The Office of Management and Budget has rescinded its call for a pause on federal assistance, according to the agency's memo shared by Democracy Forward, which led a legal challenge over the effort.
The new memo says the heads of executive departments and agencies should contact their general counsels "if you have questions about implementing the President's Executive Orders."
"Facing legal pressure from our clients and in the wake of a federal judge ruling in our case last evening, the Trump-Vance administration has abandoned OMB's ordered federal funding freeze," Democracy Forward said in a statement. "We are proud of our courageous clients -- who represent communities across the nation -- for going to court to stop the administration's unlawful actions."
The Trump administration has not yet publicly commented on the move.
The development follows a federal judge's order Tuesday that temporarily blocked the effort to pause federal payments for grants and other programs.
Under the original OMB memo obtained by NPR, a temporary pause in funding was set to take effect Tuesday evening, but a senior administration official said that the pause could be as short as a day if an agency determines its programs are in compliance.
The official said the directive should not be interpreted as a full funding freeze. The official, who was not authorized to publicly discuss the internal memo, said that agencies are supposed to review their grants, loans and programs to ensure that they align with the new administration's priorities.
Administration officials have insisted that the impacts are misunderstood, but the actual text of the memo is far-reaching and the follow-up guidance has been vague. On Tuesday afternoon, the White House issued a fact sheet that said "the pause does not apply across-the-board" and that "any program that provides direct benefits to Americans" — like Social Security, Medicare and food stamps — "is explicitly excluded."
The spending memo quickly drew legal challenges on Tuesday.
The nonprofit organizations that won the temporary stay Tuesday had claimed in their filing that the memo "fails to explain the source of OMB's purported legal authority to gut every grant program in the federal government." The groups also said that the memo failed to consider the interests of grant recipients, "including those to whom money had already been promised."
Shortly after the decision by the federal Judge Tuesday, a group of attorneys general from 22 states and the District of Columbia filed a separate challenge in federal court.
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