The U.S. Supreme Court on Wednesday ruled against the Trump administration’s effort to withhold $2 billion in payments owed to U.S. Agency for International Development (USAID) contractors. However, the decision did not mandate immediate disbursement of the funds.
In a 5-4 vote, the justices denied an emergency request from the Justice Department, which sought to block U.S. District Judge Amir Ali’s rulings ordering the government to unfreeze the funds. President Donald Trump had halted the payments through an executive order.
The court stated that the deadline for immediate payment had passed and that the case remains active in the lower court. A hearing is scheduled for Thursday, where Ali is expected to clarify the government’s obligations under the temporary restraining order issued on February 13. The justices also advised the district court to consider the feasibility of compliance deadlines.
Four conservative justices dissented from the ruling. Justice Samuel Alito, joined by Justices Clarence Thomas, Neil Gorsuch, and Brett Kavanaugh, argued that Ali lacked the authority to order the government to disburse taxpayer funds.
The Trump administration maintained that it could not meet the deadline set by Ali to release the $2 billion in payments by last Wednesday night.
The payment freeze has impacted several foreign aid projects, including irrigation and water infrastructure in Ukraine, waterworks improvements in Lagos, Nigeria, medical equipment distribution in Vietnam and Nepal, and malaria prevention efforts in Kenya, Uganda, Ghana, and Ethiopia.
Meanwhile, the administration recently concluded a review of USAID’s expenditures, confirming plans to eliminate thousands of programs valued at up to $60 billion. Although not part of the Supreme Court case, these broader cuts are expected to face legal challenges.
Chief Justice John Roberts issued an administrative stay last week, temporarily blocking Ali’s ruling while the Supreme Court considered the appeal.
The underlying lawsuit was filed by nonprofit organizations and private contractors reliant on USAID funding. A separate lawsuit was also initiated by unions representing USAID employees.
Since taking office, Trump and his ally Elon Musk have pursued a strategy of downsizing the federal government, with USAID identified as a primary target. On Thursday, USAID staff affected by layoffs were seen vacating their offices in Washington, D.C., while demonstrators gathered outside.
Contractors claim the administration’s abrupt decision left them financially strained despite fulfilling contractual obligations. They assert that the government did not adhere to the proper legal process under the Administrative Procedure Act.
Ali initially ruled against the Trump administration’s sweeping termination of foreign aid funding, stating that the government must conduct case-by-case evaluations. He later ordered the administration to issue immediate payments for completed contracts, prompting the appeal.
Acting Solicitor General Sarah Harris argued before the Supreme Court that while the government is committed to paying valid claims, Ali overstepped his judicial authority by compelling specific payments.
Contractors, however, say the funding delay has led to severe financial consequences. One organization laid off 110 workers due to the nonpayment, while another faces legal challenges for failing to meet severance obligations. Employees working on U.S.-funded aid projects in Ukraine, Georgia, and Nigeria have also reported concerns over safety due to unpaid wages.
In their Supreme Court filing, attorneys representing the contractors accused the Trump administration of disregarding Ali’s restraining order for nearly two weeks. They further argued that the Supreme Court lacked jurisdiction to intervene at this stage.
With the justices refusing to enforce immediate payment, the case will continue in the lower court. The upcoming Thursday hearing could determine whether the administration will be compelled to release the funds or if further legal proceedings will delay payments indefinitely.
