Labor & Employment Law Daily Wrap Up, LITIGATION NEWS, TRENDS—D.C. Circuit allows Trump administration to go ahead with ‘impounding’ foreign aid funds, (Aug 14, 2025)

By Brandi O. Brown, J.D.

The 2-1 decision tosses the district court’s preliminary injunction that had required the government to make the Congressionally-appropriated funds available.

On January 20, 2025, President Trump issued Executive Order 14169, which directed the State Department and USAID to freeze foreign aid spending. A group of aid grantees and associations, including the Global Health Council, sued Trump and other members of his administration under the Administrative Procedure Act (APA) and the U.S. Constitution. The district court granted a preliminary injunction requiring, among other things, the government to make available for obligation the full amount of foreign assistance funds Congress had appropriated for FY 2024. The Trump administration sought expedited appeal.

Injunction vacated. In a 2 to 1 decision issued yesterday, the D.C. Circuit reached the conclusion that the district court erred in granting that relief. The panel majority concluded 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 nor do they have a cause of action under the APA because APA review is precluded by the Impoundment Control Act (ICA). Moreover, the grantees could not “reframe this fundamentally statutory dispute as an ultra vires claim either.” Rather, it is up to the Comptroller General to step in if the President does not follow impoundment-control procedures, the majority explained. It vacated the district court’s preliminary injunction and remanded.

Judge Pan’s dissent. Dissenting, Judge Pan took issue with the majority’s decision to “compensate for the government’s litigation missteps by sua sponte reframing the case.” The argument put forward by the government did not take issue with the central legal analysis that justified the preliminary injunction—its factual finding that the President had no intention of spending the appropriated funds nor its legal conclusion that the President’s withholding of appropriations likely violated the separation of powers. Therefore, Judge Pan explained, the appeals court’s job should have been “easy” and they should have affirmed the lower court’s decision.

“My colleagues in the majority excuse the government’s forfeiture of what they perceive to be a key argument,” Judge Pan wrote, “and then rule in the President’s favor on that ground, thus departing from procedural norms that are designed to safeguard the court’s impartiality and independence.”

The cases are Nos. 25-5097 and 25-5098.

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