Trump’s Funding Freeze Raises a New Question: Is the Government’s Word Good?

As the Trump administration continues to withhold billions of dollars for climate and clean energy spending — despite two federal judges ordering the money released — concerns are growing that the United States government could skip out on its legal commitments.

Typically, when the federal government spends money through a grant or a loan program approved by Congress, it signs a legally binding agreement, known as an obligation, to deliver the money. Companies, states and other recipients often spend millions of dollars to buy equipment, hire workers, build facilities and more, fully expecting that the federal government will make good on its promise to reimburse the funds.

That expectation has been upended by the new administration.

Following an order by President Trump, federal agencies, including the Energy Department, Environmental Protection Agency and the Agriculture Department, have paused funding for a wide range of obligated grants related to the 2022 Inflation Reduction Act and 2021 bipartisan infrastructure law, sweeping laws that provided billions for climate and energy programs.

In just a few weeks, the consequences have begun to be felt nationwide. School districts that planned to use promised federal dollars to buy electric school buses have seen their accounts frozen. Farmers and store owners that spent hundreds of thousands of dollars of their own money to replace old refrigeration systems or install solar panels are finding their requests for reimbursements delayed.

Two federal judges have explicitly ordered the Trump administration to end its freeze and let the money flow again. On Monday, one of those judges, Judge John J. McConnell Jr. in Rhode Island federal court, said the White House was defying his order by withholding funds.

Jessica Tillipman, associate dean for government procurement law at the George Washington University Law School, said the administration’s actions had jeopardized the integrity of federal contracting.