Understanding the Impoundment Control Act’s Implications for the Second Trump Administration

The Impoundment Control Act of 1974—a 50-year-old statute enacted during the Nixon administration—has been making headlines since the start of President Trump’s second term in the White House. During his first week in office, President Trump signed several executive orders aimed at curtailing federal spending, and directing the Office of Management and Budget (OMB) to review congressional appropriations for agencies across the federal government. 

Under the Impoundment Control Act (the “Act”), the executive branch’s authority to restrict (or “impound”) congressionally appropriated funds is limited. The Act also establishes specific parameters for the circumstances in which the executive branch is authorized to request reconsideration of federal spending. Several pending lawsuits argue that President Trump’s first-week executive orders violate the Act’s restrictions and requirements. The outcome of these lawsuits could have significant implications for the separation of powers not only over the next four years, but for future administrations as well.

Impoundment Control Act of 1974: History and Overview

The United States Constitution vests Congress with the power of the purse, providing, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” In response to contentions that President Richard Nixon had withheld Congressionally appropriated funds for programs he opposed, Congress passed the Impoundment Control Act of 1974. The Act permits the President to temporarily impound—that is, withhold the obligation or expenditure of—appropriated funds only in certain circumstances and only if the President first notifies Congress by transmitting a “special message” explaining the proposed reason for the impoundment.

The Act provides for two types of impoundments: deferrals and rescissions. 2 U.S.C. Section 683(a) and Section 684(a). A deferral occurs when the President orders the temporary withholding of funds from obligation or expenditure. Section 684(b) of the Act permits deferrals only to provide for contingencies, to achieve savings made possible by changes in requirements or greater efficiency of operations, or as otherwise specifically provided by law.  Under the Act, a deferral may not extend beyond the end of the fiscal year in which it was proposed. 

A rescission occurs when the President proposes to cancel a Congressionally approved budget authority before that authority would otherwise expire. The Act allows the President to propose a rescission for policy or other reasons. But the Act permits the President to withhold the budget authority only for 45 days while Congress is in continuous session. Unless both houses of Congress approve the President’s request for the funding to be rescinded within that time, the funding must be expended as appropriated by Congress. 

The Act thus limits the President’s ability to withhold Congressionally appropriated funds. As Justice Kavanaugh wrote when a member of the Circuit Court of Appeals for the D.C. Circuit:

[A] President sometimes has policy reasons (as distinct from constitutional reasons, . . . for wanting to spend less than the full amount appropriated by Congress for a particular project or program. But in those circumstances, even the President does not have unilateral authority to refuse to spend the funds. Instead, the President must propose the rescission of funds, and Congress then may decide whether to approve a rescission bill. See 2 U.S.C. § 683; see also Train v. City of New York, 420 U.S. 35, 95 S. Ct. 839, 43 L. Ed. 2d 1 (1975); Memorandum from William H. Rehnquist, Assistant Attorney General, Office of Legal Counsel, to Edward L. Morgan, Deputy Counsel to the President (Dec. 1, 1969), reprinted in Executive Impoundment of Appropriated Funds: Hearings Before the Subcomm. on Separation of Powers of the S. Comm. on the Judiciary, 92d Cong. 279, 282 (1971) (“With respect to the suggestion that the President has a constitutional power to decline to spend appropriated funds, we must conclude that existence of such a broad power is supported by neither reason nor precedent.”).

In re Aiken Cnty., 725 F.3d 255, 261 n.1 (D.C. Cir. 2013).

After the Act was passed, President Gerald Ford became the first president to face the law’s restrictions on impoundment.  He frequently wrote to Congress requesting that lawmakers reconsider appropriations bills and sent rescission requests shortly after bills were enacted each fall. Presidents Reagan and George H.W. Bush requested some rescissions, Presidents Carter and Clinton requested smaller amounts, and President George W. Bush requested none. Some of the requests were successful, while others were not. Some examples of successful presidential impoundment efforts under the Act include:

• President Reagan’s recission of certain funds for the Low-Income Energy Assistance Program and other domestic programs.
• President George H. W. Bush’s rescission of funds for military construction and research and development for weapons systems.
• President Clinton’s rescission of funds for certain energy programs.

