Lawfare Daily: Trump’s Rescissions Request, Impoundments, and the Litigation Over Foreign Assistance

[Introduction]

Scott Anderson: They point out that appropriation statutes tend to be worded fairly broadly. They very rarely expressly direct the president say, you must spend this, you shall spend money on this. They say things like, the president may spend money for this, or they just simply appropriate monies for a purpose without giving any specific direction. And they say essentially, without that sort of specific direction, there is no mandate that's binding on the president in this case.

It's the Lawfare Podcast. I'm Senior Editor Scott R. Anderson, joined by Lawfare Senior Editor and Brookings Institution Senior Fellow Molly Reynolds.

Molly Reynolds: Like, that's pretty clear to me, like Congress did not mean for the procedures that it prescribes in the Impoundment Control Act, including the ones around litigation if the executive branch is determined to be doing something unlawful, it did not imagine that it was the only arbiter of this question.

Scott Anderson: Today we are talking about the rescissions request the president has put forward to Congress and what it means for the litigation over his cuts to foreign assistance.

[Main Podcast]

So, Molly, we have gathered here today for one of our, I think, signature at this point 'cause I think we are the only two people who regularly do them because conversational podcasts digging into something of mutual interest and wonkiness to talk about rescissions. This is big news. It's a topic I'm not sure we, either of us thought was going to be big news in our professional lifetimes, but it is very big news.

In a way it's probably one of the top, like three constitutional issues this administration is teeing up, which is not a small thing for this administration and the universe of constitutional issues it is teeing up. And it has huge ramifications for government, for federal spending, for the whole of policy items, Congress and executive branch have traditionally weighed in on across all sorts of issue sets.

Before we get into the specific context in which we're seeing this fought out, at least now at least preliminarily, is this kind of first battle in the broader war over rescissions and the related concept of impoundments, and that's in the context of foreign assistance. Talk to us a little bit about what it is a recession is and how it relates to the concept of impoundments and the, the constitutional, and perhaps more importantly, in a way, at least immediately, the statutory framework that Congress has set up around them.

Molly Reynolds: Yeah, so I'll just say to start off that I've spent most of my career thinking about the Congressional Budget and Impoundment Control Act, but almost all of it was about the budget half of that, and none of it was about the Impoundment Control half of it. And now, now here we are, but I do actually think it's important to remember a little bit of the history here.

So when Congress passed the Congressional Budget Act in 1974 one of the impetuses, one of the things that sort of compelled it to act was the fact that the Nixon administration had been pretty aggressively impounding funds pretty aggressively disregarding decisions in the appropriations context that had been made by the Congress.

And so one of the things that Congress did is it sort of stepped in and said, no. impoundments have always been illegal, like Congress holds the power of the purse. We have these historical examples. We're not gonna come in and say that the president is all of a sudden allowed to impound funds. What we are going to do is say that if Congress has acted in the appropriations space and the executive branch wants to do something that is at odds with what Congress has said, here are the options available for the president.

So it's not like impoundments became illegal as a result of the Impoundment Control Act. The Impoundment Control Act prescribes how the executive branch is supposed to approach trying to sort of change what Congress has done in the appropriations space. And it prescribes a couple different concepts here.

The first is this idea of rescissions, and that's, I think a lot of what we're gonna talk about today. And a rescission is when the president proposes canceling the availability of budget authority. So Congress has passed an Appropriations Act. So X amount of money should be spent on Y purpose. The president then proposes in the form of what we call a special message, which is a great term of art here, proposes that no, the executive branch actually thinks we shouldn't do these things that Congress has just appropriated funds for.

And then Congress has the opportunity to adopt a resolution affirming those rescissions. We can talk about sort of the procedural aspects of that, but basically the rescissions piece, so the, the idea that you the executive branch would propose a cancellation of budget authority, Congress has to act under the law to affirm those rescissions. And if Congress doesn't do so, then the executive branch is not supposed to rescind the money. It's not supposed to cancel the spending. So that's the idea of rescissions or sort of canceling money entirely.

The second thing that is prescribed in the law is the idea of deferral. And there the notion is that the president can propose delaying as opposed to canceling budget authority. Iin the original Congressional Budget and Impoundment Control Act, one house of Congress could then step in and end the deferral. So sort of cancel the delay that the executive branch had notified Congress that it wanted to do by adopting a resolution that disapproved of the deferral.

And then in the early eighties in a Supreme Court case that, you know, bedevils me to this day, INS v. Chadha, the Supreme Court ruled that this kind of one house legislative veto was unconstitutional. And then in a follow-on D.C. Circuit case, the D.C. Circuit ruled that the deferral power, so this idea that the president could defer funds was unseverable from the one house veto.

So then Congress had to step in, revise the law, said that deferrals were okay, but only for specified reasons, we can get into this later too, that don't include policy disagreements and that a deferral could not extend past the end of the fiscal year in which the president was proposing the deferral of funds.

And then the last concept I think is helpful to kind of put on the table to start is this notion of programmatic delay which is essentially like an extra statutory concept here. Programmatic delay is the idea that if an agency is facing what GAO calls operational factors that unavoidably impede the obligation of budget authority that it's okay for the agency to chip, to pause spending. And basically what we have here is Russ Vought, the head of OMB, is claiming that much of what we're seeing right now actually falls under this idea of programmatic delay.

And I think a lot of folks, including our friend Eloise Pasachoff who's been on the podcast before, have basically concluded that the concept of programmatic delay has expanded so far to sort of eat the definition of deferral. And now we have this world where agencies are regularly doing what actually should be deferrals, which they have to notify Congress about, but they're just calling them programmatic delay. And then Congress doesn't know that they're happening unless there's, they find out in some other way because the administration doesn't have to report on them.

So that's kind of where we are, that conceptually that's what we're, what's at stake here. I think we're gonna talk most specifically about this idea of rescissions, but we'll touch on these other concepts too. So, to sort of pick up there, Scott, in, at the beginning of June, the administration sent a special message with proposed rescissions over to the Hill. I think it's about nine and a half billion dollars.

