Trump Administration Moves to Withdraw Funding from Local Governments Affected by Judge's Preliminary Injunction

A federal judge in Washington state has issued a preliminary injunction blocking the Trump administration from following through on threats to withhold billions of dollars in federal transportation funding from Denver and other local governments. The order, handed down on Tuesday, is a significant setback for the administration's efforts to tie grant eligibility to compliance with its policies on diversity initiatives and immigration enforcement.

The legal dispute began in May, when Denver and a coalition of dozens of cities and counties filed suit, arguing that the administration’s threats regarding nearly $4 billion in critical transportation grants were both "unlawful and politically motivated." According to the injunction, the municipalities contended that the Executive Branch overstepped its authority by imposing funding conditions unrelated to the underlying purpose of the grants—a move that would violate the separation of powers between the branches of government.

The judge agreed with the plaintiffs' arguments, writing in the order that the administration’s actions likely breach constitutional limits and cause direct harm to local budgets. "It is this looming risk itself that is the injury, and one that Plaintiffs are already suffering," the ruling stated, noting that courts in similar cases have recognized the irreparable injury caused by sudden budgetary uncertainty. The ruling effectively bars the administration from implementing its threatened funding cuts while the case proceeds.

The dispute escalated after U.S. Transportation Secretary Sean Duffy sent a memo in April warning grant recipients that failing to align with the federal government’s position on diversity, equity, and inclusion measures—or refusing to participate in federal immigration enforcement—could jeopardize their access to future funds. The memo sparked immediate outcry from officials in many cities, who argued such conditions were both unlawful and disruptive to critical infrastructure projects.

In response to the court’s decision, Denver Mayor Mike Johnston praised the ruling as a win for his city and others facing similar threats. "Denver follows all laws—federal, state, and local—and it should not be so much to ask the White House to do the same," Johnston said in a statement. He called the court’s order "swift and precise," emphasizing its importance in ensuring that essential transportation funding remains protected for Denver residents.

This preliminary injunction marks another high-profile legal defeat for the Trump administration in its efforts to reshape federal funding guidelines, particularly around contentious issues such as diversity programs and immigration enforcement. As the legal battle continues, local governments across the country will watch closely for further developments that could impact billions of dollars in public projects and services.