Case Explained: WOONASQUATUCKET RIVER WATERSHED COUNCIL; EASTERN RHODE ISLAND CONSERVATION DISTRICT; GREEN INFRASTRUCTURE CENTER; NATIONAL COUNCIL OF NONPROFITS; CHILDHOOD LEAD ACTION PROJECT; CODMAN SQUARE NEIGHBORHOOD DEVELOPMENT CORPORATION v. U.S. DEPARTMENT OF AGRICULTURE; BROOKE ROLLINS, in the official capacity as Secretary of Agriculture; U.S. DEPARTMENT OF ENERGY; CHRIS WRIGHT, in the official capacity as Secretary of Energy; U.S. DEPARTMENT OF THE INTERIOR; DOUG BURGUM, in the official capacity as Secretary of the Interior; U.S. ENVIRONMENTAL PROTECTION AGENCY; LEE ZELDIN, in the official capacity as Administrator of the Environmental Protection Agency; U.S OFFICE OF MANAGEMENT AND BUDGET; RUSSELL VOUGHT, in the official capacity as Director of the Office of Management and Budget; KEVIN HASSETT, in the official capacity as Director of the National Economic Council; U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; SCOTT TURNER, in the official capacity as Secretary of Housing and Urban Development

Court: United States Court of Appeals for the First Circuit Filed: 2026-08-07 The First Circuit affirmed in part and vacated in part the district court’s preliminary injunction blocking federal agencies from categorically freezing billions of dollars in funds appropriated under the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA). The court held that the nonprofit plaintiffs possessed Article III standing to challenge the agency actions, finding that direct grantees and subgrantees suffered an injury-in-fact traceable to the agencies’ decisions to freeze funds. While the National Council of Nonprofits established organizational standing based on its members’ injuries regarding most agencies, the court found it lacked standing specifically to bring claims against the Department of Housing and Urban Development (HUD) because it failed to identify any members receiving HUD grants under these acts. Regarding the merits, the court applied the Administrative Procedure Act (APA) standard, concluding that the district court did not abuse its discretion in finding the plaintiffs likely to succeed on their claim that the agency actions were arbitrary and capricious. The court reasoned that the OMB Defendants and Agency Defendants adopted a “freeze first, ask questions later” approach by mandating an immediate, categorical pause on disbursements without adequately considering the significant reliance interests of grant recipients or explaining how they would reconcile the pause with legal requirements for payment. The court rejected arguments that these actions were committed to agency discretion or constituted impermissible programmatic attacks, determining instead that the across-the-board freezes were discrete final agency actions subject to review. The practical consequence of the decision is that the preliminary injunction remains in effect regarding the prohibition on the agencies from implementing, giving effect to, or reinstating the directive to unilaterally freeze awarded funding. However, the court vacated the specific portion of the district court’s order that affirmatively directed the Agency Defendants to “resume the processing, disbursement, and payment” of funds. The appellate court held this affirmative payment order exceeded the district court’s authority under the APA because it effectively enforced a contractual obligation to pay money, which is barred by sovereign immunity and reserved for the Court of Federal Claims under the Tucker Act. The case is remanded with instructions to modify the injunction to remove the mandatory payment directive while preserving the prohibition on the unlawful freeze. Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.