The Trump administration and a collection of nonprofit organizations are in a heated dispute over the scope of a recent court order that temporarily halted a government spending freeze. The legal conflict began on January 28, when the National Council of Nonprofits (NCN) filed a lawsuit challenging the defunding initiative. On the same day, U.S. District Judge Loren L. AliKhan, appointed by President Joe Biden, issued a stay on the freeze, which was later extended into a temporary restraining order. On February 25, the judge issued a preliminary injunction.
On March 4, the plaintiffs accused the government of violating the injunction’s terms. The government, they argued, had applied an overly restrictive interpretation of the injunction, effectively freezing about $3.6 billion in anti-homelessness funds that had already been “awarded to various grant recipients.” The plaintiffs claimed that the injunction required the government to fund grants that had been awarded but not yet fully disbursed.
In response, the Department of Justice contended that the plaintiffs were attempting to stretch the court’s order and gain broader relief than what was originally intended. The government’s response argued that the court’s injunction did not mandate funding for all grants that had been awarded, but only for those grants that had already been partially disbursed.
At the heart of the dispute is the term “open awards” mentioned in the injunction. The language used in the order bars agencies from implementing or reinstating directives related to the disbursement of federal funds under “all open awards.” The plaintiffs contend that this language means the government must fund grants that have been awarded but not yet fully paid. However, the government has interpreted “open awards” more narrowly, defining them as grants that have already been approved and partially disbursed.
The plaintiffs argue that the government’s interpretation is inconsistent with the injunction’s purpose and request that the court clarify the meaning of “open awards.” They assert that “open awards” should include all grants that have been awarded, regardless of whether they have been partially disbursed, as long as the recipients have been notified or the awards have been publicly announced. This definition would include grants that have been awarded but not yet fully processed, ensuring that organizations relying on the funding would not suffer harm.
In contrast, the Trump administration argues that the court’s orders are clear and that the plaintiffs previously accepted the government’s interpretation of “open awards.” The government maintains that the injunction was not ambiguous, and the plaintiffs should not now be allowed to change their position after months of relying on the original understanding.
The plaintiffs, in their motion to clarify, point out that many of their members are facing significant harm due to the freeze on funding. These organizations had already been notified of their grant awards and were counting on receiving financial assistance. The disruption in funding is particularly severe for those who had already begun to draw on the funds or had relied on the expectation of receiving them soon. The nonprofits argue that even if disbursements have not yet begun, the harm to recipients is just as real and severe.
The government, however, maintains that the injunction was meant only to address disbursements of funds that had already been partially paid out and insists that the plaintiffs are attempting to expand the scope of the order beyond its original intent. The DOJ argues that this could turn the court into a supervisor of executive branch decisions, such as determining which grants should be funded or whether applicants have met the necessary conditions.
As of now, the nonprofits have until March 10 to file a final motion on the issue. The outcome of this case will determine the fate of millions in federal funds and clarify the meaning of the court’s injunction. The dispute highlights the ongoing tension between the administration and advocacy groups, with significant consequences for nonprofits that depend on federal funding.
