Can Trump administration hold back federal grants? Federal statute, Constitution could be impediments
President Donald Trump’s temporary pause on federal grants was poised to run into several roadblocks. (Image from Shutterstock)
Updated: President Donald Trump’s temporary pause on federal grants was poised to run into several roadblocks, including the Impoundment Control Act of 1974 and constitutional provisions regarding congressional spending and faithful execution of laws.
A Jan. 27 memo from the Office of Management and Budget required federal agencies to temporarily pause financial assistance activities to allow for a review of whether they are “consistent with the president’s policies and requirements.” Reports on findings were due by Feb. 10.
The review should include agency activities implicated by 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 said.
The administration rescinded the freeze just two days later, according to Politico and the Washington Post.
The grant reviews will continue, however, Karoline Leavitt, the White House press secretary, told the New York Times.
“The executive orders issued by the president on funding reviews remain in full force and effect and will be rigorously implemented by all agencies and departments,” Leavitt said.
Marisa Kabas of the Handbasket broke the news about the funds freeze. Stories followed in the Washington Post, Roll Call, Forbes and other publications.
Zachary S. Price, a professor at the University of California College of the Law in San Francisco, saw trouble ahead.
“The president cannot disregard statutory mandates to spend funds, and under current law, agencies normally must spend the amounts that Congress appropriates for them,” he wrote in an article for the Yale Journal on Regulation.
Senior leadership of the ABA “is actively monitoring developments on this issue and many others,” according to Jim Walsh, the ABA’s chief communications officer and associate executive director. “Dialogue on this issue will be on the agenda at [the] midyear meeting.”
Experts considering the legality of the funds freeze included Richard Kogan, a senior fellow at the Center on Budget and Policy Priorities; Steve Vladeck, a professor at the Georgetown University Law Center, in an article at his One First newsletter; and Price in the Yale Journal on Regulation and Lawfare.
Democratic leaders of the U.S. Senate’s and the U.S. House of Representatives’ appropriations committees also listed legal issues in fact sheets here and here.
Potential impediments include:
• The spending clause, which gives the power of the purse to Congress. It reads: “No money shall be drawn from the Treasury but in consequence of appropriations made by law, and a regular statement and account of the receipts and expenditures of all public money shall be published from time to time.”
Kogan asserted in his article that the power of the purse from Congress “precludes the president from unilaterally deciding not to spend money that Congress has provided.”
• The take care clause, which requires a president to “take care that the laws be faithfully executed.”
Price argued that the spending and take care clauses mean that presidents “are constitutionally obligated to expend appropriated sums if applicable statutes make that expenditure mandatory.”
• The Impoundment Control Act of 1974, which generally bans delays in spending for policy reasons but allows deferrals that relate to efficient use of funds. Deferrals must be reported to Congress, which can override the deferrals. If a president wants to completely cancel spending, known as a “rescission,” they must take the proposal to Congress, which can decide whether to acquiesce. Funds withheld pursuant to rescission proposals must be released after 45 days of a continuous session of Congress.
Writing at Lawfare, Price noted that “the boundary between lawful programmatic delays and unlawful deferrals is contestable and generated acute controversies during the past two administrations.”
• The U.S. Supreme Court’s 1975 decision in Train v. City of New York, in which the high court interpreted a federal law providing that funds for sewage treatment “shall be allotted.” The high court held that the law required the Environmental Protection Agency to spend the full amount. The decision was not based on constitutional issues, however.
“Although the court did not address constitutional issues in Train,” Price wrote at Lawfare, “neither did it hint at any constitutional problem with a spending mandate.”
• The Supreme Court’s 1998 decision in Clinton v. City of New York, which struck down the Line Item Veto Act. The law allowed presidents to cancel some appropriations within five days of enactment, subject to a congressional override. The high court said the law improperly gave “the president the unilateral power to change the text of duly enacted statutes.”
The first question, Price told the ABA Journal, is whether the pause actually violates the Impoundment Control Act.
“Somewhat confusingly,” he says, the Government Accountability Office has interpreted the law to allow “programmatic delays” in spending.
When the Trump administration wanted to delay funds to Ukraine, the GAO said the delay would be an unlawful deferral, rather than a programmatic delay. But when the Biden administration wanted to stop spending on the border wall, the GAO said the deferral was a permissible programmatic delay.
The Trump administration would likely argue that the pause is a programmatic delay, albeit on a “much larger scale,” Price says.
The Trump administration could also assert that the Impoundment Control Act is unconstitutional, an argument made by Mark Paoletta, Trump’s nominee to serve as the general counsel to the Office of Management and Budget.
In articles (here and here) for the Center for Renewing America, a right-leaning nonprofit organization, Paoletta and his co-authors argue that historically, the power of the purse from Congress has been interpreted as a ceiling on executive spending, not a floor.
The authors argue that the power of impoundment is one of a president’s executive powers under Article II of the U.S. Constitution. They also argue that the take care clause allows a president to ensure that their agencies conform with their executive branch authority. They also point to the commander in chief clause, saying it allows a president to impound spending for the armed forces and national security.
Price thinks that historical impoundment practices became a moot point once Congress passed the Impoundment Control Act.
“I think the president is obligated to faithfully execute the law,” Price says. “I think if Congress requires spending, which is what the Impoundment Control Act does, then that’s a law the president has to follow.”
There is no constitutional power to defy that law, he adds.
Vladeck said the issue could quickly reach the Supreme Court, as it presents a fundamental question about the structure of government.
“If presidents can impound appropriated funds at any time and for any reason,” he wrote, “then there’s not much point to having a legislature.”
On Tuesday afternoon, several state attorneys general were preparing to seek an injunction, Law360 reports.
A group of nonprofits and small-business organizations filed a request for a temporary restraining order Tuesday, according to a Jan. 28 press release from the National Council of Nonprofits. They are represented by Democracy Forward, a left-of-center litigation and advocacy nonprofit organization.
The Democracy Forward lawsuit alleges violation of the Administrative Procedure Act and asks a federal court in Washington, D.C., to declare that the freeze directive was arbitrary and capricious.
The memo pausing funding was “devoid of any legal basis or the barest rationale,” the suit says.
U.S. District Judge Loren AliKhan of the District of Columbia issued a temporary restraining order Tuesday in the Democracy Forward suit, Law360 reports.
Updated Jan. 29 at 1:20 p.m. to report that the freeze was rescinded and to add the statement from Karoline Leavitt, the White House press secretary.
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