After months of uncertainty stemming from executive orders issued by President Trump and ongoing litigation, a federal judge has ordered the resumption of funding for urban and community forestry grants established under the Inflation Reduction Act (IRA). The freeze, imposed as part of the Trump administration’s broader policy review, disrupted hundreds of grant awards nationwide and prompted legal action from nonprofit recipients.

 

President Trump issued the Unleashing American Energy executive order (EO) on inauguration day. Broadly speaking, EO 14154 seeks to eliminate policies and programs the Trump administration believed ran counter to American energy-production goals. The EO also directed all federal agencies, including the U.S. Department of Agriculture (USDA), to pause the disbursement of funds appropriated under the IRA, and to review policies and programs for issuing grants appropriated through the law to determine whether such funds were consistent with the policy established through the EO.

The IRA allocated $1.5 billion for the Urban and Community Forestry Program (UCF) at the U.S. Forest Service (USFS). In September 2023, the agency distributed more than $1 billion in competitive funding to nearly 400 projects across all 50 states, Washington, D.C., several U.S. territories and Tribal Nations. The funding supports tree planting and maintenance, workforce development, community engagement and efforts to build climate resilience in urban areas.

Following the EO and a subsequent memorandum from the Office of Management and Budget (OMB), federal agencies – including the USDA – began pausing the disbursement of already-awarded funds under both the IRA and the Infrastructure Investment and Jobs Act (IIJA) to conduct policy reviews. This broad halt in funding affected a wide range of programs and recipients across multiple agencies.

In March, six conservation and community organizations filed suit against several federal agencies, challenging the legality of the funding pause under the Administrative Procedure Act. One of the plaintiffs, the Woonasquatucket River Watershed Council, based in Rhode Island, had been awarded $1 million through the Forest Service’s IRA-funded Urban and Community Forestry Program.

On April 15, 2025, a federal judge from the U.S. District Court for the District of Rhode Island ruled in this lawsuit and ordered the Trump administration’s federal agencies to immediately resume disbursement of the frozen funds. The order applied to all IRA and IIJA grants affected by the order nationwide, not just the grants affected by the groups filing the lawsuit.

In response, federal agencies were required to submit regular status reports documenting their efforts to comply and unfreeze funds. Multiple status reports have been provided by the agencies following the district court judge’s ruling. While it’s not entirely clear which UCF grants have been reviewed and unfrozen, a court status report from May 2, 2025, indicates that the USDA has resumed disbursement of all IRA and IIJA-funded awards that were not previously reviewed and identified as inconsistent with the USDA secretary’s priorities. A prior status report indicated that 309 grants or other awards were frozen due to such review, but according to the May 2 report, only 34 awards remain frozen.

According to a declaration filed by the USDA’s Director of Transparency and Accountability as part of that May 2 status report, the 34 remaining frozen awards were flagged in an individualized review for content related to diversity, equity and inclusion (DEI). The USDA emphasized that this number may still change as internal reviews continue. These awards were identified as including racial, ethnic or gender-based preferences not explicitly required by statute. USDA leadership is now reviewing staff recommendations on whether those awards should be modified, reinstated or terminated.

The USDA also clarified that projects without executed agreements are not considered “awarded” and are not covered by the court’s injunction, allowing the agency to continue pausing those commitments.

On the operational side, USDA agencies report that they have largely cleared their payment backlogs for previously frozen awards. Invoices are being processed without delay and without any distinction based on funding source, according to the declaration.

Broader legal landscape
The Woonasquatucket River Watershed Council case is one of several lawsuits filed in response to the Trump administration’s executive orders freezing or reviewing IRA and IIJA grant disbursements. Other legal challenges – filed by states, municipalities, nonprofits and environmental groups –are pending across multiple federal courts. These include Sustainability Institute vs. Trump, Butterbee Farm vs. USDA and New York et al. vs. Trump, all of which contest the legality of Executive Order 14154 and related agency actions.

While not all lawsuits involve the USDA directly, many challenge the same core policies and procedures behind the funding freeze. Together, they reflect widespread concern that the blanket suspension of congressionally appropriated funds violates the Administrative Procedure Act and constitutional principles. Courts in multiple jurisdictions have already issued injunctions or temporary restraining orders requiring agencies to resume funding – though appeals are ongoing.

Conclusion
While the USDA has made significant progress toward complying with the court’s injunction, the overall picture remains uncertain. Internal reviews of the 34 remaining DEI-flagged awards are ongoing, and the agency has not ruled out further terminations. Meanwhile, the Trump administration has appealed the district court’s ruling to the U.S. Court of Appeals for the First Circuit. Depending on the outcome, the scope of allowable reviews – and future freezes – could shift again.

TCIA’s government-relations team will continue to track these developments closely and provide updates to members as the litigation and administrative-review processes unfold.

Bailey Graves is a senior associate with Ulman Public Policy, TCIA’s Washington, D.C.-based advocacy and lobbying partner.