• "Federal Financial Assistance Pause Reversed: Navigating the Changing Landscape of Executive Directives"

  • Feb 6 2025
  • Durée: 3 min
  • Podcast

"Federal Financial Assistance Pause Reversed: Navigating the Changing Landscape of Executive Directives"

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  • Résumé

  • In the last few days, the Director of the Office of Management and Budget (OMB), Acting Director Matthew Vaeth, has been at the center of significant developments regarding federal financial assistance programs. On January 27, 2025, Vaeth issued OMB Memorandum M-25-13, directing all executive departments and agencies to temporarily pause all activities related to the obligation or disbursement of federal financial assistance. This pause was intended to allow federal agencies to review their programs and align them with the administration's priorities as outlined in recent executive orders by President Trump.

    The memorandum encompassed a wide range of federal financial assistance, including grants, cooperative agreements, non-cash contributions, direct appropriations, food commodities, loans, loan guarantees, interest subsidies, and insurance. It also included open Notices of Funding Opportunities (NOFOs) and associated review panels. The pause did not apply to activities related to Medicare and Social Security benefits, although initial guidance did not explicitly exempt Medicaid; this was later clarified to include Medicaid and other direct benefit programs like the Supplemental Nutrition Assistance Program (SNAP)[1][3][5].

    However, the implementation of this pause was short-lived. On January 28, 2025, the National Council of Nonprofits and other plaintiffs filed a complaint in federal court, challenging the OMB memo as unlawful and seeking a temporary restraining order. In response, U.S. District Judge Loren L. AliKhan issued a temporary stay on portions of the OMB memo, specifically blocking the pause on the disbursement of federal funds under all open awards. The stay was set to expire on February 3, 2025[2][5].

    Before the stay could expire, Vaeth rescinded the original memorandum on January 29, 2025, through OMB Memorandum M-25-14. This rescission was communicated in a brief memo to the heads of executive departments and agencies, stating that any questions about implementing the President's Executive Orders should be directed to the agency's General Counsel[2][5].

    The rescission of the memorandum marked a swift reversal of the administration's initial directive, reflecting the legal and administrative challenges it faced. Despite the rescission, it remains uncertain whether the administration will issue new directives to review or pause federal financial assistance programs in the future, aligning with the President's policy priorities[2][3].

    This series of events highlights the dynamic and often contentious nature of federal budget management and policy implementation, particularly when it involves significant changes to existing financial assistance programs. The actions taken by Acting Director Vaeth and the subsequent legal interventions underscore the complex interplay between executive directives, legal challenges, and the ongoing efforts to align federal spending with administrative priorities.
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