Legal Battle Over $12 Billion in USAID Funding Reaches High Court

Legal Battle Over $12 Billion in USAID Funding Reaches High Court
  • calendar_today August 24, 2025
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On Tuesday night, lawyers for the Trump administration filed an emergency appeal to the Supreme Court, asking the justices to let it freeze billions of dollars in foreign aid spending already allocated by Congress. The request now returns the USAID funding fight to the high court for the second time in six months.

The funds in dispute are nearly $12 billion in aid set aside for U.S. Agency for International Development (USAID) spending, which is required to be paid out before the fiscal year ends on September 30. Trump wasted little time on his return to the office in January, signing an executive order on his first day back in the White House that told the federal government to halt the disbursement of almost all foreign aid spending. The president billed the move as part of a crackdown on “waste, fraud, and abuse” in foreign aid spending.

The order was promptly taken to court, and in February, U.S. District Judge Amir Ali in Washington, D.C., stopped the administration’s efforts, ruling that the White House had to continue releasing money for projects Congress had already approved. In his ruling, Ali instructed the Trump administration to continue payments on billions of dollars in USAID grants.

The administration appealed that decision. In a new hearing earlier this month, the U.S. Court of Appeals for the D.C. Circuit revisited the case, ultimately voting 2-1 to vacate the injunction laid out by Judge Ali. Writing for the majority, George H.W. Bush appointee Karen L. Henderson said the plaintiffs in the case — foreign aid groups that want the government to restart their grant payments — had not set out enough grounds for suing the administration.

Henderson cited the lack of a proper “cause of action” under what is known as the doctrine of impoundment. While the appeals court’s decision was a major victory for Trump, that court has not yet issued a formal mandate to enforce its ruling. This delay has left Judge Ali’s earlier order and payment schedule technically in place. As a result, the administration is on a deadline to prevent itself from being forced to release the $12 billion before the fiscal year ends on September 30.

Legal Arguments and Broader Implications

On Tuesday, U.S. Solicitor General D. John Sauer filed the emergency request with the Supreme Court, saying that unless the justices intervene, the government will have to “rapidly obligate some $12 billion in foreign-aid funds” before the September 30 fiscal deadline. In the filing, he asked that the court “direct the district court to stay its injunction during the pendency of this Court’s review.”

“The Constitution’s foreign affairs and appropriations clauses, which together regulate spending on foreign aid, do not permit such a suit, and Congress did not upset the delicate interbranch balance by allowing for unlimited, unconstrained private suits,” Sauer wrote in the filing. He continued, “any lingering dispute about the proper disposition of funds that the President seeks to rescind shortly before they expire should be left to the political branches, not effectively prejudged by the district court.”

The plaintiffs in the case, who are a collection of foreign aid groups whose projects depend on USAID grants, say exactly the opposite. The argument from those suing the government is that the president has no power to block the spending of money that Congress had already set aside. Plaintiffs in the case point to both the Impoundment Control Act (ICA), passed in the 1970s to rein in executive spending discretion in federal dollars, and the Administrative Procedure Act as the main statutory authorities for their lawsuit.

The Trump administration, for its part, rejects the ICA and APA as applicable law in the case. The administration said it was covered by an exception for foreign assistance programs under the ICA. In court filings, the administration has also said that the APA does not apply since the plaintiffs did not have a legitimate cause of action to sue under that law.

The fight is one in a series of cases that have cropped up in recent years over questions of executive authority to decide how and when to spend money appropriated by Congress. If the administration wins the fight, that would bolster a president’s ability to rescind or delay spending even after Congress allocates the money. If the plaintiffs win, it would further weaken the executive’s discretion over the budget.

The Supreme Court previously stepped in to settle a similar dispute over foreign aid in the narrow 5-4 ruling this year. With the fiscal deadline looming and billions of dollars at stake, the justices are now being asked to once again weigh in on the fight.

For Trump, the case is the latest in an effort to overhaul U.S. spending priorities and centralize control over foreign assistance. For foreign aid groups, it’s a question of life or death: Without the funds they’ve been promised by USAID, projects around the world already in progress would have to be cut short, and new projects abandoned entirely.

With an appeals court decision in partial limbo and the administration pushing for quick relief, how the Supreme Court chooses to handle this emergency appeal could determine the fate of $12 billion in foreign aid funding — and potentially set a precedent on the limits of presidential power in spending congressionally approved funds.