strategic and International Studies, said the OMB pause on financial assistance was part of an effort to drive an impoundment crisis "all the way to the Supreme Court."

Vought and the incoming administration believe the president has the authority to determine how he spends money appropriated by Congress, Catanzaro said during a Jan. 28 panel discussion in Washington, DC.

"All of this funding under the IRA is at serious risk," said Catanzaro, who worked at the White House National Economic Council during the first Trump administration. "If you don't have the money already in your pocket, and you're hoping to get money via a grant, or you've got a conditional commitment by the [US Energy Department's Loan Program Office], anything related to that, you should be very concerned."

"He is, under the law, obligated to spend appropriated dollars. But again, that's just not the viewpoint," Catanzaro said.

Catanzaro suggested that oil and gas companies also might fail to receive support if they raise concerns with the new administration about a pause on some of the spending for new technologies the industry favors such as hydrogen.

"The pleas from oil and gas companies coming in for IRA subsidies — I think they will fall on deaf ears," Catanzaro said.