WASHINGTON: A U.S. judge on Tuesday heard a request by advocacy groups to block a sweeping directive by President Donald Trump's administration to temporarily freeze federal loans, grants and other financial assistance.
U.S. District Judge Loren AliKhan, an appointee of former President Joe Biden, held a hearing in federal court in Washington, D.C on the request by groups representing non-profits and small businesses. The freeze is set to take effect at 5 p.m. ET (2200 GMT) on Tuesday.
Jessica Morton, a lawyer for the groups, said the freeze would “create unequivocal, imminent and serious harm.”
The groups argued that the U.S. Office of Management and Budget exceeded its authority in taking the action and said the freeze “will have a devastating impact on hundreds of thousands of grant recipients.”
Daniel Schwei, a Justice Department lawyer representing the Trump administration, said many of the nonprofits that sued do not directly receive federal grants, and that they had not shown that a pause would cause them irreparable harm.
Schwei said the funding freeze applies only to programs implicated by Trump's recent executive orders on issues such as diversity, climate and immigration.
Separately, states including New York, California and Massachusetts, said they will file a lawsuit targeting the directive issued on Monday by the acting head of the OMB, New York State Attorney General Letitia James said at a virtual press conference.
“This policy is reckless, dangerous, illegal and unconstitutional,“ James said. “The president does not get to decide which laws to enforce and for whom.”
James said at least 20 states, including New York, had been blocked from the payment system for Medicaid, a public health insurance program for low-income people. The White House said Medicaid was exempted.
The nonprofit groups - the National Council of Nonprofits, the American Public Health Association, Main Street Alliance and SAGE - said in the lawsuit that OMB lacked authority to unilaterally terminate all federal financial assistance programs across the government.
The groups also argued that OMB's directive targeted grant recipients based in part on recipients' rights to free expression and association under the U.S. Constitution's First Amendment.
“The actions taken yesterday are a callous disregard for the rule of law and a drastic abuse of power that will harm millions of Americans across the country,“ said Skye Perryman, the head of the liberal-leaning legal group Democracy Forward, which is representing the plaintiffs.
Matthew Vaeth, the OMB's acting director, said the money would be put on hold while the Republican president's administration reviews grants and loans to ensure they are aligned with his priorities, including executive orders he signed ending diversity, equity and inclusion programs.
The U.S. Justice Department, which would defend the policy in court, did not immediately respond to requests for comment.