Scott Anderson: That's my recollection. I actually forget the top line because I haven't done, I haven't added all the lines together.

Molly Reynolds: Yeah, yeah, yeah. Don't hold us, neither of us do math for a living. One of us is a lawyer, one of us is a political scientists, don't hold us to that listeners.

But what is in there? What are the things that the administration has actually told Congress under the terms of the Impoundment Control Act, that it wants Congress to rescind.

Scott Anderson: So this appears to be, you know, a first salvo. In theory, we may see additional special messages for other funding and spending that we know is getting held up across the board on all sorts of issues.

But this is kind of taking aim at two fairly convenient targets, I suspect particularly for Republican allies of the administration in Congress. One is the Corporation for Public Broadcasting, which is basically having its future funds for ‘26 and ‘27 completely wiped out if this rescissions were actually enacted, rescinding it entirely. So that means PBS and NPR, other entities that benefit from that would essentially receive no funding, at least under the funds that have already been appropriated and, and were already on the table for it.

And then there is a whole set of individual rescissions regarding foreign assistance. Foreign assistance isn't one big category. It is a ton of individual accounts and programs that are, I think, best thought of as a constellation of different, often interrelated, sometimes kind of overlapping in purpose, sometimes fairly independent accounts with different statutory authorities that tied to them.

But across the board we are, it sees like a pretty dramatic cuts in foreign assistance. Just to run through a couple of the items that we see in this list, we see a substantial cut of International Disaster Assistance funds for 2025, about an eighth of the remaining funds. Huge chunks of fundings for the international in the Inter-American Fund, excuse me, the African Development Bank and U.S. Institute for Peace.

Remember, these are three of the programs the Trump administration tried to take over. In at least two of those cases they've essentially been stopped from doing so at least temporarily as litigation is ongoing. Although in the case of USIP that happened after several weeks. So there's some pretty terrible stories about the headquarters having been, having, had letters of the sign torn down for some reason. A lot of it was left unattended or in the hands of few folks from the White House.

But substantial cuts to their programming, even though those institutions are, are now more or less up and running, at least for the time being. Huge cuts from international operations accounts. Those are the accounts that provide funding to the UN or for various UN programs. They specifically say it's related to cuts to UNRWA, cuts to a lot of UN programs the administration has indicated to backing out from.

But perhaps the most notable items I would say is that you see a huge cut in funding to AIDS related public health spending. That, of course, has been a huge kind of flashpoint, including with Republicans in Congress 'cause PEPFAR spending and other related spending on AIDS issues actually is a fair amount of bipartisan support historically. So that 400 million in funding that they're trying to cut from that is likely, I think to be one of the more higher profile items 'cause we're gonna hear more about pushback from that, at least we have so far.

But the really dramatic stuff is to the Economic Support funds, the Development Assistance funds and Migration Refugee Assistance funds, those are often referred to as the DA,ESF, and MRA funds. These are three of the big traditional big buckets of foreign assistance funds. And you are seeing ESF and DA funds cut by as much as, in the case of ESF funds, more than 50%, or pardon me, of DA funds more than 50% of their appropriated funds.

So we're seeing dramatic cuts in spending across, again, the premier major foreign assistance funds. ESF funds, DA funds are used to fund most of what you think of as foreign assistance essentially. And then Migration and Refugee Assistance funds are being cut by 25%. But there's also a note in there about other funds being reallocated for other purposes and or hinting at at least reallocation for other purposes and shifting and focus towards things like removal and repatriation.

So it is a really, really indicative of the broad policy swing the administration has already tried to implement through the agency. This is the legislative and funding backup for that. Basically trying to get Congress to bless and sign off on the policy decisions the administration's already started moving towards at the agency level.

But Molly, the real question I think everybody has is where is this going? So tell us where this bill actually is and where we think it's going to go, both procedurally, where we know it's gonna go and, and what the odds are of it getting there, I guess, to the extent we know.

Molly Reynolds: Yeah. So, it cleared the House by a vote of 214 to 212, so very narrow margin. It was another one of those situations where you know, Speaker of the House Mike Johnson, I wasn't clear if he had the votes and they went to the floor anyway. And there was arm twisting and there was some literal shouting on the floor, but they did get it over the finish line in sort of the full form that had come over from, from the White House.

It's a little unclear, sort of what flipped people in the end, whether this is one of many situations where there are some House members who believe that the Senate will change the proposal when it gets over to the Senate and then it'll come back to the House. And the ultimate res, the ultimate version might be more to their liking. The risk there is obviously, like if the Senate doesn't change it, then you have already voted for a thing that maybe you don't like a lot.

But, so it does go to the Senate next. We're recording this on June 16th. It's a little unclear exactly when the Senate is likely to take it up. There's a 45 day clock. It's a little different than like some other kind of clocks that we talk about in the congressional procedure world. Often we are talking about this kind of deadline it's because the expedited procedures that are available for considering these bills without the threat of a filibuster in the Senate are only available for some period of time.

That's not what's happening here. Here, it's that after 40 that the president has sent the special message proposing the rescission, and if Congress doesn't act in 45 days, then the administration is supposed to spend the money. That it has proposed for rescission. So it can, it can pause the spending while Congress works its will in the rescissions process. But the 45 day clock, which I think is supposed to run out on July 18th, if it elapses with no, no congressional action, then the administration is supposed to spend the money.

Separate question as to whether what this administration with this White House would do if it got to July 18th and Congress hadn't acted, would they sort of take that as a message, special or otherwise that they are in fact supposed to actually spend this money? I think there's probably an argument that if we actually went through all of the steps that are prescribed in the Budget Act for the rescissions process and got to the end and there was no rescissions bill, the courts might look differently on the executive branch's actions after that point.

We can talk more about that, if you want. What I will say is that there are, when it gets over to the Senate, there are some questions about how the Senate can amend the proposal. I think it's pretty clear that they could, if they wanted to narrow what the House has passed, that would obviously then need to go back to the House for its approval.

So let's say for example there weren't the votes in the Senate for the rescission of the PEPFAR funds because Scott, as you've pointed out, that historically has a lot of bipartisan support. Or there's not, there aren't the votes in the Senate for the rescission of the funds for the Corporation for Public Broadcasting.

