Trump Executive Orders and Implications for Cities and Public Agencies

This alert is jointly authored by Brownstein’s federal and local government relations teams as well as attorneys who represent cities and other public agencies to provide a comprehensive analysis of President Donald Trump’s executive orders that most impact municipalities and public agencies at the state and local level. Brownstein remains committed to closely supporting cities, providing strategic guidance and helping to navigate federal policy shifts.

In the first several weeks of his second term, President Donald Trump has issued a series of executive orders that have far-reaching implications for cities across the country. These directives impact federal funding; immigration policies; and diversity, equity, and inclusion (DEI) programs. The enforcement and legal status of these orders remain in flux as litigation progresses, making it crucial for cities to assess potential risks and prepare accordingly. This alert provides an overview of four key areas of concern: sanctuary city policies, DEI initiatives, federal grant freezes and federal workforce reduction.
 

Sanctuary City Policies

President Trump has reaffirmed a hardline stance on immigration enforcement, particularly targeting jurisdictions that do not fully cooperate with federal authorities. A recent memorandum from the U.S. Office of the Attorney General states that sanctuary jurisdictions should be denied access to federal grants administered by the Department of Justice (DOJ). This has already led to a lawsuit brought by several cities challenging the administration’s authority to withhold funding. San Francisco and Santa Clara counties in California, King County in Washington, and the cities of Portland, Oregon, and New Haven, Connecticut filed a federal lawsuit to stop the policy. The House Committee on Oversight and Government Reform is also investigating policies of sanctuary jurisdictions and their impact on public safety. The mayors of Boston, Chicago, Denver and New York City will testify at a public hearing on this topic on March 5. 

Current Status:

• Litigation is ongoing, with multiple federal courts reviewing the legality of withholding funds from sanctuary jurisdictions.
• The administration has yet to provide clear guidance on how sanctuary status will be defined and enforced.

Risks to Localities and Public Agencies:

• Cities identified as sanctuary jurisdictions could face cuts to federal funding streams, including public safety and emergency management grants. Already, the Trump administration has targeted the states of Illinois and New York in enforcement suits.
• The uncertainty surrounding the legal challenges makes it difficult to assess long-term impacts, requiring cities to closely monitor developments.

DEI Programming Restrictions

The Trump administration has issued executive orders that effectively bar federal funds from going to organizations that promote DEI initiatives. These orders apply not only to federally funded programs but also to entities that receive federal grants, regardless of whether DEI programs are specifically funded by the federal government.

Current Status:

• These restrictions have been temporarily halted by federal court orders, but the administration continues to push for enforcement. The cases remain ongoing.
• The National Association of Diversity Officers in Higher Education (“NADOHE”), the City of Baltimore, and other organizations have jointly filed a lawsuit against the administration arguing that the order unlawfully withholds critical financial support and violates constitutional protections, disproportionately harming local programs designed to foster diversity and inclusion. On Feb. 21, the judge presiding over this case issued a preliminary injunction against key provisions in two of President Trump's executive orders targeting DEI programs, finding these provisions likely violate the First and Fifth Amendments and cited concerns over free speech and vagueness.
• Trump’s DOJ has issued a policy memo directing prosecutors to investigate DEI programs in the private sector, while a group of Democratic state attorneys general has issued public guidance pushing back on the policy shift arguing that DEIA practices “are not illegal, and the federal government does not have the legal authority to issue an executive order that prohibits otherwise lawful activities in the private sector.”
• Future funding agreements and federal contracts are expected to include new certification requirements stating that recipients do not engage in DEI-related activities deemed noncompliant with federal anti-discrimination laws.
• Click here to read our prior alert on the Department of Justice memo related to investigating DEI, here for our prior alert on the executive order repealing affirmative action requirements for federal contractors, and here for further discussion on the pushback from Democratic state attorneys general.

Risks to Localities and Public Agencies:

• Cities and public agencies that operate DEI programs may become ineligible for federal grants and contracts, though the legality of the federal government’s actions has yet to be determined as litigation on the issue is ongoing.
• If the DEI executive orders are upheld as legal, officials responsible for grant certifications could face liability under the False Claims Act if they falsely certify compliance with the new requirements, which mandate that recipients confirm their DEI programs do not violate federal anti-discrimination laws.
• The chilling effect of these restrictions could lead to voluntary rollbacks of DEI initiatives as a way to maintain access to federal funding.

