February 6, 2025

Earlier this week, a U.S. District Court judge issued a temporary restraining order (TRO) blocking the Trump administration from freezing federal loans, grants, and other financial assistance. The court’s ruling was in response to a lawsuit brought by a group of nonprofit organizations who are challenging the legality of a recent White House Office of Management and Budget (OMB) memorandum that directed federal agencies to implement a government-wide freeze on federal funding.

As part of her order, Judge Loren L. AliKhan instructed OMB to notify all affected government agencies in writing of the court’s decision. Per the TRO:

The written notice shall instruct those agencies that they may not take any steps to implement, give effect to, or reinstate under a different name the directives in OMB Memorandum M-25-13 with respect to the disbursement of Federal Funds under all open awards. It shall also instruct those agencies to release any disbursements on open awards that were paused.”

The TRO requires the Trump administration to file a status report on or before February 7, 2025, apprising the court of the status of its compliance with the order, including providing a copy of the written notice described above. Moreover, the plaintiffs are required to meet with the administration to confer and file a joint status report proposing a preliminary injunction briefing schedule on or before the same date.

It should be noted that Monday’s TRO is the second of two such orders. The first was issued this past Friday, January 31, by Rhode Island District Court Judge John McConnell Jr. at the urging of 22 Democratic state attorneys general and the District of Columbia. That particular order will remain in effect until the judge can consider the states’ request for a longer injunction. According to at least one federal agency, the TRO applies to all awards or obligations—not just those involving the aforementioned plaintiff States—and also applies to future assistance (not just current or existing awards or obligations).

While many federal departments and agencies are complying with the terms of the TROs, some agencies are not, as of yet, fully adhering to the court’s directive. For example, funding for several Environmental Protection Agency (EPA) grant programs remain inaccessible to grantees.

Trump Administration Renews Threat to Withhold Federal Justice Program Funding from “Sanctuary Jurisdictions”

Yesterday, newly sworn-in Attorney General Pam Bondi issued a series of orders and memorandums that threaten to withhold Department of Justice (DOJ) grant program funding from so-called “sanctuary jurisdictions.” Among the 14 directives issued to DOJ staff was a memorandum that expands upon a previous directive issued immediately after President Trump’s inauguration by his then deputy attorney general. That memo directed the U.S. attorney’s office to investigate local governments that are not cooperating with federal immigration enforcement “for potential prosecution.” Attorney General Bondi’s new memorandum directs the Justice Department’s civil division to identify local governments whose policies impede federal immigration operations, and “where appropriate…take legal action to challenge such laws, policies, or practices.”

Moreover, Bondi’s order pauses federal justice program funding to sanctuary jurisdictions until DOJ can conduct a review determining jurisdictions’ compliance with federal immigration law. Under the memorandum, the associate attorney general will have 30 days to identify non-compliant jurisdictions. Those deemed non-compliant will have all DOJ grant funding revoked. The order also instates a 60-day pause on all grants to non-governmental organizations (NGOs) that “provide services to illegal or removable aliens.” Pending a forthcoming DOJ review of NGO compliance with federal law, the Department will no longer provide any form of federal funding to NGOs that provide services to “removable or illegal aliens.”

Notably, Bondi’s order follows a similar directive issued last week by Transportation Secretary Sean Duffy. That memorandum threatened to withhold billions of dollars in transportation funding from local governments that refuse to comply with federal immigration enforcement. Many practical effects of that order remain unknown. For instance, the Trump administration did not clarify whether the order applies solely to individual sanctuary jurisdictions, or if it also applies to local governments under state-wide sanctuary policies.

As expected, both of the aforementioned orders are facing legal challenges, as they revive the unsettled debate regarding the president’s authority to withhold funds from jurisdictions that refuse to aid ICE in identifying and deporting undocumented immigrants. In fact, shortly after Trump issued his day-one executive order Protecting the American People Against Invasion, a coalition of non-profit organizations filed a lawsuit in Illinois. Among other things, the lawsuit argues that section 17 of Trump’s executive order – which calls on DOJ and DHS to rescind federal funding for sanctuary jurisdictions – violates first amendment rights. In retaliation, DOJ is suing the state of Illinois and the Cook County Board over alleged violation of federal immigration law. More legal action is likely to follow.

Finally, it’s important to note that there is further confusion over whether the attorney general’s memorandum violates the two aforementioned TROs that forbid the White House from issuing a pause on federal funding. Notably, the TRO language applies to “prior or future White House budget memorandums,” so the recent DOJ and DOT directives may not be subject to current legal stays on a federal funding freeze.

Bipartisan Bill to Extend Secure Rural Schools Program Reintroduced in Senate

Earlier this week, a bipartisan group of 21 senators, led by Mike Crapo (R-ID) and Ron Wyden (D-OR), reintroduced legislation (S. 356) to extend the Secure Rural Schools and Community Self-Determination Act (SRS) program through fiscal year 2026. The SRS program provides critical support to rural counties affected by reduced timber revenue from federal lands. In the past year alone, 29 California counties received over $33.4 million in SRS funding (SRS payment data can be accessed here).

It should be noted that the program expired at the end of fiscal year 2023, and, without further congressional action, future payments will revert to a formula based on timber sales. When the program’s authorization last expired in 2016, federal forest payments to counties dropped by more than 80 percent on average. Although a similar SRS extension bill unanimously passed the Senate at the end of last year, it failed to receive a House vote before Congress adjourned.

President Trump Postpones Tariffs on Mexico and Canada

On February 1, President Trump announced sweeping tariffs on Mexico, Canada, and China affecting everything from fertilizer, food, and agricultural products to minerals, crude oil, and lumber. The majority of goods from Mexico and Canada would be subject to a 25 percent tariff, while Canadian energy products would be subject to a 10 percent tariff. Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau quickly pledged to impose counter-tariffs on the U.S.

On February 3, the Trump administration struck a deal with both leaders to delay the tariffs, which were set to go into effect on February 4. In exchange for a 30-day pause, Sheinbaum and Trudeau pledged to reinforce their borders and crack down on drug trafficking, particularly fentanyl.

For its part, China announced retaliatory tariffs in response to Trump’s 10 percent tariff on all Chinese goods, which went into effect on Tuesday. Beginning February 10, President Xi will impose a 15 percent tariff on U.S. liquified natural gas and coal, and a 10 percent tariff on crude oil, farm equipment, and some automobiles. Moreover, China plans to implement further export restrictions on rare metals and will also launch an anti-monopoly investigation into Google. Earlier this week, President Trump indicated that he is in “no rush” to speak with President Xi, and it’s unclear whether the two leaders will speak before China’s retaliatory tariffs go into effect. The Trump administration is threatening to go even further – hiking tariffs on all Chinese goods to 25 percent if President Xi does not acquiesce to his demands on fentanyl trafficking and issues surrounding the Panama Canal.

Representative Kiley Reintroduces SAFE HOME Act

On Monday, Congressman Kevin Kiley (R-CA) reintroduced legislation – the SAFE HOME Act – that would incentivize homeowners to strengthen their properties against wildfire risks. Specifically, the legislation (bill number not yet assigned) proposes a 25 percent refundable tax credit for qualified home hardening projects. The credit would be capped at $25,000 annually per taxpayer and phased out for higher-income individuals. It should be noted that the benefit would apply exclusively to a taxpayer’s primary residence.