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Federal funding pause and court rulings leave federal grants uncertain, Carlsbad subcommittee told
Summary
A federal update to the Carlsbad City Council legislative subcommittee warned that a late-January Office of Management and Budget memo and subsequent, conflicting White House statements prompted litigation that has created uncertainty about federal grant and loan disbursements and could affect local projects that rely on federal funding.
David Wetmore, a federal lobbyist with Karpf & Clay, told the Carlsbad City Council legislative subcommittee that a late-January Office of Management and Budget (OMB) memo temporarily directed a freeze of “agency grant, loan and other financial assistance programs,” prompting lawsuits and court orders that have left many grant disbursements uncertain.
Wetmore said the OMB memo instructed agencies to analyze programs for conflicts with the administration’s executive orders and halted disbursements while agencies completed that review. The memo was later rescinded but, he said, a White House spokesperson’s public statement created ambiguity so that legal challenges followed and two U.S. district judges issued temporary restraining orders that have restored some payments and blocked others.
The subcommittee heard Wetmore outline the legal framework at issue. He noted the 1974 Impoundment Control Act—federal law that limits a president’s ability to withhold or delay funds appropriated by Congress—and said courts will likely be asked to resolve how the administration’s actions interact with Congress’s “power of the purse.” Wetmore also told the subcommittee the federal government faces a funding deadline on March 14 when current continuing resolutions expire, making the coming weeks “a fiscal cliff for action.”
Council members asked whether funds already awarded but not yet disbursed could be rescinded; Wetmore said some agreements executed with recipients have had funds flow and others have been blocked, and that “we don’t know the answer to a lot of this” until litigation and appropriations actions play out. He recommended monitoring court decisions and federal guidance closely and said the city and regional partners should be prepared to apply for new opportunities once federal agencies provide clear program language.
The update also touched on program-specific questions raised by council members, including whether Carlsbad or regional projects might compete for Federal Railroad Administration programs that recently awarded roughly $1.1 billion to 23 rail projects in 41 states; Wetmore said his team will continue to identify and share relevant federal funding opportunities but noted that some programs remain on hold pending the legal process.
The subcommittee did not take any formal action on the federal update; members asked the lobbyist team to continue tracking developments and flag programs that match city projects.
