People protest outside the USAID building, after billionaire Elon Musk, who is heading U.S. President Donald Trump's drive to shrink the federal government, said work is underway to shut down the U.S. foreign aid agency USAID, in Washington, U.S., February 3, 2025.
WASHINGTON (Reuters) -A day after getting a boost from the Supreme Court, U.S. foreign aid contractors and grant recipients go before a federal judge on Thursday to try to restore funding halted by President Donald Trump's administration in his drive to shut down American humanitarian efforts globally.
The case before U.S. District Judge Amir Ali represents an early test of the legality of Trump's aggressive moves since returning to the presidency in January to assert power over federal spending including funding approved by Congress.
A hearing is scheduled in Washington for 2 p.m. (1900 GMT) before Ali after the Supreme Court on Wednesday upheld his emergency order for the administration to promptly release funding to contractors and recipients of grants from the U.S. Agency for International Development and State Department. The funding would cover close to $2 billion for work already completed by the organizations.
Both sides laid out their positions in a joint status report on Thursday morning. The contractors and grant recipients suing the government asked Ali to set a new Monday deadline to release much of the funding for completed work, though the deadline would not apply to the entire $2 billion.
They are also seeking an order restoring the majority of foreign aid contracts and grants, which the administration terminated last month, while the lawsuit goes forward.
The administration said that "all legitimate payments" owed to the plaintiffs in the case would be made "within days," and not more than 10 days, but that foreign aid payments to other parties not in the lawsuit could take much longer, blaming "complicated" payment systems. It said that payments requested from the State Department would be paid within two weeks, and from USAID, within 30 to 45 days.
Some of the plaintiffs in the case have said they are in danger of shutting down if not paid immediately.
Ali earlier issued a temporary order for the administration to release the funds, but the government stalled for weeks, arguing that it possessed the authority to keep payments frozen while it reviewed contracts and grants. The plaintiffs labeled this as "brazen defiance" of Ali's order.
On February 25, the judge gave the administration a firm deadline to release some of the funds, prompting it to ask the Supreme Court to block the order, which it declined to do.
Despite the Supreme Court's action, the future of the funding remains unclear. The administration said last week it has made final decisions to terminate more than 90% of USAID foreign aid contracts and more than $58 billion in overall U.S. assistance worldwide, meaning that in its view the original freeze that Ali had blocked was no longer in effect.
The Supreme Court's ruling acknowledged that the administration's claim that it is unable to comply with Ali's deadline and asked the judge to clarify what the government must do with "due regard for the feasibility of any compliance timelines."
Plaintiffs said in Thursday's filing that it is still not clear whether the administration had taken any steps to comply with the court's order to unfreeze the funds, and said that the delays the government cited were self-imposed by the mass firing of USAID staff and new payment approval processes.
The administration countered that it has paid out at least $87 million in foreign aid since February 26, and approved another $70 million.
Theplaintiffs have accused Trump of exceeding his authority under federal law and the U.S. Constitution by effectively dismantling an independent federal agency and canceling spending authorized by Congress. They also have said the administration did not conduct a genuine review before canceling contracts.
Trump ordered a 90-day pause on all U.S. foreign aid on his first day back in office. That action, and ensuing stop-work orders halting USAID operations around the world, have jeopardized the delivery of life-saving food and medical aid, throwing global humanitarian relief effortsinto chaos.
The administration has placed most USAID staff on leave and has eliminated 1,600 jobs. U.S. District Judge Carl Nichols, a Trump appointee, last month allowed the administration to put more than 2,000 people directly employed by USAID on leave, and on Thursday allowed it to cut ties with contract workers.
(Reporting by Brendan Pierson in New York and John Kruzel in Washington; Editing by Will Dunham)
