Trump’s pause on $3T in federal funding could impact Va.

Update, 7:30 p.m. A federal judge temporarily blocked President Donald Trump’s freeze on federal spending until at least Feb. 3, but the White House did not immediately respond to the judicial order.

On Monday, Trump ordered a freeze on more than $3 trillion in federal financial assistance, including grants and loans backing economic development and infrastructure projects across the nation, according to news reports. That raises questions about what happens to huge economic development projects in Virginia from Microporous, Micron Technologies and LS GreenLink, all of which were awarded hundreds of millions of federal dollars to move forward on projects expected to employ thousands of people.

Matthew J. Vaeth, acting director of the federal Office of Management and Budget, sent an internal memo to federal agencies Monday set to go into effect Tuesday, Jan. 28, at 5 p.m., first reported by freelance journalist Marisa Kabas.

According to the memo, “Financial assistance should be dedicated to advancing administration priorities, focusing taxpayer dollars to advance a stronger and safer America, eliminating the financial burden of inflation for citizens, unleashing American energy and manufacturing, ending ‘wokeness’ and the weaponization of government, promoting efficiency in government, and Making America Healthy Again.”

It calls for all federal agencies to review federal financial assistance programs and “temporarily pause all activities related to obligation or disbursement of all federal financial assistance, and other relevant agencies that may be implicated by the executive orders, including but not limited to financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology and the green new deal.” The memo also sets a Feb. 10 deadline for all agencies to submit to the OMB information on any programs or projects subject to the pause, including “issuance of new awards [and] disbursement of federal funds under all open awards.”

Vaeth wrote that the OMB “may grant exceptions allowing federal agencies to issue new awards or take other actions on a case-by-case basis.” However, the memo says that each federal program must be assigned to a “senior political appointee” to ensure that the project “conforms to administration priorities.” If they are not, the agencies are “to the extent permissible by law, cancel awards already awarded that are in conflict with administration priorities.”

U.S. Sens. Tim Kaine and Mark Warner, both Democrats, released a statement Tuesday eviscerating the freeze: “President Trump’s reckless and illegal order to stop all federal grant and loan programs will have an immediate and profound negative impact on Americans all over the country.

“In every corner of Virginia alone, there are enormous, game-changing economic developments projects happening right now that depend on federal spending appropriated by Congress. Whether it’s Helene recovery in Southwest [Virginia], … semiconductor manufacturing in Northern Virginia… pharmaceutical jobs in Richmond… renewable energy in coastal Virginia… or the Microporous expansion in Southside – every one of these projects is in part the result of federal funding from laws we fought tooth and nail to pass in Congress, and could now be endangered thanks to President Trump’s mess.”

As listed in Warner and Kaine’s statement, Virginia projects have been awarded significant federal funding under former President Joe Biden’s administration, but in some cases, do not have the cash in hand.

On Jan. 16, Tennessee-based Microporous announced it had been formally awarded $100 million from the U.S. Department of Energy, part of which is set to go toward a new $1.36 billion battery separator manufacturing plant in Pittsylvania County expected to employ more than 2,000 people.

The grant was expected to start April 1 and run through March 31, 2028, and during that time, Microporous would submit expenses for reimbursements and receive payments from the federal government. Now, that’s uncertain.

According to the DOE’s website during the end of the Biden administration, Microporous had pledged to create 282 permanent jobs in Pittsylvania for “double-distressed coal and Justice40 communities,” an initiative started by the Biden administration that 40% of certain federal climate, clean energy, affordable and sustainable housing funding flows to disadvantaged communities — an element that is likely to run afoul of the Trump administration’s anti-DEI stance.

A Microporous spokesperson said Tuesday that the company’s leadership was discussing the matter.

In Manassas, semiconductor company Micron announced at the end of the year it will invest $2.17 billion to expand its facility, creating 340 jobs and bringing its production of dynamic random-access memory (DRAM) chips for automotive, aerospace, defense and industrial markets from Taiwan to Virginia. In December 2024, the company was awarded $275 million in federal funding, after the U.S. Department of Commerce signed a preliminary, nonbinding agreement for the funding as part of the 2022 CHIPS and Science Act. It’s not clear whether this funding will be permanently impacted by Trump’s order.

Micron did not respond immediately to a request for comment.

Another major project, LS GreenLink USA’s $681 million subsea cable factory in Chesapeake, was awarded $99 million in advanced energy project tax credits from the Department of Energy in April 2024. However, LS GreenLink Managing Director Patrick Shim said Tuesday that tax credits appear to be exempt from Trump’s order.

“We’re moving forward as planned,” he said. “We’re breaking ground in April,” with plans to be open in the third quarter of 2027 and fully operational in the first quarter of 2028.

Aside from the freeze on federal funding, Shim said that his company is in good stead under the new administration. Raw materials used to produce the cables, which are specifically engineered for offshore wind farms, will be sourced inside the United States, which will protect the company from paying high tariffs on materials from China or other countries targeted by Trump.

Also, Shim noted, LS GreenLink’s parent company, South Korea-based LS Cable & System, has a significant backlog of wind energy projects from outside the United States, so its business shouldn’t be affected by Trump’s ban on future offshore wind farms in the U.S.

Aside from these three major projects, other big economic development deals and infrastructure projects across the state have benefited from federal financial assistance, including the following:

• Topsoe, a Danish electrolyzer manufacturer, is building a $400 million manufacturing plant in Chesterfield County, and was awarded $136 million in federal tax credits.
• The Port of Virginia was awarded $380 million by the U.S. Environmental Protection Agency in October 2024 for its Clean Ports grant program, to purchase electric equipment and upgrade infrastructure.
• The Richmond-Petersburg Advanced Pharmaceutical Manufacturing cluster and its connected businesses and organizations, including Phlow and Civica Rx, have received significant federal funding under the 2023 CHIPS and Science Act. On Jan. 14, Warner and Kaine announced $3.9 million in federal funding for the Community College Workforce Alliance in Disputanta to expand workforce training programs for the hub.
• Mack and Volvo Trucks were awarded $208 million in federal funding in September 2024 to sustain jobs in the United States, including 3,600 jobs in Dublin, where Volvo Trucks is the second largest employer in the New River Valley.

“This is a five-year project for which we have not yet received any disbursements. It’s unclear to us at this point whether the funding will be impacted,” said Janie Coley, director of public relations for Volvo Group North America. “We’ve been informed that the DOE will be in touch to discuss modifications, but to our current knowledge the project will continue. That is all we know for now.”

The Port of Virginia released a statement: “The grant agreement was executed on Dec.13, 2024, and this obligates the federal funds to the projects we have planned. Though this funding is considered committed, we are continuing to collaborate with our partners at the state and federal levels. This effort is being undertaken to ensure a wider understanding of the larger commercial interest, or value, of this grant to the Port of Virginia.”

Topsoe also sent out a statement Tuesday: “We are closely following the developments. We look forward to ongoing engagement with the new administration and Congress on how federal tax and energy policies can best support energy security, resiliency and economic growth in the U.S.”

Virginia Business has contacted Gov. Glenn Youngkin’s office, the Virginia Economic Development Partnership, Phlow and Civica Rx for comment.