Some examples of unsuccessful presidential impoundment attempts under the Act include:

• President Ford’s unsuccessful attempt to rescind funds for the Head Start Program.
• President Carter’s unsuccessful attempts to rescind funds allocated for certain military purchases, such as new weapons systems and domestic energy programs.
• President Clinton’s unsuccessful attempt to rescind funds for the Low-Income Energy Assistance Program.
• President Trump’s unsuccessful attempt during his first term to withhold approximately $391 million in security assistance to Ukraine, citing concerns about the country’s commitment to anti-corruption reforms.

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Is the Impoundment Control Act of 1974 Constitutional?

Currently, there is a view among some that the Act is unconstitutional because it infringes on the President’s executive powers under Article II—including the power (and duty) to take care that the laws are faithfully executed, the power to conduct foreign affairs, and the President’s powers as Commander in Chief of the armed forces. 

At the same time, others contend that any presidential effort to disregard the Act’s restrictions undermines Congress’s constitutionally vested power of the purse and is itself unconstitutional. As had occurred during various presidential administrations since the Act’s creation, litigation initiated by potential beneficiaries of appropriated funds who may be aggrieved by deferrals and rescissions will continue until the Supreme Court further addresses the intersection of the legislative power of the purse with the Executive’s powers that depend on expenditures from the United States Treasury.  See, e.g., Train v. New York, 420 U.S. 35, 37, 95 S. Ct. 839, 841 (1975); New Haven v. United States, 809 F.2d 900, 901 (1987); Cty. of Santa Clara v. Trump, 250 F. Supp. 3d 497 (N.D. Cal. 2017); Pub. Citizen v. Stockman, 528 F. Supp. 824, 825 (1981). 

As you might expect, within Congress, current opinions on the constitutionality of the Act are largely split across party lines. Several Republicans have come out in support of President Trump’s efforts to curtail federal spending without adhering to the procedures established by the Act, while Appropriations Committee Democrats argue that, “unilateral action taken by the executive branch to delay or cancel appropriations enacted into law . . . has always been unlawful.” As discussed in a recent article on Fox News, several notable legal scholars agree that the Act serves as a constitutional protection of the separation of powers. For example, the article quotes Michael McConnel, director of the Constitutional Law Center at Stanford Law School, as stating:

“The president has the constitutional obligation to take care that the laws be faithfully executed, and that includes spending. . . . So I don’t know where [OMB Director Russel] Vought gets the view that somehow the president has the right to decide what the government is going to spend money on. . . . This is Congress’ job.”

Similarly, the article quotes Georgetown Law professor Stephen Vladeck as stating, “There are contested issues of constitutional law, but this just isn’t one of them. . . . Were it otherwise, there wouldn’t be much point in having a legislative branch.”

Ultimately, however, it will likely be up to the Supreme Court to decide whether to uphold the Act during President Trump’s second term or indicate another path forward. Congressional Republicans may also seek to make the issue moot by acting on President Trump’s spending agenda, sidestepping the Act’s procedural requirements in the process. Or, they may work with the White House to meet the Act’s requirements in order to avoid what many have labeled as a potential “constitutional crisis.” 

Where Do We Go from Here?

So, where do we go from here? At this point, we are still learning about how President Trump and the OMB intend to execute the administration’s agenda going forward. We are also currently awaiting the outcomes of several key court cases—which, as discussed above, may ultimately end up in the Supreme Court. It is also worth noting that at least one federal judge has charged the Trump administration with violating an order to “immediately restore frozen funding” that the judge entered after finding the spending freeze “likely unconstitutional”—and how this plays out could have significant implications going forward as well. 

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