US appeals court says Trump can slash billions in owed USAID funds

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Supreme Court temporarily allows Trump's freeze on USAID payments

Former Deputy Assistant Attorney General John Yoo predicts a 'momentous battle' in the courts over President Donald Trump's pause on funding for USAID and discusses the DOJ's request to the Supreme Court to allow Trump's desired firings.

A federal appeals court ruled Wednesday that the Trump administration can slash up to roughly $2 billion in foreign aid payments that it halted earlier this year, delivering a victory to the Trump administration months after President Donald Trump sought to dismantle the U.S. Agency for International Development (USAID). 

Judges on the U.S. Court of Appeals for the D.C. Circuit ruled 2-1 to vacate a lower court’s preliminary injunction handed down earlier this year. The lower court judge had required the Trump administration to resume its payments on nearly $1.98 billion in owed funds for USAID projects previously approved by Congress, after the Trump administration abruptly froze them earlier this year. The issue has been held up in federal court for months.

Writing for the majority, Judge Karen L. Henderson, a President George H.W. Bush appointee, said that the plaintiffs lacked the proper cause of action to sue the Trump administration over its decision to withhold the funds, or what is known as impoundment.

SCOTUS RULES ON NEARLY $2 BILLION IN FROZEN USAID PAYMENTS

U.S. President Donald Trump is joined by Tesla and SpaceX CEO Elon Musk, and his son, X Musk, during an executive order signing in the Oval Office at the White House on February 11, 2025. (Andrew Harnik/Getty Images)

The plaintiffs, Henderson said, "may not bring a freestanding constitutional claim if the underlying alleged violation and claimed authority are statutory."

"Nor do the grantees have a cause of action under the APA because APA review is precluded by the Impoundment Control Act (ICA)," she added, though she noted the U.S. Comptroller General could technically sue under that law.

The 2-1 majority also ruled that the plaintiffs failed to show Trump had acted "plainly" in excess of his executive branch authorities.

 Judge Henderson was joined in the majority opinion by Judge Greg Katsas, a Trump appointee.

It was not immediately clear whether the plaintiffs in the case would seek to have their case reviewed en banc— or by the full panel for the Democrat-majority U.S. Court of Appeals in D.C.— though doing so could afford them some near-term relief, if the full appeals court sided with the federal judge who had issued the preliminary injunction earlier this year.

Regardless, the ruling is a major victory for President Donald Trump, who issued an executive order on his first day in office in January to block nearly all foreign aid spending as part of his administration’s broader crackdown on waste, fraud, and abuse.

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Employees and supporters gather to protest outside of the U.S. Agency for International Development (USAID) headquarters on February 03, 2025 in Washington, DC.   (Photo by Kevin Dietsch/Getty Images) (Photo by Kevin Dietsch/Getty Images)

Critics, meanwhile, have argued that the abrupt withdrawal of U.S. investment and presence around the world risks economic harm, reputational damage and new security risks at home and abroad.

Trump’s executive order sparked a flurry of federal lawsuits, and eventually made its way to the Supreme Court in February. Justices on the high court denied the Trump administration’s request in February to continue its freeze on USAID payments, ruling 5-4 that an earlier Feb. 26 payment deadline had already expired, and remanded the case back to the district court to clarify additional payment details. 

Four conservative justices on the bench excoriated the slim majority ruling earlier this year. 

Justice Samuel Alito issued a scathing, eight-page dissent in February blasting the narrow court majority's ruling as an "unfortunate misstep," and one he argued "rewards an act of judicial hubris" by the lower court judge, U.S. District Judge Amir Ali.

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Washington , DC - January 20: Supreme Court Justice Samuel Alito, Supreme Court Justice Clarence Thomas, Supreme Court Justice Brett M. Kavanaugh, Supreme Court Justice Amy Coney Barrett, Supreme Court Chief Justice John Roberts, Supreme Court Justice Elena Kagan and Supreme Court Justice Sonia Sotomayor attend the 60th inaugural ceremony on January 20, 2025, at the US Capitol in Washington, DC. Trump became the 47th president of the United States in a rare indoor inauguration ceremony. The parade was also moved inside Capitol One Arena due to weather.  (Ricky Carioti /The Washington Post via Getty Images)

"Does a single district-court judge who likely lacks jurisdiction have the unchecked power to compel the Government of the United States to pay out (and probably lose forever) 2 billion taxpayer dollars? The answer to that question should be an emphatic ‘No,’ but a majority of this Court apparently thinks otherwise," Alito wrote in the dissent, joined by Justices Clarence Thomas, Samuel Alito, Neil Gorsuch and Brett Kavanaugh.

"I am stunned," he added.

TRUMP TEMPORARILY THWARTED IN DOGE MISSION TO END USAID

An American flag and USAID flag fly outside the USAID building in Washington, D.C., on Feb. 1, 2025. (REUTERS/Annabelle Gordon)

Still, the Trump administration's efforts have sparked the ire of foreign aid groups and other recipients of the assistance, who argue that the quick dismantling of them risked "immediate and irreparable harm." 

They have also raised concerns that slashing the funds could create new obstacles for U.S. businesses looking to open or expand into foreign markets.

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Scott Greytak, a director at the group U.S. Transparency International, previously told Fox News Digital in a statement that cutting such a large amount of U.S. foreign aid carries significant economic and security risks— especially in countries with higher risks of corruption, could "open the door for increased cross-border corruption, fraud, and other crimes," he said.