By Tim Schermetzler of CSD Attorneys at Law P.S.
In this month’s column, I cautiously dip my legal toe into the implications around recent federal funding actions. I say “cautiously” because I realize there are strong opinions on all sides of federal politics right now. To be clear, I avoid taking a position here on any of the political issues or the advisability of the federal government’s actions. Rather my focus for this article is to describe the general legal framework and status of these executive actions and offer strategies for navigating an increasingly uncertain federal funding environment.
Anyone that tuned into national news over the last few months undoubtedly heard stories about freezes to federal funding and cuts to federal programs. For several reasons, there is a high level of uncertainty about the potential impacts of federal government actions at the local level, including Washington ports. This uncertainty exists, in part, because of pending litigation concerning those actions and the prospect that federal funding sources may be reduced and/or rerouted through different agencies or programs than those currently delivering those funds. While resolutions to these questions are still a moving target, given the interest that this topic has generated, this month’s column offers strategies for ports to consider while awaiting answers on the disposition of federal programs and funding.
Since taking office in January 2025, the administration of President Donald J. Trump has issued several Executive Orders (“EOs”) aimed at carrying out the new administration’s goals. While Congress is empowered to be the primary branch of federal government to create laws, Presidential executive orders apply federal law and carry the full force of the law even though such orders require no action by Congress. It is not uncommon for a new administration to issue multiple EOs when taking office, including orders that are meant to change existing EOs from the outgoing administration. It is also not uncommon for some of the EOs to be challenged by opponents in the courts.
Some of President Trump’s EOs addressing federal funding have received a lot of attention in the last few months, including: EO 14154 – Unleashing American Energy, EO 14151 – Ending Racial and Wasteful Government DEI Program and Preferencing, and EO 14173 – Ending Illegal Discrimination and Restoring Merit-Based Opportunity. These EOs are a small selection of the orders that were issued since January 2025, there are many other EOs which may impact federal funding sources to local government, both directly or indirectly, including EOs directed at energy policy and streamlining certain governmental review processes.
The disposition of these EOs is unclear, in part, because of pending court cases. For instance, on March 26th, the U.S. Court of Appeals for the First Circuit upheld a lower court’s order enjoying (stopping) implementation of an Office of Management and Budget (“OMB”) Memorandum (M-15-13) issued in January that aimed at freezing federal funding along with funding freezes identified in EO 14154, among others. While the lower-court injunction on the OMB Memorandum was upheld by the First Circuit, other temporary restraining orders were recently modified by the appellate courts: EOs 14151 and 14173 were initially halted by a nationwide temporary injunction issued by a Maryland Federal District Court Judge on U.S. Constitution First Amendment speech and Fifth Amendment due process to grounds, but the U.S. Court of Appeals for the Fourth Circuit lifted the stay on certain aspects of these EOs pending a full hearing on these issues. It will likely be months, or even years, before a final decision is reached by the courts on these cases, especially because of the probability of appeals on these decisions. In the meantime, it is possible that federal funding agencies may conduct a project specific evaluation of non-obligated grant awards to identify activities contrary to the current administration’s priorities, which in turn could lead to a final administrative decision on whether the grant will be canceled, modified, or continue as planned. We have not been able to confirm whether this will be the administration’s policy direction.
Given the likelihood that uncertainty will continue, your port may be taking a ‘business as usual’ approach to federal funding because these funding sources have not been affected or changed as of yet. When the dust settles from litigation on the EOs and the changes to federal funding are more certain, your port may assess the impacts and adjust as necessary. Certainly, other ports may be more proactive addressing potential impacts to federal funding, especially if federal funding is tied to significant operations or projects at your port. Whether your port is taking a wait-and-see approach or a more proactive approach, the below list offers some strategies for your port to consider if you receive federal funding:
- Assessing potential impact on federal funding. Not all federal funding is or will be affected by EOs or guidance issued by the OMB. An important first step is to identify and compile all relevant documents for federal grants or contracts that your port was awarded. This includes any emails or other communication from the grant officer or from the federal agency awarding the grants. Pay particularly close attention to any communications pertaining to “stop work” orders or “termination” of funding. After this information is compiled, assess whether your federal grants or contracts are within the scope of an EO or directive from OMB. Your port should follow the awarding federal agency’s directions and requests. Where there is no clear direction from federal agencies, you may look to your grant officer and/or legal counsel for assistance determining whether your grants are impacted.
- Review terms of grants and contracts. Grants and contracts are governed by their terms and applicable laws and regulations. As a result, the potential impact and proper action steps will differ from one grant or contract to the next. If a grant or contract is, or may be within the scope of an EO or directive from the OMB, take care to read the specific terms and provisions and any applicable federal agency regulations to ensure ongoing compliance. Pay particular attention to terms involving conditions of payment, change or amendment clauses, stop work or termination provisions, and dispute resolution clauses.
- Request reimbursement as often as possible. If your port believes it may be affected by funding freezes on previously awarded grants, you may want to consider requesting reimbursement more frequently than the typical reimbursement request schedule – i.e., request reimbursement weekly rather than monthly or quarterly. Take care to review your grant agreement and the awarding federal agency’s policies for how often you can request reimbursement. Your grant officer or manager at the awarding federal agency may be able to advise your port on how often you can submit reimbursement requests.
- Exercise caution with certification. Carefully review any certification request or other request to certify compliance with federal law prior to receiving federal funding. Work with your port’s legal counsel to analyze new or changed certification requests, including those with new or undefined terms. For example, EO 14173 called for future grant certification provisions to include that the recipient does not operate any programs promoting Diversity Equity and Inclusion (“DEI”) that violate any applicable Federal anti-discrimination laws. While a port grant program may not include this type of programming, ports should still take care to understand the scope of the certification request.
- Maintain complete records. Keep records of costs related to changes to projects or programs affected by federal funding freezes, including stop work or termination notices. These records may be used to request reimbursements or prepare any potential claims.
- Keep in regular contact with your federal delegation. Reach out to your federal delegation with your questions and concerns. Members of Congress, and their offices, regularly aid in navigating federal agencies and can be a helpful source of information on the implementation of federal funding. In some cases, these elected officials may have helped secure grant or loan funds for your port and have familiarity with the programs or projects these federal funds are intended to support.
- Keep informed and stay the course. Unless specifically directed otherwise by the federal grant awarding agency or legal counsel, your port should stay the course with projects and programs supported by federal funding, perhaps with the caveat of requesting reimbursement more regularly as discussed in an earlier bullet.
- When in doubt, seek federal agency clarification and consult with legal counsel. These above points focus on impacts of the recent EOs on federally funded grants. EOs implicate other federal actions beyond grants, including enforcement against individual entities and civil compliance investigations. The potential impacts to federal funding and how to best keep informed and navigate the labyrinth of EOs, court actions and agencies rules is an evolving process. Work with your port legal counsel to understand impacts to these orders.
If you have a question for Knowing the Waters, please e-mail me at tschermetzler@csdlaw.com.
