Two hours before an Office of Management and Budget directive is poised to take effect, potentially freezing as much as $3 trillion in federal funding for grants, loans and other programs, 23 state attorneys general filed a lawsuit to block it. 

What You Need To Know

  • 23 state Attorneys General filed a lawsuit Tuesday to block an Office of Management Budget directive that would freeze up to $3 trillion in federal funding

  • On Monday, OMB Acting Director Matthew J. Vaeth issued a memo directing federal agencies to review their grants, loans and other programs to ensure they comply with the president’s flurry of recent executive orders

  • California and New York are leading the lawsuit

  • The attorneys general are seeking a temporary restraining order to block the directive from taking effect at 5 p.m. ET Tuesday

The suit is seeking a temporary restraining order, alleging immediate harms to their states.

“The Trump Administration is recklessly disregarding the health, wellbeing and public safety of the people it is supposed to serve,” California Attorney General Rob Bonta said in a statement. 

A federal judge temporarily blocked the freeze through Monday, ruling just minutes before the freeze was intended to go into effect. 

California and New York are the states leading the lawsuit, which comes one week after a similar coalition of attorneys general filed a pair of lawsuits against the Trump administration for seeking to end birthright citizenship. Arizona, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, North Carolina, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington, Wisconsin and the District of Columbia are also part of the federal funding lawsuit.

“We won’t sit idly by while this administration harms our families,” New York Attorney General Letitia James wrote on X Tuesday.

The memo Office of Management and Budget acting Director Matthew J. Vaeth issued Monday has broad implications, affecting funding for disaster relief, education, child care, transportation, cancer research, law enforcement and other programs. The memo, which directed federal agencies to review their grants, loans and other programs to ensure they comply with the president’s flurry of recent executive orders, is supposed to take effect at 5 p.m. EST Tuesday.

While the federal funding pause does not affect some programs, including student loans, states reported the Medicaid website portal was down Tuesday, preventing payments. The White House called it an outage and insisted "no payments have been affected.

Other impacted programs include disaster-relief funding for Los Angeles to recover from the recent wildfires, Title 1 funding for disadvantaged schools and preschool programs.

The lawsuit alleges the OMB directive violates the U.S. Constitution, violates the Administrative Procedure Act and is “arbitrary and capricious.”

The attorneys general say only Congress has the authority to pause federal financial assistance, and it has not delegated unilateral authority to the OMB to do so. The lawsuit says the OMB memo violates the Constitution’s separation of powers between the executive branch and Congress, the latter of which has the country’s exclusive power of the purse.