President Donald Trump holds up an executive order after signing it during an indoor inauguration parade at the Capital One Arena on Jan. 20, 2025 in Washington, D.C.  (Photo by Anna Moneymaker/Getty Images)

WASHINGTON — A federal appeals court on Wednesday overturned a lower court’s ruling that had required the Trump administration to spend foreign aid dollars approved by Congress.

But instead of addressing the central argument of the lawsuit — that a president cannot refuse to spend money approved by lawmakers, who hold the power of the purse — the Circuit Court in a potentially significant decision said the organizations that filed the case didn’t have the authority to do so.

Judge Karen LeCraft Henderson wrote in her 33-page opinion that only the comptroller general, who leads the Government Accountability Office, has the power to bring lawsuits when a president impounds, or refuses to spend, congressionally approved funds.  The GAO is an independent, non-partisan watchdog agency that works for Congress.

“Because the grantees lack a cause of action, we need not address on the merits whether the government violated the Constitution by infringing on the Congress’s spending power through alleged violations of the 2024 Appropriations Act, the ICA and the Anti-Deficiency Act,” Henderson wrote. The ICA is the Impoundment Control Act, which is the legal mechanism through which the president can delay or withhold funds.

Henderson was nominated to the Circuit Court in 1990 by President George H.W. Bush, a few years after President Ronald Reagan nominated her as a federal district judge in 1986.

Henderson wrote that she and Judge Gregory G. Katsas, who was nominated by President Donald Trump, concluded “the district court abused its discretion in granting a preliminary injunction” for several reasons.

Both Republican and Democratic state attorneys general filed amicus briefs in the case, with Republicans siding with the Trump administration. The case originated when Trump signed an order on Inauguration Day freezing certain foreign aid spending.

Henderson wrote that “within weeks, the State Department and USAID suspended or terminated thousands of grant awards.”

‘It is our responsibility to check the president’

Judge Florence Y. Pan, who was nominated by President Joe Biden, issued a 46-page dissenting opinion, arguing the ruling from her two colleagues was “procedurally and substantively flawed.”

“It is our responsibility to check the President when he violates the law and exceeds his constitutional authority,” Pan wrote. “We fail to do that here.”

Pan wrote she disagreed with the majority’s opinion that Trump withholding certain foreign aid funding was “a mere violation of the Impoundment Control Act that should be addressed by the Comptroller General.”

“In this case, the President’s violation of the Impoundment Control Act is a sideshow,” Pan wrote. “That statute provided a mechanism for the President to lawfully attempt to impound the funds, and his failure to follow its prescribed procedures is evidence that he was, in fact, refusing to obligate the funds in defiance of Congress.”

Public media funding targeted

The Trump administration has used the Impoundment Control Act one time this year, when it requested Congress cancel $9.4 billion in funding for the Corporation for Public Broadcasting and various foreign aid programs.

The House voted mostly along party lines to approve the full request in mid-June.

Senate Republicans approved the bill in July after preserving full funding for the President’s Emergency Plan for AIDS Relief, or PEPFAR.

House GOP lawmakers then cleared the bill for Trump’s signature just before a 45-day clock ran out.

Trump administration sees ‘big win’

Several members of the Trump administration, including Office of Management and Budget Director Russ Vought and Attorney General Pam Bondi, cheered the Circuit Court’s ruling in social media posts.

“In a 2-1 ruling, the DC Circuit lifted an injunction ordering President Trump to spend hard-earned taxpayer dollars on wasteful foreign aid projects,” Bondi wrote. “We will continue to successfully protect core Presidential authorities from judicial overreach.”

Vought wrote the ruling was a “Big win!”

An OMB spokesperson wrote in a statement the ruling represented a victory for the White House.

“Radical left dark-money groups have been using the court system to seize control of U.S. foreign policy,” the spokesperson wrote. “Today’s decision stops these private groups from maliciously interfering with the President’s ability to spend responsibly and administer foreign aid in a lawful manner and in alignment with his America First policies.”

Lauren Bateman, attorney at Public Citizen Litigation Group and lead counsel on the suit, wrote in a statement that the court’s ruling represented “a significant setback for the rule of law and risks further erosion of basic separation of powers principles.

“We will seek further review from the court, and our lawsuit will continue regardless as we seek permanent relief from the Administration’s unlawful termination of the vast majority of foreign assistance. In the meantime, countless people will suffer disease, starvation, and death from the Administration’s unconscionable decision to withhold life-saving aid from the world’s most vulnerable people.”

