Trump administration spending freeze will remain blocked, US appeals court says

By Jack Queen and Nate Raymond

BOSTON (Reuters) -A court order blocking President Donald Trump's freeze on trillions of dollars in government financial assistance will remain in place for now, a federal appeals court said on Wednesday. 

The ruling by the Boston-based 1st U.S. Circuit Court of Appeals leaves in place a lower court order blocking Trump's freeze on $3 trillion in federal grants, loans and other financial aid while the government appeals. 

U.S. District Judge John McConnell in Providence, Rhode Island issued the injunction on March 6 at the behest of Democratic attorneys general from 22 states and the District of Columbia, saying the administration overstepped its authority.

That order blocked the Republican president's administration from reissuing or adopting a funding freeze first announced in a January 27 memo by the White House's Office of Management and Budget that it rescinded after the litigation began.

The memo directed federal agencies to temporarily pause spending on federal financial assistance programs while the administration reviewed grants and loans to ensure they are aligned with Trump's executive orders.

The Trump administration asked the appeals court to put the decision on hold while it appealed. It argued that with the OMB memo now rescinded, the Democratic-led states had leveraged their pre-existing case to wrongly obtain a broad injunction against an array of discrete agency funding decisions.

But Chief U.S. Circuit Judge David Barron, writing for a panel of three 1st Circuit judges all appointed by Democratic presidents, said the injunction McConnell issued did not bar all freezes in funding, just "discrete final agency actions to adopt the broad, categorical freezes challenged here."

New Jersey Attorney General Matt Platkin, a Democrat who helped pursue the case, hailed the ruling on X, saying it "rejected an effort by the Trump administration to continue their illegal funding freeze."

The White House did not respond to requests for comment. It could appeal the decision to the U.S. Supreme Court, which has a 6-3 conservative majority. 

McConnell, an appointee of Democratic President Barack Obama, in his earlier decision said the Trump administration had "put itself above Congress" and undermined the separation of powers between branches of government.

In February, a judge overseeing a similar case in Washington issued a preliminary injunction that also blocked the freeze. 

(Reporting by Jack Queen in New York and Nate Raymond in Boston; Editing by Leslie Adler and Saad Sayeed)