Labor & Employment Law Daily Wrap Up, PROCEDURE—D.C. Cir.: TRO ordering disbursement of Radio Free Europe funding stayed pending appeal, (May 9, 2025)

By Kathleen Kapusta, J.D.

“The court,” wrote the dissent, “was not required to stand by and allow the government to continue to withhold the appropriated funds ‘until the [Network] is forced out of existence.’”

In a short order issued May 7, the D.C. Circuit granted the government’s motion for a stay pending appeal and dissolved an administrative stay entered by the court below after it issued a TRO ordering the United States Agency for Global Media (USAGM), which oversees six federally funded broadcast networks, to enter into a grant agreement with Radio Free Europe/Radio Liberty (RFE/RL) covering April 2025 and disburse over $12M in funding. A per curiam concurrence was attached to the order. In a separate dissent, Judge Pillard argued that “RFE/RL faces existential harm from our stay of the district court’s temporary restraining order (RFE/RL v. Lake, No. 1:25-cv-00799-RCL (D.C. Cir. May 7, 2025)).

Concurrence. Pursuant to the per curiam concurrence, Congress, through appropriations that USAGM disburses through grants, has allocated specific funding for RFE/RL, which operates as a private, nonprofit corporation. USAGM entered grant agreements providing funding to RFE/RL through the end of February 2025 when it began negotiating a grant agreement with RFE/RL for Fiscal Year 2025. Although RFE/RL signed the agreement in late February, USAGM did not.

Lawsuit. When, in March, President Trump issued Executive Order 14238 directing that USAGM be reduced to the minimum level of operations, USAGM terminated RFE/RL’s grant agreements. Suing, RFE/RL moved for a TRO compelling USAGM to disburse $7.5 million to it to cover its grant entitlements for March 1-15. It also sought a preliminary injunction “ordering USAGM to effectuate further grant agreements with RFE/RL to disburse the funds that Congress had appropriated through September 30, 2025.”

USAGM disbursed the funds and entered a grant agreement providing funding through the end of March. In April, it proposed a new Master Grant Agreement for Fiscal Year 2025 with significantly different terms. RFE/RL then moved for a TRO seeking disbursement of congressionally appropriated funds for April 1 to April 30, 2025, totaling $12,178,590.

TRO. On April 29, the district court ordered USAGM to immediately enter into a grant agreement with RFE/RL covering April 2025 under the same terms and conditions as the old agreements and immediately disburse RFE/RL’s April funding in the amount of $12,178,590. USAGM appealed and sought a stay.

Likely to succeed. According to the concurrence, the government is likely to succeed on its challenges to the injunction as it had no basis for binding USAGM to all the terms contained in earlier grant agreements. Pursuant to the governing statute, the concurrence explained, USAGM has significant latitude to establish terms for grant agreements, it can limit grant funding to activities it determines are consistent with the statutory purpose to support international broadcasting, and it can defund RFE/RL if it determines that it is not effectively carrying out that purpose. “Given this degree of agency discretion, we think it unlikely that USAGM could be prohibited from seeking to renegotiate any terms in the grant agreement—a complex government contract reflected in some 31 pages of fine print.”

As to the district court’s requirement that USAGM disburse funds under the terms of the contract extension it had ordered, the concurrence, for reasons explained in the related case of Widakuswara v. Lake, concluded that the lower court likely lacked jurisdiction to order payment of the funds owed under a grant agreement.

Further, for substantially the same reasons as the discussed in Widakuswara, the concurrence concluded that the remaining Nken factors for determining the applicability of stay on balance supported a stay here.

Dissent. Dissenting, Judge Pillard stated that she would have denied the government’s stay motion largely for the reasons stated in her dissent in Widakuswara. Here, as there, she argued, “the government is unlikely to succeed on the merits of its assertion that the Tucker Act deprives the district court of jurisdiction over the Networks’ statutory and constitutional claims.”

Moreover, she noted, “RFE/RL’s slightly different circumstances underscore the fallacy at the heart of the government’s position and vividly illustrate why none of the Networks’ claims belong in the Court of Claims. Not only does RFE/RL’s complaint make no contract claim, but RFE/RL has no contract that it could be seeking to enforce ‘disguised’ as something else.” Specifically, she argued that the networks all challenge the government’s impoundment of funds appropriated by Congress for the purpose of sustaining their operations and their claim of entitlement to those funds originates, not in a contractual agreement, but in binding Congressional enactments.

Irreparable harm. Judge Pillard also, for the same reasons she espoused in Widakuswara, again rejected the government’s claim of irreparable harm. She added, however, that the harm asserted here—the imminent prospect of having to pay one month worth of funds appropriated by Congress, “did not justify imposing a stay that provisionally decides the jurisdictional issue in the government’s favor pending resolution of the appeal—and watching the Network vanish in the meantime.”

The government, Judge Pillard continued, did not explain why it would be entitled in the Court of Claims to withhold the funds the district court required it to pay, which “brings into sharp relief what the government is doing: It claims irreparable harm and obtains a stay by insisting the case likely belongs in the Court of Claims, not based on any reason to think that court can or will approve its impoundment of funds, but as a strategy to run down the clock, avoid complying with the existing TRO, and starve RFE/RL out of existence.”

As to the balance of equities, she contended that RFE/RL faces existential harm from the stay of the TRO as it has already been forced to scale back its operations, furlough more than 400 employees, and cancel contracts with its freelance journalists, among other things.

Finally, Judge Pillard argued that the per curiam stay order “omits the crucial context that makes clear why that TRO was entirely appropriate.” Here, she pointed to the new Master Grant Agreement proposed by the agency that included a “long list of new extraordinary terms,” which, she contended, suggested it would not secure the Networks’ right to funds but instead sign those rights away. Moreover, she asserted, the agency’s persistent refusal to enter into a one-month extension of the prior grant agreement “suggested that the ‘defendants are trying to strongarm [the Network] into signing their latest version of the Master Grant Agreement.”

Under these circumstances, she concluded, the justification for the TRO “was clear and amply supported the district court’s grant of incremental and limited relief. The court was not required to stand by and allow the government to continue to withhold the appropriated funds ‘until the [Network] is forced out of existence.’”

The case is No. 1:25-cv-00799-RCL.

Judge: Per curiam.

Attorneys: David Meir Zionts (Covington & Burling) for RFE/RL, Inc. Daniel Tenny, U.S. Department of Justice, for Kari Lake.

Companies: RFE/RL, Inc.; Radio Free Europe/Radio Liberty

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