Lawsuits imminent over Trump’s dismantling of USAID

WASHINGTON — U.S. Agency for International Development employees and contractors are discussing potential lawsuits targeting the unprecedented attack on the federal agency by President Donald Trump’s administration, according to four sources familiar with the talks.

Lawsuits based on loss of income could be used to bring up weighty constitutional claims over presidential power in the face of congressional legislation that set up and funds the agency and its programs.

These would be the latest in a stream of lawsuits against Trump’s aggressive and unprecedented use of executive action, with more expected to follow as he seeks to unilaterally re-shape the federal government without the approval of Congress amid claims he lacks the legal authority to do so.

So far, the Trump administration has put a block on foreign aid, closed USAID’s Washington headquarters and announced that many employees around the world will be placed on administrative leave.

Both nonprofit groups and companies that have contracts with the agency could launch claims based on losses caused by the government reneging on its agreements.

Some companies that rely on USAID contracts are at risk of imminent bankruptcy if payments are not made, according to a senior official at a USAID contractor.

In the meantime, the agency’s mission to provide assistance to impoverished people has been abandoned, with essential aid that was in transit now stuck in limbo.

The nonprofit groups are expected to claim, among other things, that the government has violated the Administrative Procedure Act, a law that requires agencies to follow the correct legal procedures before making decisions, a lawyer involved in strategic talks said.

An action that courts deem to be “arbitrary and capricious” under that law can be set aside.

Plaintiffs could also question the legal authority of Elon Musk’s so-called Department of Government Efficiency and allege that the administration is unlawfully withholding funds appropriated by Congress.

The challengers could seek an immediate injunction seeking to block Trump’s moves, which fly in the face of Congress’ role in enacting legislation on such issues. It is unclear exactly whether Trump intends to dismantle the agency altogether — as Musk has said — or whether it will be drastically restructured.

NBC News was not able to confirm which specific contractors would join potential lawsuits.

Separately, the American Foreign Service Association (AFSA), a union representing government workers, said in a statement it “plans to take legal action in the days ahead” over the agency’s decision to recall personnel from abroad.

Several different law firms have been approached for advice and guidance on what action is possible, Randy Chester, the group’s vice president for USAID told NBC News.

“We’re left with very little recourse, which is unfortunate, because they’re going to lose a tremendous workforce, and at the end of the day, America doesn’t win. If USAID closes, America loses,” he added.

Legal experts say that the president does not have the authority to abolish a federal agency created by Congress. USAID was established first by an executive order in 1961 but was later enshrined in a law enacted by Congress in 1998.

“My best reading of the law is that although the president could direct greater coordination of USAID with the State Department and maybe even transfer some functions, he cannot unilaterally abolish the agency by executive order,” said Richard Briffault, a professor at Columbia Law School.

A more recent law requires the executive branch to consult Congress on any proposed reorganization, something that Secretary of State Marco Rubio, who has assumed leadership of USAID, belatedly appeared to do on Monday when he sent a letter to senators.

As of Wednesday afternoon, the USAID website consisted of a single page that included only the most recent announcement about global personnel. The State Department did not immediately respond to a request seeking comment.