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Rescission of Appropriations2019-08-20T02:37:01-04:00

Overview of the White House’s attempt to block unobligated FY19 foreign assistance appropriations, with FAQs, legal analyses, government documents, and press reports.

At a Glance

OMB claims that President Trump has the power to freeze appropriations until after they expire. GAO maintains that such action would violate the Constitution’s Separation of Powers and the Impoundment Control Act (ICA) – the very statute Congress enacted to curb similar abuses by President Nixon. At stake is $4.3 billion in unobligated foreign assistance appropriations due to expire September 30.

According to press reports, the Administration intends to send an ICA notice to Congress on August 20 requesting rescission of the targeted funds. This action seeks to take advantage of a perceived loophole in the statute: the notice automatically freezes the funds for 45 days, effectively running out the clock on the FY19 appropriations that expire September 30. In doing so, the White House hopes to achieve the foreign-assistance budget cuts that it previously requested but Congress explicitly rejected.

The frozen funds cover a variety of foreign assistance: international organizations, peacekeeping operations, international narcotics control and law enforcement, development aid, assistance for Europe, Eurasia and Central Asia, economic support funding, foreign military financing programs, and global health programs.

Not all foreign-assistance funds are being treated equally by the Administration. For arbitrary and capricious reasons, they have carved out projects dear to certain high-ranking officials, such as Vice President Pence and Ivanka Trump. This shows that White House’s actions are not only illegal, but they are arbitrary and capricious.

The Administration almost attempted this rescission action last year. Congress was so taken aback by the mere threat, however, that GAO issued an opinion on whether the Administration’s tactic would have been legal. GAO did not mince words: it told Congress that taking advantage of the 45-day window to ‘run out the clock’ on annual appropriations violated both the relevant statute and the Constitution’s basic design. The White House eventually capitulated in the face of political and public pressure.

And yet, undeterred by GAO’s opinion, the Administration is again embarking to do what they know to be illegal. In doing so, it seeks to nullify billions of dollars’ worth of foreign assistance, appropriated by Congress and signed by President Trump himself into law, by abusing the 45-day period in the rescission statute.

Unless Congress or the GAO bring suit to challenge the Administration, it could be left to NGOs and Contractors harmed by these actions to do so. As detailed in our analyses, we believe they likely could do so.

FAQs

The Administration plans to freeze the unobligated balances on the FY19 foreign assistance appropriations and return those funds to the U.S. Treasury, rather than spending them as Congress enacted. The lawsuit would ask a Federal court to order OMB to release the targeted foreign assistance funds to the State Department and USAID for spending before they expire.

The case would argue that the Administration is violating the Administrative Procedures Act by taking improper actions that adversely affect the NGOs and contractors. The improper actions are:

  • the Administration’s refusal to permit the agencies to spend the funds as appropriated as appropriated by Congress in duly enacted statutes;
  • the Administration’s freezing of foreign assistance funds before the end of the fiscal year so that they expire without being spent, in violation of the Impoundment Control Act; and
  • the Administration effectively applying a Line Item Veto to the funding for programs that it does not support, which has already been declared unconstitutional by the U.S. Supreme Court.

While litigation is never entirely predictable, we believe a lawsuit as outlined herein is well-grounded. There are numerous ongoing lawsuits against the Administration for its disregard of appropriations laws for policy purposes. For example, the U.S. House of Representatives and the Sierra Club have brought separate lawsuits around the Administration’s diversion of appropriated funds from their intended purposes to fund the border wall.

A small group of leading contractors has agreed to serve as lead plaintiffs – but only if leading NGOs also sign on.

GAO could also bring a lawsuit, though it is unclear whether they will do so.

NGOs and contractors that anticipate being impacted by the Administration’s freezing of foreign assistance appropriations are encouraged contact Robert Nichols at (202) 360-6624 and [email protected].

Legal Analysis

Challenging the Administration’s Impoundment of Foreign Assistance Appropriations (Aug. 11, 2019).

Strategy for Challenging the Administration’s Impoundment of Foreign Assistance Appropriations (Aug. 13, 2019).

The Capacity to Reprogram, Rescind, and Impound, Harvard Law School Federal Budget Policy Seminar Briefing Paper No. 8 (2005).

Twisting the President’s Arm: The Impoundment Control Act as a Tool for Enforcing the Principle of Appropriation Expenditure, 100 Yale Law Journal 1 (1990) (describing the Reagan Administration’s attempts to resist GAO enforcement of the ICA).