Halt on White House Spending Freeze Upheld by First Circuit (1)

A federal appeals court backed a judge’s dissolution of a government-wide funding freeze that the Trump administration enacted to reshape federal spending at the outset of his second term.

The First Circuit upheld a Rhode Island federal judge’s preliminary injunction, explaining that the administration’s later cancellation of the spending freeze by the Office of Management and Budget didn’t snuff out the controversy in the case.

“The States are challenging the OMB Directive, not the piece of paper that contained it,” Chief Judge David J. Barron said in the unanimous opinion.

The ruling in the challenge brought by a coalition of 24 attorneys general is a setback for the Trump administration’s struggle to redirect federal spending and bolsters efforts to challenge future executive branch funding deferrals.

Set in motion by the White House OMB, the freeze halted trillions in government loans, grants, and other payments, unleashing uncertainty for programs ranging from Medicaid to child-care programs and infrastructure projects.

Guidelines from the US Supreme Court on how federal judges must handle grant cancellation claims, outlined in an August concurrence by Justice Amy Coney Barrett, didn’t cut against the majority of the state’s challenge to the funding freeze, the panel said.

The panel, however, found issue with and vacated one portion of the injunction ordering federal agencies to “release and transmit” funds from awarded grants or contracts that had been paused.

In an emailed statement, California Attorney General Rob Bonta said the ruling affirmed that the “unilateral” freeze was “deeply harmful, reckless, and wholly unreasoned.”

“Since this case was first filed, state attorneys general have stood together dozens more times to successfully block the President’s unlawful actions,” Bonta said.

Representatives for the White House weren’t immediately available for comment.

Judges Julie Rikelman and Lara Montecalvo also sat on the panel.

The states are represented by their respective attorneys’ general. The government is represented by the Department of Justice.

The case is New York v. Trump, 1st Cir., No. 25-1236, opinion issued 3/16/26.