A federal judge has directed the Trump administration to restore funding for numerous foreign aid contractors who claimed they suffered significant financial losses due to a sudden 90-day funding freeze.
Judge Amir Ali, based in Washington, D.C., and appointed by President Joe Biden, ruled that the administration failed to justify the broad suspension of foreign aid, which disrupted contracts with businesses, nonprofits, and organizations.
“To date, the defendants have not provided any rationale for suspending all congressionally approved foreign aid, a decision that sent shockwaves through thousands of agreements and severely impacted reliance interests,” Ali wrote in his ruling.
He further emphasized that without temporary relief, the financial damage already inflicted would likely continue to escalate.
Trump Officials Barred from Cancelling Foreign Aid Contracts
Ali’s decision prohibits key administration officials, including Secretary of State Marco Rubio and Office of Management and Budget Director Russell Vought, from terminating or freezing foreign aid contracts initiated before Trump’s inauguration while legal proceedings continue. This ruling effectively puts a stop to a core part of Trump’s executive order mandating a 90-day freeze on foreign aid.
The judge concluded that the administration’s abrupt decision to halt all foreign aid was “arbitrary and capricious,” as it failed to consider the consequences for businesses and organizations that had already secured funding.
“Conducting a review of programs is not inherently arbitrary,” Ali stated. “However, no justification has been provided for why reviewing long-established programs required an immediate and total suspension of appropriated funds.”
Widespread Damage to Contractors and Organizations
Legal representatives for affected contractors described the extensive disruption caused by the funding freeze, arguing that thousands of organizations reliant on USAID funds were being forced to halt operations.
“Businesses are closing, employees are being laid off, food is going to waste, and life-saving medications are expiring,” attorney Stephen Wirth stated during a court hearing.
The impact extended beyond foreign organizations, affecting U.S.-based companies and nonprofits working with international partners. Many of these entities were forced to furlough or lay off nearly their entire staff, with some at risk of shutting down permanently.
“Halting billions in government spending and forcing countless aid partners out of business is a matter of enormous political, social, and economic significance,” another attorney argued, stating that such a drastic move should require explicit congressional approval.
Government’s Defense and Court’s Rejection
The Justice Department defended the funding freeze by asserting that executive orders from the president should not be subject to judicial review under the Administrative Procedure Act (APA).
DOJ attorney Eric Hamilton argued that because the policy stemmed from a presidential directive, USAID and the State Department’s actions could not be challenged under APA guidelines, which prevent agencies from making arbitrary decisions.
However, Judge Ali rejected this argument, warning that the administration’s reasoning would set a dangerous precedent.
“If accepted, this interpretation would allow the president and federal agencies to reframe any agency action as a directive from the president to avoid judicial review,” Ali wrote.
Previous Legal Challenges to the Aid Freeze
This ruling marks the second time a judge has intervened to stop Trump’s broad effort to reduce foreign aid spending. A week earlier, Judge Carl Nichols, a Trump appointee, ruled against the administration’s decision to place thousands of foreign aid workers on administrative leave and cut off their system access. Nichols extended his ruling to block these actions for another week.
Ali is now the third judge to temporarily halt Trump’s attempts to unilaterally freeze large portions of federal funding. In a separate case, Judge John McConnell of Rhode Island, appointed by President Barack Obama, blocked the administration from pausing domestic federal programs. Another judge in Washington, D.C., Loren AliKhan, also issued a ruling preventing aspects of Trump’s domestic spending freeze from taking effect.