Federal judge orders release of withheld funding as Colorado leaders decry “real pain” of holdups

A federal judge ordered the Trump administration Thursday to release hundreds of millions of frozen federal dollars — the latest court ruling mandating the undoing of a sudden halt in spending that has plunged Colorado’s industries, institutions and nonprofits into uncertainty.

U.S. District Court Judge John McConnell in Rhode Island granted a preliminary injunction in a lawsuit filed by Colorado and nearly two dozen other states led by Democratic officials. It comes more than a month after the plan by President Donald Trump’s administration for a sweeping pause on federal spending stirred up a wave of confusion and anxiety across the United States.

The federal dollars remained withheld from Colorado and other states despite previous court rulings requiring that the funding be released.

“The executive’s categorical freeze of appropriated and obligated funds fundamentally undermines the distinct constitutional roles of each branch of our government,” McConnell wrote in the order. “… Here, the executive puts itself above Congress. It imposed a categorical mandate on the spending of congressionally appropriated and obligated funds without regard to Congress’s authority to control spending.”

Leaders from Colorado universities, health care providers, environmental organizations and the agricultural sector outlined in a media call Thursday how the sudden freezing of federal dollars has sown uncertainty across the state.

“These cuts cause real pain in Colorado and across America — we have to realize how difficult and painful that is,” U.S. Sen. John Hickenlooper, a Democrat, said during the call, which his office organized.

Denver-based forest health nonprofit Coalitions and Collaboratives has halted all wildfire mitigation work due to the freeze, said the group’s chief operating officer, Jonathan Bruno.

“Communities will have to fend for themselves as we head into what is looking like an active wildfire season here in Colorado,” he said.

Colorado farmers are worried that promised federal reimbursements for research projects and farm needs will never come, said Roy Pfaltzgraff of PFZ Farms. The uncertainty has prompted some farm lenders to reconsider whether federal funding should be counted as income when calculating loan terms, he said.

“It is just going to drive the cost of everything up,” Pfaltzgraff said.

Continuing uncertainty

Even where federal dollars have been unfrozen, many recipients are unsure whether they can or should use them.

On Feb. 5, Hally Strevey realized that the organization she leads — the Coalition for the Poudre River Watershed — could no longer access an account holding $700,000 in federal grant funding. The money from the U.S. Bureau of Reclamation’s WaterSMART grant program was earmarked to pay for improvements to the Poudre River’s watershed east of Interstate 25 and its floodplain.

The dollars reappeared on Monday, Strevey said, but she has received no communication from federal authorities about whether she can spend them.

“While the funds appear to be back in the account, I have low confidence in them — are they just going to disappear again?” said Strevey, who is the executive director of the nonprofit. “With the lack of communication and how chaotic things have been, it’s scary.”

The future of millions in grant dollars already awarded to the nonprofit also remain unclear,  Strevey said. The group was awarded a grant to complete wildfire mitigation work and repair damage caused by the 2020 East Troublesome and Cameron Peak fires.

Federal grant funding made up approximately a quarter of the small nonprofit’s $2 million 2025 budget and was going to make up almost half of the 2026 budget, she said.

“The uncertainty is real,” Strevey said. “The funds have returned for WaterSMART, but that doesn’t mean that I’m ready to start spending money. There’s still so much uncertainty and that’s challenging when you’re a small team of five.”

FEMA, weatherization money caught up

Before Thursday’s court order, Colorado’s still-frozen funding included nearly $45 million in public safety funds destined for the state, officials said earlier this week. That money was set to be distributed from the Federal Emergency Management Agency.

In his court order, McConnell told FEMA that it must file a status report by March 14 to update him on its progress in disbursing the funds.

Another $35 million from a weatherization assistance program also remained frozen. That money, tapped for the state under under the Infrastructure Investment and Jobs Act, was supposed to go to the Colorado Energy Office. The office said last month that $570 million in federal funding bound for the state was still locked despite court orders directing its release.

“Unilateral cuts to everything from lifesaving health care to resources for firefighters would be devastating for our state, and I will continue to do everything in my power to stop these reckless, illegal acts,” Colorado Attorney General Phil Weiser said in a statement Thursday. “As evidenced by this ruling, the law is on our side.”

The White House has said the temporary funding halt would ensure that the payments complied with Trump’s agenda, which includes increasing fossil fuel production, removing protections for transgender people, and ending diversity, equity and inclusion efforts.

But among the funding awards impacted are billions of dollars that would pay for rooftop solar power in low-income neighborhoods, subsidize low- and moderate-income households’ purchase and installation of electric heat pump water heaters, and cover grants to reduce greenhouse gas emissions and other harmful pollutants.

The Trump administration quickly rescinded a memo outlining the funding freeze. But McConnell previously ruled that withdrawing the memo hadn’t sufficiently stopped the freeze.

Many state governments, universities and nonprofits — including in Colorado — have argued that federal agencies continue to block funding for a range of programs.

U.S. District Judge Loren AliKhan in Washington has also extended an order blocking the funding freeze. AliKhan granted a preliminary injunction requested by groups representing thousands of nonprofits and small businesses.

The Associated Press contributed to this story.

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