The Trump administration is strategically using loopholes to maintain its spending freezes despite judicial restraining orders instructing agencies to comply with court rulings. Political appointees in various agencies are invoking different legal authorities to delay funds while presenting their actions as independent from Trump’s directives. Critics assert this undermines the spirit of court orders. For instance, the U.S. Agency for International Development (USAID) has implemented new payment procedures to block humanitarian aid, citing justification beyond Trump’s freeze. These tactics may extend to domestic grants, showcasing the administration’s agility in restricting funds despite judicial oversight challenges.
The Trump administration is strategically taking advantage of loopholes to maintain much of the president’s comprehensive spending freezes, according to reports from officials and legal documents, despite court orders instructing agencies to ignore these directives.
This strategy involves political appointees throughout various agencies invoking alternative legal authorities to halt spending, while presenting the actions as if they were undertaken independently of President Trump’s original guidelines.
Critics argue that officials in the administration are superficially adhering to the actual text of court orders while undermining their spirit. This tactic illustrates the proactive and agile measures taken by the Trump administration to restrict financial resources, posing challenges for judges attempting to enforce the unblocking of funds.
The White House press office did not reply to a request for comment.
A clear outline of this tactic was revealed by the administration, specifically in a declaration submitted late Tuesday by Pete Marocco, a Trump appointee spearheading efforts to dismantle the U.S. Agency for International Development. This information was part of a lawsuit concerning Mr. Trump’s executive order placing a freeze on most foreign aid spending.
In the declaration addressed to Judge Amir H. Ali of the Federal District Court in Washington, Mr. Marocco stated that U.S.A.I.D. officials were instructed not to enforce a directive, established through Mr. Trump’s freeze order, regarding the suspension of contract and award payments.
However, this does not mean that the funds are being disbursed again. The agency’s payment system, known as Phoenix, remains inoperable, as reported by over a dozen agency employees and aid organizations reliant on its funding. Consequently, fulfilling the administration’s proclaimed intention of allowing programs providing critical humanitarian aid to continue has proven unfeasible.
Mr. Marocco indicated that the administration has devised a new payment procedure featuring tighter controls, necessitating written verification from a senior official that any specific payment adheres to administration policies. Additionally, a comprehensive review process is in place to ensure there is no justification for terminating any grant or contract.
“Payments will be released as they are processed” through this new method, he added.
To substantiate the ongoing halt on foreign aid disbursement, he referenced not Mr. Trump’s order but various other statutes, regulations, and grant and loan agreements. He stated these “authorities are understood not to have been enjoined” by Judge Ali’s restraining order.
This type of loophole invocation is not exclusive to foreign aid spending freezes. It has also emerged in litigation related to an order from Mr. Trump’s Office of Management and Budget mandating agencies to pause around $3 trillion in domestic grants, loans, and contractual expenditures.
Although the White House later withdrew that order and judges have prohibited the government from following it, organizations awarded domestic grants have similarly reported that the systems allowing them to access these funds remain inoperable.
In light of this, one of the judges who intervened, John J. McConnell Jr. of the U.S. District Court for the District of Rhode Island, stated on Feb. 10 that the ongoing “pauses in funding violate the plain text” of his order. He asserted that the administration “must immediately take every step necessary” to restore all funds that had been withheld.
However, shortly thereafter, the Trump administration presented an argument that complicated this seemingly straightforward instruction. They expressed a desire to freeze payments to New York City for a FEMA-managed program that aided in subsidizing costs for housing migrants in hotels and providing them services. Their rationale was based not on the O.M.B. memorandum but rather concerns about the city’s compliance with the grant conditions.
In a somewhat sharp order, Judge McConnell concurred that the administration could autonomously withhold that funding since the justification given was “authority in the applicable statutory, regulatory, or grant terms” distinct from the O.M.B. directive. Consequently, the administration not only halted the grant but also reclaimed $80 million from the city’s accounts.
The administration’s ability to prevent financing for the migrant program in New York could serve as a precedent for justifying an ongoing freeze on other domestic grants. In the same court filing, the Justice Department indicated that the administration had “identified this FEMA funding as one (of potentially many) sources of funding” it intended to freeze under other specific legal authorities.
It remains uncertain whether judges will regard this strategy as a mere pretext, and whether the persistent withholding of funds across the government stems from Mr. Trump’s directives, which, although enjoined, have clarified expectations for subordinate officials.
On Feb. 12 — coinciding with Judge McConnell’s declaration that the administration could withhold spending as long as it pointed out a specific authority beyond the O.M.B. memo — budget officers at the Agriculture Department received an email containing a “halt spending flowchart” to guide them in determining which programs could proceed and which ones must be restricted.
The flowchart, a copy of which was acquired by The New York Times, explicitly stated that certain expenditures approved by Congress, including those through the Biden administration’s Inflation Reduction Act and the bipartisan Infrastructure Investment and Jobs Act, should be frozen, along with foreign assistance that had not been committed before Mr. Trump’s inauguration.
“Do not obligate or outlay,” the flowchart instructed, without citing any specific legal authorities.
At U.S.A.I.D. and the State Department, officials and aid groups report that aid operations remain stalled, and field programs continue to deteriorate despite the restraining order imposed on Feb. 13 by Judge Ali.
On Thursday, senior officials at U.S.A.I.D. sent an email to agency employees, which The Times has obtained, acknowledging Judge Ali’s order but stating that its provisions do not prevent the agency from reviewing or terminating contracts and grants in accordance with their contractual terms.
Numerous contracts continue to be terminated “for convenience,” invoking a standard clause incorporated within most contracts, according to former contractors for the agency. One termination letter sent to a contractor on Wednesday included that phrase, as per a copy obtained by The Times.
In his declaration, Mr. Marocco also referred to the “convenience” clause as a standalone authority to terminate foreign aid contracts. He mentioned that the State Department had already terminated 25 such contracts and issued stop-work or suspension orders for at least 711 additional contracts.
As justification, he cited statutory authorities given to Secretary of State Marco Rubio — who Mr. Trump appointed as the acting head of U.S.A.I.D. — and “terms included in the contracts themselves.” Mr. Trump has aimed to consolidate the agency within the State Department, contravening a law that established U.S.A.I.D. as an independent body.
Mr. Marocco further reported that the department had terminated 733 grants funded by foreign assistance, also in line with their terms, which “allow for awards to be terminated if they no longer serve the program goals or agency priorities.” Furthermore, about 6,824 grants are under suspension while a case-by-case review continues, he noted, again referencing authorities beyond Mr. Trump’s foreign aid freeze order.
Agency officials indicated that the Trump administration appears to be advancing preparations to repatriate the majority of U.S.A.I.D. foreign service officers to the United States, despite a temporary restraining order from Judge Carl J. Nichols of the Federal District Court in Washington that prohibits any such employees from being involuntarily evacuated from their host countries for the time being.
This order, which Judge Nichols has previously extended, is set to expire on Friday. On Tuesday, U.S.A.I.D. foreign service officers who accessed their official travel portals discovered they had been assigned a return date of March 7 to the United States, according to six individuals who received that notification.
Two of these individuals stated that the U.S. embassies in their host nations have conveyed that this was merely a placeholder — however, without any formal disclaimer, many expressed concern that this indicated they would be compelled to prepare to return within just over two weeks.
Karoun Demirjian, Nicholas Nehamas, Stephanie Nolen, Linda Qiu and Edward Wong contributed reporting.