I think the Senate could amend the proposal to remove those and then send it back over to the House. It's a little less clear, to me at least, what the Senate can do in terms of adding things if it wanted to. I will say that in the 50 plus years, 51 years since the Congressional Budget and Impoundment Control Act was passed, we actually haven't done this that many times. And the president and Congress don't, haven't used this procedure that often.

In part because if you sort of think about what it is doing, Congress has said, we wanna spend this money. The president has signed a law saying we're gonna spend this money, and like, yes, we do appropriations legislating these giant packages. And so you can, I guess, imagine the idea that, you know, some things made it through the process that enough people don't like that you could undo them.

But one of the reasons we do appropriations in big giant packages is because it's an opportunity for log rolling. Everyone gets something that they want. But what you end up doing in the Rescissions context is you identify specific things that have, say, specific constituencies that might be mad about them. If you take away the funding and then you, you ask members of Congress to sort of face those politics instead. So I don't know what's gonna happen, but that, that is sort of the next procedural step in the rescissions process.

Scott Anderson: And, and to be clear in the Senate side, just to be express about this, I, I think you already touched on it, but I wanna be clear for listeners, it's a 50% threshold in the Senate.

Molly Reynolds: Yeah.

Scott Anderson: It's not a filibusterable, not filibusterable, subject to the filibuster.

Molly Reynolds: You're right. That I should be even more clear about this. So, so, yes. If the Senate takes up a rescissions package, it has a statutory limit on debate on the legislation, which has the effect of preventing a filibuster. And so the, so yes if the Republicans could find 50 of their own votes plus JD Vance available to break a tie they could get this through on, on a party line vote.

And so then the question is really you know, are there 50 votes within the Republican conference for exactly what the House has passed? For something that looks different than what the House has passed? And we will have to see. So that's sort of rescissions in the legislative, the active legislative process right now.

But Scott, another place where we've seen this concept come up is in some of the litigation over the administration's actions to pause, in this case, foreign assistance funds. Can you sort of just walk listeners through the case where the government has started building an argument that relies on the exist, in part on the existence of the rescissions process? And then we can kind of talk about what that tells us about how the government is thinking about this, these issues, and kind of what we make of the government's argument.

Scott Anderson: Yeah, it's really, really interesting. This was to, to give listeners a peek behind the curtain, the impetus for Molly and I doing this podcast, 'cause in a conversation we realized we'd both been following separate tracks of this issues set, her on the legislative side, me on the litigation side. And suddenly they intersected.

And we thought it was worth tying those together 'cause we haven't seen a lot of people kind of connecting the dots on this, who have been following this. The, the case in question is under the caption AIDS Vaccine Advocacy Coalition v. U.S. Department of State. It's consolidated with another case called Global Relief Coalition v., I believe U.S. Department of State, but it tends to get the AVAC, A-V-A-C, caption as the lead one.

And this is a challenge brought by a really kind of pretty diverse array of grantees of foreign assistance funds, primarily USAID, some Department of State, that are either implementing agencies or the end recipients of foreign assistance funds that were interrupted by the Trump administration's policies they implemented pretty early on suspending initially, almost all foreign assistance and then quickly implementing a whole wave of cuts.

This was the first case that went to the Supreme Court on the emergency docket since, after President Trump entered the White House which has become a fairly common occurrence where actually the district court's preliminary injunction, or TRO, I should say, in favor of the plaintiff was upheld by the Court.

And so it has been kind of the tip of the spear in a lot of these debates over these impoundments arguments 'cause foreign assistance was the one kind of hit first and hardest by the administration. And now is the one that's being put forward for excision. It's not a coincidence. I think they are feel better about their ability to do rally their caucus around cutting foreign assistance than they do maybe a lot of the other budget cuts they're considering.

So it's a convenient political space in which for them to have these arguments. It's also one where they have as we're gonna see in this, in, in a second, walking through the litigation, the added valence of a foreign affairs power, an area where the president traditionally exercises a lot more discretion, or at least claims a lot more authority in a domain. And so it has that kind of added level of argument.

So in this case we essentially have had a preliminary injunction in place that has said, government, you need to pay out all the people that were supposed to get funds for work they had already completed prior to a date in March, I can't remember exactly which date off the top of my head.

Then there's all this question about all these funds moving forward that you had agreed to provide people that you have since suspended or canceled. The court said each of those, we're gonna have to look at, on an individual basis. So people are gonna have to file those separately, either as separate matters or as an amended complaint. Because we need, we need to dig into the nitty gritty of the exact details of those cancellations to understand whether they're legal or not.

But on the third front the government does have to spend this money. And so he has said to the government, you need to have a plan for how you're going to spend this money that Congress has appropriated. Because if you get to the end of the period at which, where you get close to where the money is going to expire, because most funds are appropriated for a fixed period, particularly foreign assistance funds, and you haven't spent the money, you will have committed an unlawful impoundment. And that's gonna be a problem on a couple of different fronts. And it's including that it violates Congress's constitutional authority.

The court has asked for this sort of plan about exactly how the administration intends to spend this funding. They haven't gotten anything about it. Something we'll circle back to in a little bit. Instead, what they got on June 3rd is a really, really substantial big brief that lays out, I think, in the greatest detail we've seen so far across all the different litigation on this, although perhaps I've missed something, the what appears to be the legal arguments they're going to lean on to argue that president can cancel these funds.

And it boils down to kind of three chunks. And before I get into this, I should note this brief, because of a weird procedural thing, is actually going to have to be broken up redrafted and refiled because they went dozens of pages over the usual page limit.

And they argued that's 'cause consolidated matters. They thought they could just add 'em together and do one brief that's twice as long. The court said, no, no, I'm afraid that's wrong. And is making them refile it in either a slightly shorter format or as two separate briefs in the two different matters, we'll see what ends up happening. But presumably it's gonna look a lot like this, even though this particular brief is not gonna be the one that's argued and that that revised brief, I believe is due next week. So we'll see if there may be additional arguments there.

