A federal appeals court has ruled against the Trump administration’s attempt to halt trillions of dollars in government assistance programs, backing state officials who challenged the unprecedented policy.
The 1st U.S. Circuit Court of Appeals in Boston on Monday affirmed a lower court’s decision that prevented what judges called an improper freeze on federal funding. The ruling favored attorneys general from 22 states and Washington D.C. who filed suit against the administration.
Chief Circuit Judge David Barron criticized the White House’s Office of Management and Budget, stating it “directed the agency defendants to freeze such funds without considering an obvious aspect of the problem — namely, the reliance interests of the recipients of the obligated federal funds that were to be frozen.”
Judge Barron, appointed during a Democratic administration along with his fellow panel members, referenced a district court finding that federal agencies had not properly evaluated whether payments were legally mandated or justified on an individual basis.
The appeals court mostly supported U.S. District Judge John McConnell’s March 2025 order that stopped the policy, though it reversed portions requiring agencies to send payments to the plaintiff states. This change followed a Supreme Court decision from last year indicating that lawsuits for government contract and grant money must go through specialized courts.
The White House has not provided a response to requests for comment on the decision.
The legal challenge began after the Office of Management and Budget issued guidance in January 2025, following Trump’s return to office, instructing federal agencies to temporarily halt spending on assistance programs.
The directive stated the suspension was needed while officials examined grants and loans to verify they matched Trump’s executive directives, including those eliminating diversity, equity and inclusion initiatives and suspending climate change project funding.
The policy potentially affected as much as $3 trillion in federal assistance.
Although the OMB later rescinded the memo amid legal challenges, including the case before Judge McConnell, the states maintained that withdrawing the memo did not necessarily end the underlying policy.
