Yesterday’s 5–4 Supreme Court decision requiring the United States Agency for International Development to start making payments that the Trump administration had frozen was immediately hailed as a signal of the justices’ discomfort with the administration’s efforts to feed “USAID into the wood chipper,” as Elon Musk colorfully put it. It was also said to suggest skepticism of President Donald Trump’s claim that he has the constitutional authority to impound federal dollars and ignore Congress’s spending commands.
Perhaps. But the optimism may be premature. The reprieve that the order offers is brief, the basis for the decision is narrow and procedural, and the eventual outcome remains uncertain.
In a dissenting opinion, four of the conservative justices said that the federal courts ought to play a highly circumscribed role in policing Trump’s efforts to dismantle agencies by preventing them from spending money. Although Chief Justice John Roberts and Justice Amy Coney Barrett sided with the liberal justices this week, that’s no guarantee of their vote when the case comes up in a different procedural posture, which it almost certainly will. The plaintiffs’ temporary victory could still curdle into defeat.
The key to understanding how the justices will think about the case is the Administrative Procedure Act, an 80-year-old law that allows injured parties to sue federal agencies that act in an unlawful or arbitrary manner. The APA is generally solicitous of lawsuits against the government, and is said to have created a strong presumption in favor of judicial review.
The challengers—USAID contractors who haven’t been getting paid—brought their claim under the APA. That’s natural. Although there’s some confusion about the precise source of the command to stop paying out on existing contracts—an executive order? a now-withdrawn Office of Management and Budget memo? DOGE? a directive from the secretary of state?—there’s no question that a blunderbuss spending freeze has been instituted.
If that freeze is illegal or arbitrary—and there’s a good argument that it’s both—the APA empowers the courts to set it aside and, if necessary, to enjoin the federal government from freezing the funds. Seen that way, the case is a bog-standard challenge to unlawful agency action.
But the APA is limited in some important respects. Of particular relevance here, a plaintiff can’t seek “money damages” under the APA. So if a government employee runs a person over and he wants damages for his injuries, or a government agency breaches a contract with a business owner, those parties can’t bring an APA suit. Instead, they have to take their case to the Court of Federal Claims, a special court that handles claims of money damages against the federal government.
The four dissenting justices, in an angry opinion by Justice Samuel Alito, insist that that’s what the plaintiffs should have done. Sure, the plaintiffs say they’re challenging a general spending freeze. But what they’re really challenging is the refusal to pay out on their contracts. The “relief” that they seek, Alito wrote, “more closely resembles a compensatory money judgment rather than an order for specific relief that might have been available in equity.”
That’s one way to understand what the plaintiffs want. After all, they do want money. Plus, the courts are generally reluctant to entertain broad-brush challenges to agency policy, especially when an agency is accused of not doing something that it’s supposed to do. Otherwise, as the Court explained back in 2004, there’s a risk of “injecting the judge into day-to-day agency management” of the agency’s affairs. The courts don’t want to be in the business of micromanaging all of USAID’s contracts.
So which is it? Is the lawsuit best seen as an APA challenge to an illegal funding freeze? Or as a demand for money damages arising from specific contractual breaches that should go to the Court of Federal Claims?
That question has no intrinsically correct answer. It’s a matter of emphasis and judgment. A person’s preferred characterization may depend on their sense of just how aberrant and troubling the Trump administration’s actions are. The closer the case seems to a conventional breach-of-contract dispute, albeit at scale, the more appropriate sending it to the Court of Federal Claims may seem.
That parsimonious approach has all the virtues of judicial modesty. It also has all the vices.
There’s something deeply artificial about treating the case like an everyday spat over the terms of a contract for, say, military equipment. The funding freeze reflects a comprehensive, deliberate effort to destroy an agency that Congress established and President Trump dislikes. That freeze can be appropriately viewed as a discrete agency action that’s properly subject to APA review.
Contra Alito, just because the case is about money does not make it a case about money damages. The distinction may seem fine, but it’s got a long pedigree. “The fact that a judicial remedy may require one party to pay money to another,” the Supreme Court reasoned in 1988, “is not a sufficient reason to characterize the relief as ‘money damages.’”
Money damages, the Court explained, aim to redress an injury that’s already happened. They are meant to soothe past harms, not prevent them. Most APA suits, in contrast, are anticipatory. They allow courts to prevent agencies from harming plaintiffs in the first place. That’s what the plaintiffs are seeking here—not a financial remedy for a breach of contract, but an end to a funding freeze that causes them ongoing injury.
Moreover, conceiving of the case as a routine breach-of-contract dispute would have troubling consequences. If the case is forced into the Court of Federal Claims, the plaintiffs might eventually get a money judgment against the government, perhaps a hefty one, especially if they bring a class action. But the Court of Federal Claims likely won’t enter an injunction that ends the spending freeze. That’s not what it does.
And Trump won’t care that Congress will have to shell out cash down the line. His goal is more immediate and more destructive.
The outcome of this arcane jurisdictional dispute may thus effectively determine whether Trump has the power to impound federal funds and dismantle federal agencies. If he does, expect him to exercise that power again. And again. And again.
Right now, all we know for sure is that four conservative justices are okay with that outcome, whatever the damage to Congress’s power to control federal spending. The three liberal justices probably aren’t, whatever the risks of excessive judicial interference in government administration.
That leaves Roberts and Barrett.
We don’t know what they think. The Supreme Court’s very short opinion turned on the case’s very hurried procedural posture. Once the lower court enters a more durable order, the case will likely wing its way back to the justices, probably within weeks.
At that point, we’ll find out whether the Supreme Court intends to serve as a bulwark against a president who is hell-bent on asserting the unilateral power to control federal spending. If not, yesterday’s order may come to look like a momentary, ephemeral reprieve in Trump’s ongoing assault on Congress’s power of the purse.
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