Federal Grant Freeze

Several of President Trump’s executive orders initially froze federal funds, including those allocated for infrastructure, environmental programs and public services. On Jan. 27, the Office of Management and Budget (OMB) released the OMB memo (now rescinded) purporting to “temporarily pause all . . . Federal financial assistance.” Following its release, OMB clarified that the memo did not intend to pause all federal funding—only funding directly implicated in early executive orders. The Trump administration later rescinded the OMB memo but insisted that the funding freezes embedded in the following executive orders remains in effect:

• Protecting the American People Against Invasion (Executive Order 14159, 90 FR 8443);
• Reevaluating and Realigning United States Foreign Aid (Executive Order 14169, 90 FR 8619);
• Putting America First in International Environmental Agreements (Executive Order 14162, 90 FR 8455);
• Unleashing American Energy (Executive Order 14162, 90 FR 8455);
• Ending Radical and Wasteful Government DEI Programs and Preferencing (Executive Order 14151, 90 FR 8339)
• Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government (Executive Order 14168, 90 FR 8615); and
• Enforcing the Hyde Amendment (Executive Order 14182, 90 FR 8751).

Current Status:

• Federal courts have issued temporary restraining orders and preliminary injunctions preventing the administration from implementing funding freezes contemplated both in the OMB memo and the above executive orders.
• Despite these temporary restraining orders or injunctions, reports indicate that certain agencies continue to delay or withhold funds, prompting further legal scrutiny and motions by multiple plaintiffs to force the Trump administration to comply with these rulings. Several states continue to report being locked out of funding portals.
• The administration has appealed the temporary restraining orders, and additional court decisions are expected in the coming weeks.

Risks to Localities and Public Agencies:

• Programs reliant on federal grants—such as public transportation, housing assistance and climate initiatives—may experience disruptions.
• Cities must prepare for potential delays in federal funding, requiring contingency plans for critical services.
• Agencies responsible for grant administration should document funding commitments and maintain compliance with all court rulings to safeguard financial support.

Reduction of the Federal Workforce

President Trump has also issued directives aimed at reducing the size of the federal workforce, requiring agencies to operate with fewer employees and imposing hiring restrictions. The administration has signaled its intent to streamline government operations, which could have significant effects on cities that rely on federal agencies for funding, approvals and technical assistance.

Current Status:

• Judge George O’Toole, a Clinton appointee to the U.S. District Court for the District of Massachusetts, ruled that the unions that filed suit over the offer lacked the legal standing required to proceed with their case.
• President Trump’s mass resignation offer expired on Feb. 12. According to the OMB, 75,000 federal employees accepted the resignation offer. This number falls short of the 5-10% goal to reduce the 2 million employee workforce (or 100,000-200,000 employees).
• Federal agencies have been instructed to limit hiring and reduce staff, with exceptions for national security and law enforcement roles.
• Some agencies have already implemented layoffs, and further reductions are expected in the coming months.

Risks to Localities and Public Agencies:

• Reductions could cause delays in federal contracting and funding approvals. With fewer federal employees handling contracts, grants and project approvals, municipalities and public agencies may experience longer wait times for essential funding and agreements.
• Agencies that provide technical assistance, regulatory approvals and compliance oversight may be less responsive, making it harder for cities to execute federally supported projects.
• Cities with a large number of federal employees, many of which are concentrated in D.C.-adjacent states like Maryland and Virginia, could see job losses that affect local economies, reducing consumer spending and tax revenues.

The evolving nature of these executive orders presents significant challenges for U.S. cities and other public agencies. The legal battles over sanctuary city funding, DEI restrictions, federal grant freezes and workforce reductions introduce uncertainty into budget planning and program administration. While court rulings have temporarily blocked some of these measures, the administration’s ongoing efforts to enforce its policies signal continued risks. Public agencies should remain vigilant, seek legal guidance as necessary and prepare for potential shifts in federal funding requirements.

Brownstein will be maintaining a tracker of the EOs issued by President Trump in the first days and weeks of his second term. The tracker can be viewed by clicking the link here.

This document is intended to provide you with general information regarding the impact of federal executive actions on cities. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.