In potential showdown, aid groups demand court find USAID, State officials in contempt

Despite a federal court order, Trump administration officials now running the U.S. Agency for International Development have not reopened the flow of money to thousands of programs around the globe, many of which have laid off workers and are starving for funds.

In a court filing late Tuesday, USAID said it was permitted to cancel most of its contracts. It also said it was reviewing contracts and grants one by one for evidence of waste, fraud and to ensure they are aligned with President Trump's goals.Last week, a federal judge had ordered USAID to reopen the flow of money to the programs while the case plays out. Judge Amir H. Ali in U.S. District Court in the District of Columbia wrote that the plaintiffs, who receive money from USAID, showed that the loss of funding "threatens the very existence of [their] business."

He gave USAID until Tuesday to respond and explain how it was complying with the order. The case is one of several that have been filed against USAID on behalf of employees and grant recipients.

The sudden halt in funding has reverberated across the globe, forcing the shutdown of everything from safe-houses for Cambodian rights defenders to the layoff of journalists investigating corruption in authoritarian states.

But the judge's order did provide USAID some wiggle room. Ali said it would not prohibit the agency from "enforcing the terms of contracts or grants."

In its filing late yesterday, USAID cited that provision to justify its moves. The agency says it reviewed the terms of contracts and found they explicitly or "implicitly" allow USAID to end most of them.

USAID says it has already terminated nearly 500 contracts, including some because they focused on diversity, equity and inclusion and others because they promoted sustainability and climate change.

Other contracts were cancelled because they supported "Regime Change, 'Civic Society' or 'Democracy Promotion.'"

USAID has not killed all foreign aid. It says it has spared more than 20 contracts worth more than $250 million.

That is a tiny fraction of the agency's annual spending. In fiscal year 2023, USAID spent more than $40 billion in about 130 countries. The vast majority of money went to help with governance, health and humanitarian assistance. A quarter of the total budget went to sub-Saharan Africa. One of USAID's goals is to promote democracy abroad.

"It's just bizarre," said an executive with an organization which receives USAID funding, pointing out that the agency was eliminating projects it had labeled "democracy promotion."

"This is 'Alice in Wonderland' stuff." The executive asked that he and his organization not be named for fear of retribution.

Peter Maybarduk, who works for Public Citizen, which represents plaintiffs in the suit, called USAID's Tuesday filing "outrageous."

"People who long have been partners of the United States, in vulnerable situations around the world, will suffer as a result of this failure to restore funding, funding the U.S. already had promised, and that a court last week ordered the government provide," Maybarduk wrote in an email quoted by Reuters.

The Trump administration wants to fold USAID into the State Department. In the past month, State has terminated more than 700 "foreign assistance-funded grants," according to an affidavit filed by Peter Marocco, USAID's deputy administrator.

Judge Ali has yet to respond to Tuesday's USAID filing.

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