But at least in this brief, they basically put forward kind of three related arguments as to why the Impoundment Control Act and the Constitution don't allow or allow the Trump administration to do what it's doing in kind of canceling these funds.

I should note they also make a jurisdictional argument we've seen in all these cases that, that the Tucker Act says that all these disputes should be taken to the Court of Claims and then to the Federal Circuit as opposed to being dealt with in individual district courts. That issue is currently being briefed and argued before the en banc D.C. Circuit in a separate matter, the Voice of America case, Widakuswara v. Lake.

Doesn't look good for the government on that argument, the, the en banc D.C. Circuit’s preliminary rulings has not been very friendly to it, so I don't think they're gonna win on it. But we'll see. So this all may get mooted out if that ends up being the case. And it’ll have to get re argued before the Court of Federal Claims and then the Federal Circuit.

But at least on the substance, once you get past that jurisdictional argument, they say basically three things. First, they argue that the Impoundment Control Act creates a, what they call a reticulated which I don't think is the proper use of that phrase which means a net like or web like, it's not clear how that really applies here. But a reticulated system for structuring inner branch debate over spending decisions that they essentially argue is supposed to be exclusive.

So under the Administrative Procedure Act, that cause of action that the plaintiffs are relying on, in this case, APA says you, you can't pursue claims under the APA if Congress has specifically foreclosed your ability to pursue those claims. And they are saying that's what they did here with the Impoundment Control Act. They point to the specific fact that they have this kind of inner branch dialogue process that they say the Impoundment Control Act is supposed to facilitate.

They point out the Impoundment Control Act allows lawsuits by the Comptroller General which they say kind of renders suits by private individuals redundant and unnecessary. And they point the language located at two, Title Two of the U.S. Code Section 681, which says that the act should not be construed as affecting in any way the claims or defense of any party to litigation concerning any impoundment as suggesting no private claim was supposed to be advanced by the enactment of the law.

Although I would say I think the most natural reading of that provision might well be the opposite, that it wasn't actually intended to preempt any existing sort of claim. Regardless they essentially argue A, that the Impoundment Control Act is, this reticulated system of inner branch relations, is supposed to be exclusive and doesn't allow for private parties to pursue lawsuits under the APA or other causes of action.

If they were to lose on that, they then go on and argue, oh, by the way there isn't any statutory basis for actually compelling us. The APA only allows plaintiffs to compel the government to take action unlawfully withheld. In this case, that's not what's happening. They point out that appropriation statutes tend to be worded fairly broadly. They very rarely expressly direct the president, say you must spend this, you shall spend money on this. They say things like, the president may spend funding for this, or they just simply appropriate monies for a purpose without giving any specific direction. And they say essentially without that sort of specific direction, there is no mandate that's binding on the president in this case.

And then they point out that the Impoundment Control Act which does essentially say, hey, you are supposed to spend this money only really does so after a failed rescission request. And this is where this June 3rd rescission request comes in because they say hey, we just filed this request. We're within our 45 days. It's still pending.

So there's no obligation on us right now to go forward and spend this money that only kicks in after rescission is rejected, after the 45 days, at least at the earliest. So the Impoundment Control Act doesn't independently provide any basis for saying, oh, these funds are being unlawfully withheld either, in addition to the appropriations legislation itself.

Tthey also mentioned they need, the Antideficiency Act is not providing an alternative basis for this on the logic that it has a separate sort of enforcement scheme. That's another law that gets kind of pulled into the ecosystem here, that that bars kind of inappropriate federal funding, spending, excuse me, that they argued doesn't really go in here.

Then they argue that judicial enforcing the Impoundment Control Act at this stage in the way that plaintiffs are asking, would essentially deprive the president of discretion that the Impoundment Control Act was intended to provide. And they point out that there are a lot of contingencies where the president's supposed to be able to delay and hold funds, at least in their reading of law and practice in the space.

They specifically here, not at what we're gonna talk about a little bit later, the pocket veto scenario where a rescission request is submitted within 45 days of expiration under their reading of the law and a reading that they say the GAO had several years ago, but has since reversed itself on. They essentially say that means that money goes away unless Congress takes affirmative action to preserve it, which would you know, be a backdoor way of getting rid of these funds potentially if you were to buy that interpretation of the law.

And then their third argument is in reading all these statutes, essentially the courts have to be super, super careful not to intrude on the president's broad, extraordinary power over foreign affairs. And they specifically say, hey look, the president is supposed to have lots of discretion. Congress gives it lots of discretion that's 'cause it has to because the president controls foreign affairs and has to have that leeway in interpreting and applying these statutes. And by the way, they point out that at least as a constitutional matter in their view, there is actually no presumption that the executive branch must expend all the funds that Congress appropriates.

They say there's lots of cases earlier in American history where the executive branch did not spend all the money appropriated by Congress and that that is discretion provided to the president. Maybe the Impoundment Control Act changed that. But there shouldn't be an assumption against that, particularly in a space as sensitive as foreign affairs, where the president usually has a lot of discretion for good constitutional reason.

So those are the three big bucket arguments. I wanna know what you think about these, Molly 'cause they're, they're pretty extraordinary. As I frame them, I tried to frame them in a colorable light, in a light that's, that puts them in the kind of best face forward as I think the briefing tries to. But on reading this, they struck me as actually pretty extraordinary. And I wanna see if you agree with me.

Let's start with the first one. This idea that the Impoundment Control Act is supposed to create this exclusive system of remedies that shuts down private plaintiffs pursuing these sorts of claims. What do you make of that?

Molly Reynolds: I. To me, it's pretty clear that that is not what Congress intended when it wrote the law. I mean, I think it's like, it's that basic.

And so you can go back as I enjoy doing to the like actual legislative history of the development and debates around the Impoundment Control Act. And during debate over the Impoundment Control Act in, in 1974 Sam Ervin, who was one of the lead managers for the bill in the Senate, when discussing the power of-.

So the, the sort of way the legal remedies happen on behalf of the legislative branch in the act is that the comptroller general, who's the head of GAO is empowered to sue in situations where GAO has determined that there is an illegal impoundment, whether that's, funds that the administration is rescinding without having gone through the, the process of proposing the rescission and having Congress act or if the administration is using the deferral power in an unlawful way.

