‘Why is it tied to the money flow,’ NY judge extends temporary block on Trump social services funding freeze

MANHATTAN (CN) — A New York City federal judge said Friday he will extend a temporary restraining order blocking the Trump administration from cutting off $10 billion in child care and housing funds for five Democratic-led states, citing inconsistencies between officials’ statements and the rollout of the freeze that caused “consternation and chaos” in the affected states.

U.S. District Judge Vernon Broderick said Friday he plans to extend the temporary restraining order blocking the Administration for Children and Families from freezing funds for three public welfare programs in New York, California, Colorado, Illinois and Minnesota while he prepares a written opinion on the states’ motion for a preliminary injunction.

During oral arguments, Broderick, a Barack Obama appointee, pressed Justice Department lawyers on what statutory and regulatory requirements governed the funding freeze and how the administration followed those procedures to monitor state compliance.

“Why is it tied to the money flow,” he asked. “Who made that decision, and why?"

“Aren’t there, in the regulations themselves, auditing and other things that are part of monitoring the different programs,” he queried.

A separate Manhattan-based federal judge, U.S. District Judge Arun Subramanian, granted the states’ emergency request for a 14-day restraining order in early January to maintain the status quo while their bid for a preliminary injunction was considered.

That temporary restraining order barred the Trump administration from freezing funds for three programs: the Child Care and Development Fund, Temporary Assistance for Needy Families and the Social Services Block Grant.

At Friday’s hearing, Jessica Ranucci of the New York attorney general’s office urged Broderick to issue an injunction for the duration of the case, warning of “extreme” and “immediate” irreparable harm from a fiscal shortfall without court intervention.

“Even a temporary gap in between court orders would cause the states irreparable harm,” she said. “We believe that this funding freeze is arbitrary and capricious and contrary to law.”

The states contend that the Trump administration unlawfully conditioned the release of the $10 billion in frozen funds on their turning over the “complete universe” of data on millions of families receiving public benefits.

“The funding freeze should be enjoined because it is unlawful many times over,” the states wrote in the motion for preliminary injunction. “Congress has created statutory schemes that constrain the executive branch in how it can identify and sanction noncompliance or fraud by recipients of the ACF Funds, but defendants have taken none of the steps required by these statutory processes and, in any event, no law authorizes a freeze of the entirety of a state’s funds.”

The states argue the administration’s rationale for the funding freeze — preventing fraud — is a pretext for “unlawfully punishing the five plaintiff states because of their political leadership and policies.”

Ranucci said the $10 billion at issue amounts to about $200 million a week for housing, child care and social services to the five states, adding that in New York City, the funds cover about half of state support for domestic violence shelters and shelters for mothers and children.

Friday’s arguments came as the city prepared for a major winter storm forecast to bring up to a foot of snow and below-freezing temperatures next week.

Justice Department lawyers said the Administration for Children and Families’ funding decisions fall within HHS’s general monitoring authority and its terms and conditions, which require recipients to ensure “expenditures are free from fraud, waste, abuse and duplication.”

In an opposition brief, the federal government argued the freeze was not “arbitrary and capricious” because Administration for Children and Families acted “based on concerns about programmatic fraud and insufficient internal controls within the States to detect and prevent.”

The Justice Department also requested that, if Broderick grants an injunction, the states be required to post a bond equal to the amount of their federal reimbursement “drawdown” requests.

Broderick questioned that proposal, saying requiring bonds of potentially hundreds of millions of dollars in an Administrative Procedure Act case could be “intended to send a chilling effect” on challenges to the administration.

“The request could be seen as unnecessarily punitive in nature in a situation such as this,” he said, requesting briefings from both sides on the issue of requiring a bond in an Administrative Procedure Act case like this.

“I would like to know, in these circumstances, is a bond another suffering,” he said.

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