Developing: OMB Memo Pauses Federal Agency Financial Assistance
Impacts on Nonprofit, Governmental, Quasi-Governmental Entities
January 29, 2024 – This afternoon, the White House rescinded OMB Memorandum M-25-13. The White House Press Secretary, Karoline Leavitt, noted that OMB’s rescindment of the memo was not inclusive of the President’s Executive Order relating to federal funding. The Hill reported that Ms. Leavitt clarified during a press conference on Tuesday, January 28, that the OMB’s pause was also not intended to impact Medicare, Medicaid, Social Security, or SNAP. As this remains a fluid situation, Windels Marx will continue to monitor and share our thoughts on the developments.
Yesterday, January 27, the Trump administration’s Office of Management and Budget issued the attached memo directing that, “to the extent permissible under applicable law, Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be impacted by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” All “Federal Financial Assistance,” as defined in 2 C.F.R. § 200.1, is subject to this action.
The temporary pause is scheduled to go into effect today, January 28, at 5:00 p.m. Agencies are instructed to submit detailed information on programs subject to the pause on or before February 10.
Per the OMB, “each agency must pause: (i) issuance of new awards; (ii) disbursement of Federal funds under all open awards; and (iii) other relevant agency actions that may be implicated by the executive orders, to the extent permissible by law, until OMB has reviewed and provided guidance to your agency with respect to the information submitted.” The pause is also intended to apply to all open Notice of Funding Opportunity grants and includes “conducting merit review panels.” Exceptions may be granted on a case-by-case basis.
Notably, the OMB has indicated that direct benefits provided to individuals are excluded from the pause and otherwise exempted from this review process. The memo explicitly names Social Security and Medicare as being excluded. Other similar, mandatory programs providing to relief to individuals may also not be affected.
The OMB has directed each agency to, inter alia, assign responsibility for overseeing the review to senior political appointees, review currently pending Federal financial assistance announcements, initiate investigations, and “to the extent permissible by law, cancel awards already awarded that are in conflict with Administration priorities.”
Considering the far-reaching implications of this executive action, we anticipate widespread legal challenges by all manner of nonprofit, governmental, and quasi-governmental entities. We encourage all clients receiving federal funds to carefully review governing documents and be alert to developments associated with their respective government agencies as this promises to be a dynamic situation. We further suggest contacting your Windels Marx relationship contact to address how this may impact you directly.
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