And in the debate over, I'm gonna read this in the debate over the bill, Ervin said the comptroller general will be granted authority to sue in the Federal District Court for the District of Columbia to enforce the provisions of the title, so these, these what I was just talking about, using attorneys of his own choosing 25 days after he gives notice to Congress. The idea there was that, you know, if GAO makes a determination and Congress does actually want to use some of its legislative power to respond to that, it should be given the opportunity to do so.

And then he says, this authority is not intended to infringe upon the right of any other party to initiate litigation. Like, that's pretty clear to me. Like Congress did not mean for the procedures that it prescribes in the Impoundment Control Act, including the ones around litigation, if the executive branch is determined to be doing something unlawful, it did not imagine that it was the only arbiter of this question.

And so that I, like, in some way, it couldn't be clearer to me that the government here is arguing like in pretty clear contravention of what Congress meant when it wrote the law in the first place.

Scott Anderson: And I'll say just to, to foot stop that I have the exact same reading and that's the part that jumped out at me. And particularly this quote of this 2 U.S.C. 621 language is really extraordinary, 681, language, excuse me, is really extraordinary 'cause you could, before the Impoundment Control Act, sue over an unlawful impoundment, at least if under the APA-

Molly Reynolds: There are, there are dozens of those cases from the Nixon administration.

Scott Anderson: Yeah. And, and it says very clearly, the statute's not supposed to affect the way those claims or defenses can be brought. So how can you then argue that it's supposed to preempt them? It's just really, really bizarre in my mind, and an incredibly, I would say, aggressive, but just kind of, it's not quite artful enough to be aggressive.

I don't really know what to make of it. It is, it is really just a very optimistic reading of the law and the statutory text on behalf of the government in a way that I think is unlikely to carry water. But we will, we'll have to wait and see to know for sure.

Molly Reynolds: So there's also this question that when you were sort of really helpfully running through the arguments that the government makes, there's this question around the notion that there's no mandatory action appropriate for APA relief here. What do you make of that piece of the argument?

Scott Anderson: So I do think, particularly when you talk about the appropriation statutes, I wanna turn it back to you for the Impoundment Control Act itself. But in terms of the appropriation statutes, I actually think this is probably the government's strongest argument. And it's where we've seen this judge in this litigation actually refuse, it's the place, area which refused to go so far at the plaintiff's urging.

When the plaintiffs were saying, hey look, you know, we have all these grants and contracts that were in place the contract, the administration has suspended. You should restore them 'cause there is no universe in which they can meet their appropriations obligations and avoid an unlawful impoundment except to give us the money this late in the game.

The court said, look, we have to look at the individual authorities here. These statutes are really different. I mean, this is, again, a super broad, broad, diverse coalition of different plaintiffs with different positions, different pockets of funds from different funds and authorities and programs and contract, not to mention individual contracts and grant agreements.

So the legal nexus of issues is really different across cases. And in this case, this judge, at least, was not willing to go so far to say, I can resolve this sort of writ large. Now, the government really, really minimizes the likelihood that any of this language is likely to be interpreted or should be interpreted as obligatory or binding. And it sets a very high bar for that. It says essentially only if it says money shall be used for this purpose, should that be it.

I kind of, I don't think that's right in terms of congressional intent, and I kind of doubt at least the district court and the D.C. Circuit are likely to read the law is so demanding in terms of what is obligatory and maybe the Supreme Court as well, I’m a little less confident there.

Because, you know, Congress has been legislating against this backdrop of the Impoundment Control Act for the last 50 years, and they know there are obligations to spend this money. And then so particularly where they say this money is appropriate for this purpose, I think it's hard to go around the understanding that they thought that money was supposed to be t spent for that purpose within the statutory window that they're providing. Right. Or else why would you provide a statutory window at all for expiring the funds?

I, I do think, however, that there are a number of cases in a lot of these statutes where there is a suggestion of permission or discretion where the president may use things for certain purposes. And there you are gonna find courts and potentially this judge say, I'm not quite ready to say this is strictly obligatory, but it's gonna be very, very case specific and context specific and statute specific.

And that's a much more complicated terrain to have this fight done. You kind of need the resolution at the categorical legal issue level before you can get down into that sort of nitty gritty. But eventually, I, I kind of do suspect we'll get there for some of these.

I don't know what that means for the vast majority of these plaintiffs. I think a lot of them will still have obligatory argument they can make that they're entitled to, to a chunk of these funds. But I haven't sat down to figure out how many fit under what type of authority or not, or what sort of structure. And it's worth noting while there's a lot of plaintiffs in these cases, there's still a minority of the overall of affected parties that are still at least in many of their views, entitled to foreign assistance funds. So it's hard to know exactly how this, this shakes out in terms of individual plaintiffs.

And it's worth noting I do think this statutory interpretation question is one area where the constitutional issue will come into play in the executive branch's favor in a little bit. We can talk about that in a minute.

I think it's a little overblown, but statutory interpretation context, you might see anumber of judges say, well, in cases where it's a, it's a little even split where there's some ambiguity, we, we are gonna defer to the president a little bit on this 'cause there is clearly a foreign affairs nexus.

Before we get to that though, let's talk about being Impoundment Control Act. So they, they also make this argument that the Impoundment Control Act isn't supposed to give anybody this sorts of claim because the comptroller general has this exclusive, exclusive role and that there's no obligation to spend this money until this 45 day window after the rescission request comes down. That's where the obligation kicks in. And then maybe there's a pocket recissions, so that doesn't even apply. What do you make of that Molly?

Molly Reynolds: To me, just really ignorant of how the U.S. Congress works. I mean, like, I don't 'cause basically taken to its extreme, what that argument is saying is that every time Congress passes an appropriations bill and the president signs that appropriations bill into law, it is, you know, just an idea of what could happen.

