Appeals Court Rules Only GAO Can Sue Against Funding Freezes

This court case fell under the radar while we Thompson editors were on vacation last week, but it could have a huge impact on federal grant funds. The U.S. Court of Appeals for the District of Columbia ruled that only the comptroller general at the Government Accountability Office (GAO) can bring suit under the Trump administration’s funding freezes, as opposed to recipients harmed by the cuts in funding.

The case, Global Health Council, et. al, v. Donald Trump, stems from the Jan. 20 executive impoundment of funds appropriated by Congress, when Trump issued an executive order directing the State Department and U.S. Agency for International Development (USAID) to freeze foreign aid spending. Seeking to restore the flow of funds, foreign aid grantees and associations sued under the Administrative Procedure Act (APA) and the U.S. Constitution.

While a U.S. District Court subsequently issued a temporary restraining order (TRO) in favor of the plaintiffs, the Appeals Court on Aug. 14 vacated the lower court’s TRO stating that the grantees “lack a cause of action to press their claims.”

“They may not bring a freestanding constitutional claim if the underlying alleged violation and claimed authority are statutory,” the court ruled. “Nor do the grantees have a cause of action under the APA because APA review is precluded by the Impoundment Control Act (ICA). Instead, the Comptroller General may bring suit as authorized by the ICA. Accordingly, we vacate the part of the district court’s preliminary injunction involving impoundment.”

The court added that if the Comptroller General finds that the president or another executive official has taken steps to reserve or defer funds or has ordered, permitted or approved such action, the president must report the reserve or deferral to the Congress. If not, the Comptroller General is expressly empowered to sue the president to require such budget authority to be made available after filing an explanatory statement to Congress. “The Comptroller General thus serves as an enforcer of the statutory scheme, which controls any efforts by the president to impound appropriated funds,” the court stated.

Therefore, the Appeals Court, in a 2-1 decision, ruled that the only recourse for the president’s wholesale withholding of foreign aid lies in the provisions of the ICA that allow the Comptroller General to address discrete rescissions or deferrals that affect specific line-items of budget authority.

It is expected that this decision may impact other cases where states and groups have sued, arguing that Trump illegally withheld funds under the law. It is expected that this ruling will be appealed, as it would be unlikely that GAO would take proactive steps to sue the administration for withholding funding.

Grantees just want to get their funds so that they can carry out their missions. It shouldn’t be this difficult.

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