The Trump administration today withdrew a controversial order to freeze funding for a wide range of government programs, according to multiple news reports. Acting Office of Management and Budget (OMB) Director Matthew Vaeth reportedly wrote in today’s memo, “OMB Memorandum M-25-13 is rescinded. If you have questions about implementing the President’s Executive Orders, please contact your agency General Counsel.”
A federal judge yesterday temporarily blocked the funding freeze with an administrative stay that lasts until February 3 and scheduled a hearing for February 3 to decide whether to block the freeze for longer. States were already having trouble accessing Medicaid after the Monday order, and the future of many other programs has been in doubt.
A $42.45 billion broadband deployment program that has been in the works for years seemed to be threatened by the now-rescinded funding freeze and could undergo changes even though the freeze was rescinded today. The Broadband Equity, Access, and Deployment (BEAD) program was created by Congress in November 2021 and is being implemented by the National Telecommunications and Information Administration (NTIA).
Longtime telecom policy analyst Blair Levin wrote yesterday that given the language and context of the Trump administration memo, the funding freeze likely covers the BEAD grant program. “While there are legal questions about the ability of the Administration not to spend money that Congress has appropriated, as a practical matter, those legal questions will not affect the pause ordered by the memo,” Levin wrote in a note for New Street Research.
In addition to the initial memo announcing the freeze, the Trump administration issued a directive that specifically named many federal programs that would be evaluated by the Office of Management and Budget (OMB). BEAD is one of the programs listed in the directive that told agencies to submit information about spending plans.
“OMB will review each agency submission and will communicate additional information to each Federal agency through the agency Senior Financial Assistance Official and the Points of Contact provided,” the directive said.
We contacted the NTIA about the potential impact on BEAD yesterday but did not receive a response. In November 2024, the NTIA announced that it had approved initial funding plans submitted by all 50 states, the District of Columbia, and five US territories, which are slated to receive grants and dole them out to broadband providers for network expansions.
Judge steps in
Lawsuits seeking to block the funding freeze were filed by over 20 state attorneys general and the National Council of Nonprofits. The nonprofits’ group lawsuit led to the administrative stay that delayed enforcement of the funding freeze until February 3.
“The purpose of a temporary restraining order or a preliminary injunction is to preserve the status quo while the court considers the merits of the case… Given the weighty legal issues in this case, and to properly evaluate the merits of Plaintiffs’ motion, the court will require full briefing from the parties and a motions hearing,” Judge Loren AliKhan wrote in the order issued from US District Court for the District of Columbia.
AliKhan applied the administrative stay to the order that agencies “pause… disbursement of Federal funds under all open awards,” explaining that the stay “is tailored to Plaintiffs’ concern that a lapse in existing federal funding will cause irreparable injuries to recipients and their programs. In this way, the administrative stay does not affect OMB’s memorandum as it pertains to ‘issuance of new awards’ or ‘other relevant agency actions that may be implicated by the executive orders.'”
Broadband program still in doubt
As we’ve previously reported, US Senator Ted Cruz (R-Texas) and other Republicans want to overhaul the BEAD funding plans. Cruz accused the NTIA of “technology bias” because the agency decided that fiber networks should be prioritized over other types of technology, and Republicans objected to the Biden administration’s enforcement of a requirement that low-cost plans be offered.
The US law that created BEAD requires Internet providers receiving federal funds to offer at least one “low-cost broadband service option for eligible subscribers,” but also says the NTIA may not “regulate the rates charged for broadband service.” Republicans allege that the NTIA has gone too far in the direction of rate regulation, and Internet providers complained about NTIA guidance that “strongly encouraged” states to set a fixed rate of $30 per month for the low-cost service option.
Cruz, who is chairman of the Senate Commerce Committee, has said that Congress will do a thorough review of the program early in 2025. Levin’s research note said the NTIA was likely to have paused spending even if the Trump administration hadn’t tried to freeze funding.
“Even without the memo, we would not have been surprised to see NTIA informally pause spending while it awaits guidance on how the Trump Administration wishes to proceed with the program,” Levin wrote. New Street Research expects to see changes similar to those proposed by Cruz.
“We expect a pause in BEAD funding, and perhaps USF [Universal Service Fund] funding as well, but further expect that, because the funding largely assists Republican areas, the pause will be relatively short,” Levin wrote. “Still, we acknowledge considerable uncertainty about the timing and constraints on future BEAD spending.”