But if the president chooses to sort of send a package or separate messages rescinding every single thing in the appropriations bill, then nothing has to happen for 45 days. And if you sort of take it even further and think, no, Congress would have to actually take up every one of those rescissions bills and vote them down for the underlying appropriations language to take effect. Like what is it imagined that the U.S. Congress would do with any of its time other than reprocess all of the legislative decisions it has already made when it wrote the law in the first place?

Like I just. I'm, I'm struggling with the words here. 'cause to me it's, it's so ignorant of the institutional realities and the like way the institutions function and are supposed to work together, that it just strikes me as a like, really, it's just like a really illogical argument.

Scott Anderson: Well, and I really think the fact that they decided to go ahead and talk about pocket rescissions, this idea that if you file a rescission within 45 days of the expiration of funds, they just magically go away, is like a strategic error on their part. Because they, they're basically just shining a bright light on the biggest logical gap in their whole structure, which is that there's a, there's an escape hatch at the end of this that is completely inconsistent with Congress's purpose. And at least the way that we're gonna interpret apportionment and deferrals, all these other authorities, any administration could use it anytime to get rid of any of these funds

And like, like go ahead and previewing that which is not implicated by this case by the way, like previewing that I think raises alarm bells for the court in a way that otherwise maybe they could have been like, well, you know, you we're gonna wait till the end of this process. We're not gonna try and obligate it.

It's worth noting some of this stuff is probably gonna get mooted out 'cause we're gonna hear, we're not gonna hear even the newly filed briefs of this until a week from now. Who knows how quickly the court's gonna move on this. But the rescissions package 45 days is gonna be up in mid-July.

I suspect the court, it's gonna be a lot more convenient for the court in this case, given that all the funding here is implicated in this rescissions package to kind of wait it out and then decide. So we may not ultimately get a resolution on this point because the 45 days will be ripe in this particular case.

But it's a tricky, tricky argument and I, I, I think maybe they were a little too ambitious in having excitedly settled on this legal argument, including it in a way that that may not actually help them persuade the judge, but, we'll, we'll have to wait and see.

Molly Reynolds: One more thing on your historical argument that you made before. I just wanna plug for listeners that our friends at Protect Democracy have a truly masterful report on the sort of historical myth of the presidential impoundment power. We'll put a link to it in show notes.

They've also filed an amicus brief in this case that we're talking about in AVAC, that relies on a lot of and tries to rebut some of these arguments that there was a time before the Impoundment Control Act when all of this was okay. And so again, going back to this, this notion of this has never been a thing that the president really had the power to do.

Scott Anderson: And it is a, the fact that the argument that he did in case you're owning is a very much a pet theory of the general counsel of the Office of Management and Budget, Mark Paoletta. He wrote, or co-authored, I should say, a number of pieces about this.

The one I'm most familiar with is a piece from the Center for Renewing America from last summer. It's called The History of Impoundments before the Impoundment Control Act of 1974. That is, if you read this brief, that's what the argument, the two paragraphs that they make take comes from

Molly Reynolds: The, the other, the other CRA as I refer to it, because, you know.

Scott Anderson: Yes, exactly, exactly.

But it is, Protect Democracy actually did do yeoman's work, kind of rebutting this point for point. And it is a, it is a very favorable reading of history, to say the least, at least from my, my assessment.

Molly Reynolds: Before we go on to talking about sort of what comes next in all of this beyond just this lawsuit, I also wanna ask you, Scott, as someone who thinks a lot about the foreign affairs powers of the presidency, what do you make of the arguments in this brief that are in that context?

Scott Anderson: Yeah, so this is a recurring theme we've seen in this litigation since the very beginning. I wrote a piece on it like two or three months ago for Lawfare pretty early on, kind of trying to rebut this idea that foreign assistance is somehow an you know, Article Two presidential authority.

It just has never been viewed that way. I mean, foreign assistance has always been categorized by the Supreme Court and by the executive branch most of the time as an expression of the tax and spend power of Congress under Article One.

So it's never been something where the fact that it touches on foreign affairs somehow makes it the president's authority. And the president doesn't have any inherent authority to provide funds and provide them to other countries. It's is can, he can only do that pursuant to delegated statutory authority.

So, you know, the normal constitutional order would be the president actually needs some sort of principle on which he can exercise that delegated power. Like Congress actually can't hand that power over to the president even if it wanted to. And here it's, it's far from clear that it has, in fact, it's, I think it's fairly clear it hasn't entirely.

In foreign, foreign affairs context there is an accepted principle that the non delegation principle that normally limits that delegation is much weaker, doesn't apply to the same extent as it does in the domestic context.

I suspect that does kind of bleed across into the foreign assistance context, at least for most judges. The Supreme Court in particular, a number of the justices, well, they may take issues with other ways the administration is approaching this, I think, are likely to view favorably the idea that in foreign affairs context, generally the president should get the benefit of a doubt.

Justice Kavanaugh has written a lot about this. Chief Justice Roberts decisions tend to lean in that direction. Justice Amy Coney Barrett has leaned in that direction in state secrets privilege context, and other context over her brief time on the court. I think that's all indicative of the fact that there, that argument is gonna have a little bit of grab.

But it is way overstated the way the government puts it forward. This idea that the president has a ton of authority about dictating this, that Congress can't intrude on or that Supreme Court or other courts can't interpret contrary to the president 'cause that raises big constitutional questions. I just don't think that carries water. I don't think more, most courts are gonna view it that way.

I'm not surprised the executive branch makes that argument. It's not unusual for them to do it. And this idea that we're gonna pull out big constitutional authorities and not rely on them as an independent basis for what we're doing, but try and implicate them to push the court away from statutory interpretations we don't like, because of the principle of constitutional avoidance saying, hey, we don't even want to implicate this constitutional question, so you better just give us our way on the statutes so we don't have to reach that.

You know, it's, it's, it's not an uncommon executive branch litigation tactic, and so I'm not super surprised to see it, but I don't think it carries water. And it is, as, as while it might apply in a variety of other foreign affairs context, particularly in the, in the foreign assistance context, it's just never been viewed that way, including by the Supreme Court when it's looked at foreign assistance cases relatively recently in the past. Instead it always sees it as a tax and spend sort of issue. And so I don't think it's gonna carry the day, but maybe it helps a little bit on marginal cases on the statutory front.

