While the Office of Management and Budget (OMB) directive that would have paused funding for federal programs and grants was rescinded on January 29 in response to court challenges, OMB is moving forward with agency analysis on the impacts of the executive orders listed in the revoked memo.

AWC and the Puget Sound Regional Council (PSRC) will host an update on Thursday, February 6 at 8 am to share the latest updates on new federal funding directives from state and federal leaders. Attendance is limited to AWC and PSRC members. Register here.

Federal agencies have also started releasing guidance to their staff on interpreting executive orders related to their programs and grant funding. The U.S. Dept. of Transportation released a memo outlining its approach to federal funding and a change of focus in funding priorities in response.

Included in the DOT memo is the directive that DOT-funded programs and activities cannot be used “to further local political objectives or for projects and goals that are purely local in nature and unrelated to a proper Federal interest.” Instead, they should prioritize projects with robust co-funding requirements that comply closely with all Buy America Build America Act requirements, and “not depend on continuous or future DOT… assistance for improvements or ongoing maintenance.”

The memo goes on to specify that DOT-funded activities must prioritize projects that:

• Have user-pay models
• Fund “local opportunity zones;&rdquo
• Mitigate impacts on families and family-specific difficulties, such as transportation accessibility
• “Give preference to communities with marriage and birth rates higher than the national average;”
• Prohibit vaccine and mask mandates; and
• Require compliance with federal immigration enforcement.

More agencies will likely provide guidance on which programs might be impacted by executive orders soon.

What cities can do to prepare:

• Review the relevant executive orders and agency guidance for your federal funding and projects.  If you have questions about a specific grant your city received, reach out to the agency and ask about the status of your award.
• Review federal grant agreements and contracts your city has in place, including payment obligations and drawdown procedures.
• Document and communicate the impacts of potential disruptions or revocation of projects relying on federal funding and grants. City members of the National League of Cities (NLC) can share information with NLC using this form.
• Share impacts with your congressional delegation. When communicating with your members of Congress, describe the consequences if agencies were to withhold funding for projects that are underway. Stress the actual impact to your residents, taxpayers, progress of community projects, and city budgets.

The following executive orders are the focus of the OMB request for agency review. Read NLC’s summary of the orders and local government impacts:

• Protecting the American People Against Invasion
• Reevaluating and Realigning United States Foreign Aid
• Putting America First in International Environmental Agreements
• Unleashing American Energy
• Ending Radical and Wasteful Government DEI Programs and Preferencing
• Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government
• Enforcing the Hyde Amendment

AWC will continue to monitor and share information with cities as it becomes available.

Assessing the local impacts of federal executive orders

January 29, 2025

The President issued several executive orders in the first week in office, some of which could impact federal funding and grants and specific communities.

The Local Government Legal Center (LGLC) and National League of Cities (NLC) are hosting a webinar on January 31 to answer questions about the impacts of recent federal executive orders related to immigration on local governments. Register here.

On January 28, a federal court granted a temporary restraining order on a directive from the federal Office of Management and Budget (OMB) that would have paused funding for many federal grants and programs. On January 29, the administration rescinded the directive, but the status and potential long-term impacts of the executive orders remain fluid.

The OMB directive could have paused federal grants, even those already awarded, until February 10 to allow the agencies to review impacts of the executive orders on the underlying funding programs. A clarification to the memo also specifically exempted programs that go directly to individuals like Social Security, SNAP, Medicare, and Medicaid from the pause. The restraining order is in effect until the court takes up the permanent injunction request on February 3 in a legal challenge brought by the National Council of Nonprofits.

Federal agencies had also begun to communicate with grant recipients about a pause in payments for services provided by federal grants, including the Department of Justice for federal law enforcement funding and the Department of Transportation. With the court order and the directive withdrawn, the federal payment systems should now be reopened for processing.

It is likely that more legal challenges will be filed on the orders. Washington joined a legal challenge filed by 22 states on January 28 regarding the OMB directive to pause federal funding and grants. Washington state is also participating in a legal challenge to an executive order related to birthright citizenship. A federal court placed a temporary restraining order on that executive order on January 23.

AWC and the Puget Sound Regional Council (PSRC) will host an update on February 6 at 8 am to share the latest updates on the status of the federal funding freeze from state and federal leaders. Attendance is limited to AWC and PSRC members. Register here.

This issue is evolving quickly. Cities are encouraged to stay in contact with their federal funding agencies and congressional delegation about potential impacts if the funding is terminated or requested to be returned.

Federal infrastructure funding

President Trump’s executive order, Unleashing American Energy, directs the government to pause all disbursements under the Infrastructure Investment & Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law (BIL), and the Inflation Reduction Act (IRA). See section 7, titled Termination the Green New Deal.

Many cities and towns in Washington may have current projects underway that are funded through the IIJA. AWC encourages those cities and towns to read the executive order and review the terms of your relevant grant agreements for payment obligations. Grantees should inform their agency contacts about any disruptions and document the related costs or losses. In addition, carefully follow the updates and guidance issued by the U.S. Dept. of Transportation in the coming days.

It is possible that Notice of Funding Opportunities (NOFOs) will either be revised or rescinded and republished. This is not uncommon during transitions of federal administrations. However, it could result in delays to your projects. Cities may see the elimination of environmental and equity requirements, and potentially the inclusion of “anti-discrimination” clauses that target diversity, equity, and inclusion programs that violate federal law.

City members of NLC can complete this form to communicate the status of your infrastructure project and whether it may be affected by the executive order. NLC is tracking the impacts at the local level to inform its advocacy in Washington, D.C.