AGC breaks down executive orders, the law, and what the courts have said on this topic.

This week the Senate Budget Committee held a hearing to consider the nomination of Russ Vought to be the Director of the Office of Management and Budget. Taking front and center in the hearing was the topic of impoundment, which is when a presidential administration withholds money that was provided by Congress. It is a top priority for Democrats looking to hold the executive branch accountable and ensure funding provided by Congress is released by agencies.

Adding fuel to this fire was a vaguely worded executive order that directs agencies to “pause the disbursement of funds” for electric vehicle charging stations provided under the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. This caused confusion at the Department of Transportation, where they temporarily stopped all funding for transportation projects. As a result, the White House issued a clarifying memo that this directive only applied to electric vehicle projects.

So, let’s take a look at what laws are on the books and what court cases have been decided on this issue of impoundment.

The Impoundment Control Act of 1974. The Impoundment Control Act of 1974 lays out legal procedures to limit the executive branch's ability to withhold funds appropriated by Congress. The Act requires the President to notify Congress of any intent to withhold funds, allowing Congress to review and approve or deny the request. If funds are improperly withheld, it also sets up a process for the Government Accountability Office to sue for the release of the funds. Mr. Vought has claimed that he believes this law to be unconstitutional.

Have courts ruled on impoundment? Yes. In two separate cases, Volpe v. Missouri Highway Commission and Train v. City of New York.  In both cases, courts ultimately ruled impoundment was unlawful: the executive branch could not withhold funds appropriated by Congress without proper authorization. Notably, in Train v. City of New York it was the U.S. Supreme Court that ruled impoundment was unlawful. Also, both of these cases were instances of the Nixon administration withholding funds and both cases predate the Impoundment Control Act.

Finally, even if the Impoundment Control Act were to be repealed, a president withholding funding would still likely face legal challenges. The courts have established a precedent through these cases, affirming that the executive branch cannot unilaterally block appropriated funds without statutory authority.

For additional information, please contact Alex Etchen.