So Molly, we've set up that there's this big brief and debate happening. There's a big debate happening in Congress. We're at kind of a holding pattern, at least for the moment. We're waiting to see what the Senate does on the rescissions package. We're waiting to see new briefing and argument in the court decision before D.C. Federal District Court in the AVAC case.

We also know there's a lot of percolating happening on other fronts in Congress, in the administration, both in the litigation, in terms of other sort of collateral actions that are happening. So let's run through these a little bit.

First, why don't we talk about what we're hearing about Plan B and a couple of Plan Bs. Because this administration has not been shy about saying, here's what we're planning to do if this doesn't work, or what we are likely to do in other packages where we can't get Republicans on board with rescission.

They hint at it in this brief, as I mentioned in discussing pocket rescissions. So talk to us a little bit about what their plan seems to be if and when this doesn't work, or if it can't be extended to these other funding cuts they wanna make.

Molly Reynolds: Yeah, so we might call these their Plans B there's sort of two parts to this that have been reported over the last week or so.

One involves this idea of deferrals that I mentioned earlier, which again, are the ability of the executive branch to tell Congress that it's going to pause some funding. But under the law that pause can't last past the end of the fiscal year for which the funds are supposed to be obligated.

And deferrals are allowed only for specific reasons. I'm gonna read what those are because part of the administration's strategy here involves an argument about one of these things. So, number one is to provide for contingencies. Number two, to achieve savings made possible by or through changes in requirements or greater efficiency of, of operations, or three as specifically provided by law.

So the first of these, this idea of providing for contingencies that the administration reportedly is going to rely on to propose a set of deferrals. And here the reporting suggests that OMB would submit to Congress some deferrals that are supposed to run out at the end of this fiscal year. And they are planning again, according to this reporting, to use the fact that we are approaching the debt limit, we are approaching the, the deadline by which Congress must act to raise the nation's borrowing limit as the contingency that requires this kind of pause in federal funds.

I'll say two things. One, the sort of magnitude of what we're talking about in terms of pausing funds while like large and consequential for the people who rely on the funds that would be paused, like it, it pales in comparison to the size of the federal debt. So this really isn't a thing that's going to make a meaningful difference over any kind of real time horizon in our approaching the debt limit. Like it could matter, you know, for a little bit of time, but not it's not gonna solve our debt limit problem.

And secondly, I'll just say that this question is not new. You know, one of my overarching principles for watching Congress is that there's virtually nothing new under the sun. In the nineties, the Clinton administration explored this idea of deferrals as a way to postpone the date by which they needed to act on the debt limit.

There's an OLC memo that explores this, that is, as you might expect, OLC to be in this set of circumstances, somewhat favorable to the idea that the administration could do this under the argument with the justification that the debt limit is the reason. So that's sort of one thing that might be coming.

A second thing is this idea of pocket rescissions that Scott was talking about before. And so the idea that the, if the president submits a rescission request that's close to the end of the fiscal year, and then you get to the point where the 45 day clock, where the end of the fiscal year happens before that 45 days runs out, you sort of like, it's a backdoor way to effectuate the rescission without Congress having to act.

The Trump administration tried this in the first, its first go round. And in 2018, GAO said that this was not allowed. That basically the law requires the executive to propose these things in a way that would ensure the prudent obligation of funds in a timely fashion. And so that, you know, this isn't, you can't be too cute by half basically. But at the time, and again now, Russ Vought has signaled that he believes different. And so I think we should expect the White House to try that again as well. So that's a little bit of like one line that has been reported on.

Scott in a separate court case, we also have some signs of ways that the administration might be, again, wanting to sort of play around with deadlines and the idea of no year money and all that kind of stuff. Do you wanna talk a little bit about what's happening with the National Endowment for Democracy?

Scott Anderson: Yeah, this is the case, National Endowment for Democracy v. the United States of America that's been ongoing was early on one of these kind of second stage foreign assistance cases. But the net is in kind of a very unique position in that it has a much more express and direct statutory directive indicating funds will be directed towards it.

And so it's one where early on the administration initially resisted spending, but then pretty quickly caved once litigation was initiated. Probably 'cause they talked to the Justice Department and realized they were not going to win that one.

But in this case, they've done something a little bit interesting, which is of course we have had in the last few months a continuing resolution providing additional funding and kind of re-upping the existing funds available for a variety of purposes, including the National Endowment for Democracy. And in a status report last week, we saw the administration indicate over objections from the plaintiffs that essentially they read the continuing resolution as allowing them to hold funds much longer than they would otherwise.

It's essentially broadening the window until the end of the continuing resolution, not towards the prior resolutions, which various funds that have yet not yet been paid out, were held towards. So they are now saying they're gonna hold a bunch of funds appropriated for the National Endowment for Democracy in 2025 for them, for their use in 2025 until 2026, which is when the continuing resolution runs towards.

This poses all sorts of operational questions for the National Endowment for Democracy obviously. This could have much broader ramifications because if you buy that, this is something the administration can do in this context where again, there's much more expressed language and much more established practice of this money being given pretty much as a lump sum to the National Endowment for Democracy you know when once it's appropriated, if you buy this sort of argument, you could see it applied a lot more broadly to if nothing else kicked the can down the road.

And that's kind of what this administration wants to do. You know, they wanna withhold this funding in the interim. Everything they've been doing so far is kicking the can down the road because a lot of these are arguments that probably aren't gonna bear out ultimately in the courts if they get there.

But maybe they don't have to get there. And if they can win in the short term and drag out enough, they'll eventually win in the long term, particularly in the foreign assistance context, where you're gonna see a lot of foreign assistance partners fold and collapse or declare bankruptcy and therefore not be available. And some have argued that's actually part of what the administration is trying to accomplish here.

So if that's the case, this is a strategy that could be dangerous if it actually carries through. Now this is just in a joint status report. It is, you know, not a litigation position. It's not something that necessarily has always been, clearly, it's been fully vetted through the Justice Department and through other officials that would have to weigh in on whether this argument actually carries water or not.

