State of New York v. Trump, 133 F.4th 51

In January 2025, OMB issued Memorandum M-25-13 (the “OMB Directive”) under direction from the President, pausing the obligation and disbursement of broad categories of federal funds pursuant to recent Executive Orders.
Twenty-two states and the District of Columbia, along with the Governor of Kentucky, challenged the OMB Directive and related funding freezes, arguing they were unlawful and caused significant harm to states’ budgets and essential services.
The day after the lawsuit was filed, the OMB rescinded the Directive, but evidence showed the freezes continued under color of Executive Order, leading the district court to find the case was not moot.
The district court granted a preliminary injunction prohibiting agency defendants from implementing any categorical funding freezes based on the rescinded Directive or Executive Orders, and directed restoration of frozen funds.
Defendants appealed and sought a stay of the injunction pending appeal, arguing the injunction was overbroad and interfered with lawful executive discretion.
The First Circuit addressed only the stay motion, using the familiar Nken v. Holder standard for stays pending appeal.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are funding freezes final, discrete agency actions reviewable under the APA?	Yes; they are categorical actions taken without statutory authority.	No; plaintiffs attack a broad program, not discrete agency action.	Yes; categorical freezes are discrete, final agency actions.
Did OMB’s rescission of the Directive moot the controversy?	No; freezes continued, as evidenced by communications and official statements.	Yes; since the Directive was rescinded, no case or controversy remains.	No; voluntary cessation doctrine precludes mootness.
Is the preliminary injunction overbroad/vague or improperly bars lawful conduct?	No; it only bars categorical freezes not based on lawful, individualized authority.	Yes; it inappropriately bars broad swaths of lawful executive action.	No; injunction is tailored to unlawful categorical freezes.
Does the injunction impermissibly interfere with Article II executive authority?	No; executive cannot suspend statutory programs via broad directives contrary to law.	Yes; it unduly limits the President’s supervision of agencies.	No; APA/reviewability limits are not overridden by Article II.

Nken v. Holder, 556 U.S. 418 (stay pending appeal standard)
Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (elements for preliminary injunction)
Bennett v. Spear, 520 U.S. 154 (test for final agency action)
Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55 (APA challenge must be to discrete agency action)
Lujan v. National Wildlife Federation, 497 U.S. 871 (no programmatic APA challenges)
Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (reviewability and presumption of regularity)
Franklin v. Massachusetts, 505 U.S. 788 (President not an "agency" under APA)
Hilton v. Braunskill, 481 U.S. 770 (factors for granting a stay pending appeal)