On January 27th, the acting director of the Office of Management and Budget (OMB) issued a memo purporting to require Federal agencies to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance.”
Scope
The memo claims to define “Federal financial assistance” to include the following components, based on the definition in 2 CFR 200.1:
- Grants;
- Cooperative agreements;
- Non-cash contributions or donations of property (including donated surplus property);
- Direct appropriations;
- Food commodities;
- Loans;
- Loan guarantees;
- Interest subsidies;
- Insurance; and
- Other financial assistance.
However, it would supposedly exempt assistance “received directly by individuals”, including Medicare and Social Security.
Taken on its own terms, the scope of the order could include Medicaid as well as many other federally supported programs. Some states have already reported that they are unable to access their Medicaid systems. However, other parts of 2 CFR 200 note that “Medicaid payments to a subrecipient for providing patient care services to Medicaid eligible individuals are not considered Federal awards expended under this part unless a State requires the funds to be treated as Federal awards expended because reimbursement is on a cost-reimbursement basis.”
Likely Next Steps
OMB’s legal authority for issuing such a freeze is dubious at best. The Impoundment Control Act of 1974 places many conditions and limits on the President’s power to perform such actions. New York and other states have announced an impending lawsuit in the Southern District of New York to be filed before the memo’s nominal deadline of 5pm Eastern Time today (January 28th). This court (or others) could place an injunction on the action before the end of the day. Ultimately, the issue would likely have to be resolved by the Supreme Court.
As always, please feel free to reach out to SPG to discuss further implications.