They are certainly going to get strong pushback from the National Endowment for Democracy. I strongly suspect they're gonna get strong pushback from the court as well. We'll have to wait and see. And this may be another front where we're gonna see the administration just essentially try and push this whole set of arguments one more year further back and maybe all the way to 2029 if they can.

But Molly, this isn't the only front we've seen action on from the administration from the courts. We've also seen GAO itself be really active. Just this morning we woke up to a report that they, they had issued a second finding indicating that the administration had engaged in unlawful impoundment in whole, withholding funds related certain library programs.

At the same time, we also know they've issued a couple other decisions where they found certain funding withholdings haven't amounted to impoundments. So talk to us about what the GAO is doing in this space, how it's parsing these different kind of efforts to hold up funds on the part of the administration and the role that's likely to play in this broader debate.

Molly Reynolds: Yeah, so we know from testimony given by the comptroller general in front of Congress within the past couple of months that GAO has at least three dozen open investigations into actions by the executive branch to, to determine whether those things constitute illegal impoundments.

And we got two decisions in that context today. One involving wind energy programs at the Department of Energy where GAO held that that was not actually an illegal impoundment. And the second involving funding for the Institute for Museum and Library Sciences, I believe is IMLS, that it does constitute an illegal impoundment.

And I think this sort of illustrates a couple of notable things. One is it reminds us again that under the Impoundment Control Act, this is a responsibility of GAO. This is a job that GAO is empowered to do, to investigate whether something constitutes an illegal impoundment, whether it constitutes a cancellation of funds that the executive branch did not seek a formal rescission of, or whether it constitutes a deferral for usually for reasons that are not one of the ones that are prescribed an act for why the administration could defer the funds.

And so one possible, one possibility here is that this gets followed up with litigation. GAO has not historically actually litigated these cases, which is usually because the executive branch just unfreezes the money, like does what it's supposed to do. I'm not super optimistic that this administration is going to sort of take a GAO finding and say, you know what? We were wrong. We're gonna, we're gonna change our mind.

I think it also illustrates the degree to which, like GAO is empowered to make these kinds of determinations, is empowered to say this was illegal. And that's sort of happening on one side. It's also still true that everything we said before about the idea that sort of GAO-related processes and litigation can't possibly be the only way for these things to get adjudicated. So I think both of those things can be true and I think it's important to say that.

And then I also, it's pretty clear to me that we are on a collision course between GIO and the White House and OMB over a lot of these things. And I, as I remind listeners, because I remind everyone I talk to about this, the current comptroller general's appointment expires at the end of the calendar year. And so we are we may well be headed for a nasty fight around who the next comptroller general is and what are the powers of GAO.

Alright, Scott, you did a really lovely job of walking us through kind of where we are in the foreign assistance litigation. Talk a little bit about where that's going next.

Scott Anderson: We are gonna see action in that litigation on another front, separate and apart from these arguments about impoundments that the government put forward as part of a motion to dismiss, they're again now gonna have to refile as as two motions to dismiss or as some other shorter brief.

This past week, the plaintiffs in this case filed a motion to try and enforce the preliminary injunction to basically compel the government to finally bring forward the plan regarding how it's going to spend these funds it says that it was putting forward.

Notably again, this is something that they've started saying since March, since the preliminary injunction was issued. The preliminary injunction has been appealed to the D.C. Circuit. We're supposed to hear argument on that in early July. But notably, the government actually hasn't tried to stay the preliminary injunction on this particular issue so far.

I suspect that is because they have been consistently kicking the can down the road saying, we're gonna come up with a plan. We're gonna come up with a plan. They haven't done it yet. Well, now the plaintiffs are saying you need to make them come up with a plan and produce it, judge or they're not gonna be able to disperse these funds at all to satisfy their obligations under the appropriations clause to actually spend the money the way Congress intended.

The government's required to file a response brief early next week. And then we're probably gonna see litigation on this relatively quickly because there's a sense here on the part of the plaintiffs that they are trying to run out the clock and they don't want to get too close to cutoff of some of these funds, to the extent they survive rescission, I should say, to the extent that it pushes them too close logistically to the end of when you really have this impoundments crisis at the end of these appropriated funds.

Again, the plaintiffs haven't yet in this filing made the argument saying, we are the only way the government can meet its obligations because it's failed to find any alternatives. This is the step before that argument. I suspect we're gonna see that argument, what they put forward certainly in, in hearings pretty early in this proceeding, if not in briefings, I think we may see it come back because that is the surest way that these plaintiffs are gonna get their funding.

I don't know if you know this court will buy into that. I don't know if higher courts will buy into it, but it's, it is indicative of the fundamental problem here, which is that how do you force the executive branch to spend money it has to spend, but that it does have some degree of discretion over deciding who do they give it to, under what specific terms and things like that.

And that's what the courts are really wrestling with across a whole spectrum of cases here is how do you micromanage the executive branch without intruding too far on what they're doing. But ensuring they actually abide by what Congress wants them to do and that's their duty to enforce.

It's not gonna be an easy set of questions. It's gonna be a tricky one for Judge Ali to wrestle with, but that's coming down the pike and might come down the pike sooner than the resolution of these broader set of issues we have. So that might be the next front we see this litigation get fought out on.

Molly Reynolds: Yeah, I think this is a really important point, which is just the idea to which the, the administration's ability to run out the clock on Congress in any number of contexts, that like asymmetry between the two branches is hugely consequential. This is obviously not the only context in which we see it.

You know, we spent much of the first Trump administration, particularly the last two years of the Trump administration talking about how the administration ran out the clock on subpoenas from congressional committees. But it's coming back here too. And it's, I think a sometimes underappreciated dynamic in the interplay between the two branches.

Scott Anderson: Yeah, absolutely. Speaking of running out the clock, we have run out the clock on this conversation, Molly, but always a thrill to be able to have a dialogue with you over these exciting and deeply wonky topics.

For the listener who stuck with us through this whole hour of a deep dive into recissions. We're thrilled to have you with us as well. But until next time, Molly, thank you for joining us here today on the Lawfare Podcast.

Molly Reynolds: It's great to be here, Scott.

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