Rhode Island Attorney General Peter Neronha speaks with WPRI TV investigative reporter and managing editor Tim White outside U.S. District Court for the District of Rhode Island in Providence on Friday afternoon, Feb. 21, 2025. (Photo by Nancy Lavin/Rhode Island Current)
A crowd of Democratic state attorneys general packed the left side of a third-floor federal courtroom in Providence Friday afternoon, prepared to make their case for a longer and more sweeping ban against a federal funding freeze.
Opposite them sat U.S. Department of Justice attorney Daniel Schwei, the lone representative for President Donald Trump and the dozens of federal cabinet agencies named in the AGs lawsuit.
“It kind of reminds me of a wedding where everyone sits on the bride’s side,” Chief Judge John McConnell Jr. of the U.S. District Court for the District of Rhode Island, joked.
But there was little love as arguments played out during the two-hour hearing. The AGs decried the immediate and irreparable harm already playing out nationwide for state agencies and government contractors unable to make payroll or provide services to residents in the wake of an attempted federal funding freeze.
Schwei acknowledged the infamous White House budget memo that set off the cascade of chaos and litigation was too broadly interpreted at first. But he insisted the AGs’ request seeking to stop the administration and federal agencies from blocking access to any federal grants and aid was too broad.
As expected, McConnell did not immediately issue a ruling of the request for a preliminary injunction, though he promised to do so “quickly” — likely within a week. Until then, his existing, short-term ban preventing the federal administration from freezing funds stands.
Speaking to reporters outside the courtroom Friday afternoon, Rhode Island Attorney General Peter Neronha, one of six co-leads in the lawsuit, said he felt confident in the AGs’ arguments.
“You can’t really read from the questioning which way a judge is leaning, but I am confident we’re right on the law here,” Neronha said. “The question will be how do you write the remedy? But I have no doubt we’re going to get a preliminary injunction.”
If granted, the requested injunction would prevent the federal government from freezing any already-obligated grants and aid not expressly under the executive branch’s purview as the case proceeds. While McConnell granted a short-term ban three weeks ago, the longer and more permanent block is necessary, Neronha said.
“The reason we want an order is because, frankly, we don’t trust them,” Neronha said. “In the long run we need this order to ensure that the president won’t go back to doing what is patently unconstitutional and that is to reverse the spending decisions of the Congress.”
Even though the White House budget memo was rescinded two days after its Jan. 27 issuance, the objective of freezing federal funds remains, as stated on X by White House Press Secretary Karoline Leavitt. Even now, trillions of dollars in funding for educational and scientific research, energy efficiency programs and foreign aid remains inaccessible, including in Rhode Island, according to court documents filed by the AGs.
They argue the abrupt halt of money necessary to pay employees to provide services risks severe consequences to the people who benefit from those programs, as well as state governments themselves.
In Rhode Island, for example, the unexpected halt of $125 million in federal funding to the Office of Energy Resources, including rebates for electric vehicles, could jeopardize expected state revenue, forcing state officials to overhaul their entire budget, Sarah Rice, Rhode Island assistant attorney general, said during the hearing Friday.
You can’t really read from the questioning which way a judge is leaning, but I am confident we’re right on the law here.
– Rhode Island Attorney General Peter Neronha
Elsewhere across the country, inability by state governments to pay contractors hired for infrastructure work or to run Head Start programs for young children has created a “chilling effect” where vendors no longer want to work with state governments, Rice said.
“This is a threat to all components of service infrastructure in each of our states,” Rabia Muqaddam, special counsel for federal initiatives for the New York Attorney General’s office, said during the hearing Friday. “It is really impossible to hold, in my eyes, how vast the impact would have been if not for the court’s orders.”
Muqaddam also highlighted the unprecedented nature of Trump’s executive orders in the breadth and speed with which he attempted to halt trillions of dollars in funding already authorized by Congress. The AGs lawsuit contends, among other arguments, that the funding freeze violates the separation of powers and spending clauses of the U.S. Constitution.
Schwei, however, pointed to budget and spending freezes enacted under presidents Barack Obama and Joe Biden, including Biden’s decision to halt the $1.4 billion allocated for a border wall between the U.S. and Mexico. Much like Biden wanted to pause cash flow to study whether it was the best use of money, so does Trump look to review how federal money is spent, Schwei said.
“The rationale is for agencies to pause funding to review it,” Schwei said, “and decide, is this the best use of taxpayer dollars?”
He openly admitted that the initial White House budget memo had a broader impact than was intended, but pointed to subsequent guidance issued as soon as the day after clarifying and narrowing the scope of the funding freeze to specific sources.
“When properly understood, the OMB memo is directing a pause to a handful of discrete topics,” Schwei said.
McConnell pushed back, noting it wasn’t until he issued his temporary restraining order that suddenly, funds were again accessible to state agencies, nonprofits and contractors.
If, as Schwei suggested, only federal agencies with the independent power to review their funding had paused grants and aid, the court order would not have led to a gush of previously backstopped funding, McConnell said.
McConnell also offered counterpoints and questions to the AGs, including over the scope of a proposed court order and the overlap with a slew of other federal lawsuits challenging executive orders on funding, including in D.C. and Massachusetts.
McConnell, a Biden-era appointee and prolific donor to Democratic candidates prior to his appointment to the bench, has come under fire by Vice President J.D. Vance and later, Elon Musk, who called for impeaching McConnell in a post on X.
Members of Rhode Island’s congressional delegation and the Rhode Island Bar Association quickly came to McConnell’s defense.
Neronha on Friday called the Republican-led criticism of McConnell “ridiculous.”
“What the vice president, Mr. Musk and others do when they challenge Judge McConnell’s integrity, when they talk about impeaching him, is again, trying to undermine the judicial branch of government,” Neronha said. “When the president sidelines both the Congress and the judiciary, what we have is an authoritarian system of government.”
McConnell appeared unfazed by the sudden national spotlight and criticism.
“I try not to read the papers anymore, thankfully, except when The New York Times called my order ‘slightly testy,’” he said during the hearing, referring to an article published on Wednesday.
Earlier Friday, a federal judge in Massachusetts extended a temporary ban preventing the National Institutes of Health from capping funding for research institutes and universities.
On Thursday, a federal judge in D.C. heard arguments, but did not issue an order, in a separate case by nonprofit and business groups challenging the federal funding freeze.
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