The James H. Shannon Building (Building One) on the NIH campus in Bethesda, Maryland. (Photo by Lydia Polimeni,/National Institutes of Health)

President Donald Trump’s freeze on $8 billion of congressionally appropriated funding to the National Institutes of Health was illegal, the Government Accountability Office reported Tuesday.

Orders Trump signed in the early days of his return to office and related administration directives violated the Impoundment Control Act by failing to spend money that Congress, which holds the power of the purse under the Constitution, had approved, the GAO report said.

Roughly 1,800 grants for health research were held up by the administration, the report said.

Trump’s Inauguration Day order ceased funding for a variety of health research grants that related to diversity, equity and inclusion, transgender issues or environmental harms. The Department of Health and Human Services issued a memo directing its agencies, including NIH, to cease publishing notices in the Federal Register of meetings of grant review boards.

GAO, an independent investigatory agency that reports to Congress, called those meetings “a key step in NIH’s grant review process.” HHS has since restarted notices of the meetings.

From February to June, the NIH released $8 billion less than it obligated in the past two years, representing a drop-off of more than one-third, according to the GAO. The gap between 2025 spending and that of previous years continued to grow, GAO said, with NIH obligating a lower amount of grant funding each month.

Illegal impoundment

The failure to fund grant awards violated the Impoundment Control Act and the Constitution, which certified Congress as the branch of government responsible for funding decisions, said GAO.

If a law is passed by Congress and signed by a president, it must be carried out by the executive branch, the watchdog said.

“The President must ‘faithfully execute’ the law as Congress enacts it,” the report said. “Once enacted, an appropriation is a law like any other, and the President must implement it by ensuring that appropriated funds are obligated and expended prudently during their period of availability unless and until Congress enacts another law providing otherwise. … The Constitution grants the President no unilateral authority to withhold funds from obligation.”

There are specific circumstances that allow for a funding freeze — a rescissions law, such as the one Congress passed last month to defund public broadcasters and foreign aid, is one example — but they did not apply to this case, the GAO said.

Delays may be permissible to allow a new presidential administration to ensure grants are awarded based on its priorities. But a complete block on funding is illegal, the GAO said. There is no evidence that other grant awards — or any other type of funding at HHS — took the place of the $8 billion in unspent grant money, the report said.

“While it can be argued that NIH reviewed grants to ensure that funds were spent in alignment with the priorities of the new administration, NIH did not simply delay the planned obligations of the funds,” the GAO said. “Rather, NIH eliminated obligations entirely by terminating grants it had already awarded.”

GAO can sue the executive branch based on its findings. The report noted there is already litigation from other parties over the frozen grants.

Dems call for reinstatement

Congressional Democrats responded to the report by harshly criticizing Trump and White House Office of Management and Budget Director Russ Vought and calling for the funds’ release.

“This is simple – Congress passed and the President signed into law investments in NIH research to help find cures and treatments for cancer, Alzheimer’s disease, ALS, diabetes, mental health issues, and maternal mortality,” U.S. House Appropriations Committee ranking Democrat Rosa DeLauro of Connecticut said in a statement. “But now, GAO has determined that President Trump and OMB Director Vought illegally withheld billions in funding for research on diseases affecting millions of American families—research that brings hope to countless people suffering.”

Senate Appropriations Vice Chair Patty Murray, a Washington state Democrat, said in a statement the funding freeze “dangerously set back” efforts to cure cancer, Alzheimer’s and other diseases.

“Today’s decision affirms what we’ve known for months: President Trump is illegally blocking funding for medical research and shredding the hopes of patients across the country who are counting on NIH-backed research to propel new treatments and cures that could save their lives,” Murray said. “It is critical President Trump reverse course, stop decimating the NIH, and get every last bit of this funding out.”

An HHS spokesperson deferred a request for comment Tuesday to OMB.

An agency investigated by the GAO is generally given a draft of the watchdog’s findings and asked to respond.

The HHS response, obtained by States Newsroom, said grant reviews were back on schedule, though it did not address grant obligations.

“Despite the short delay in scheduling and holding peer review and advisory council meetings to allow for the administration transition, NIH has been on pace with its reviewing grant applications and holding meetings and has caught up from the pause when compared to prior years,” the response said.

GAO’s summary of the HHS response said the department had restarted meetings of grant review boards and provided some “factual information” but did not justify the lack of grant spending or provide current status of payments for previously approved grants.