U.S. President Donald Trump’s administration faced a lawsuit on Tuesday, challenging a funding freeze of federal grants and loans. The lawsuit, filed by nonprofit groups and a small business organization, claims the freeze is illegal and will have a devastating impact on hundreds of thousands of grant recipients.
The Office of Management and Budget (OMB) had issued a memo on Monday night, requiring federal agencies to identify and review all federal financial assistance programs and supporting activities consistent with President Trump’s policies. The memo also called for a temporary pause on all activities related to obligation and disbursement of federal financial assistance.
The lawsuit, filed in U.S. District Court in Washington, D.C., blasts the OMB’s action, saying it fails to explain the source of its legal authority to gut every grant program in the federal government. It also claims the memo fails to consider the reliance interest of the many grant recipients, including those to whom money had already been promised.
The lawsuit was filed by the National Council of Nonprofits, the American Public Health Association, the Main Street Alliance, and the New York-based group SAGE. The New York state attorney general’s office is also planning its own lawsuit challenging the OMB’s freeze.
Senate Minority Leader Chuck Schumer called the memo “a dagger at the heart of the average American family” and “just outrageous.” The lawsuit claims that the memo’s policy of targeting grant recipients based in part on their First Amendment rights and with no bearing on their eligibility to receive federal funds is unconstitutional.