National Endowment for Democracy v. United States of America

District Court, District of Columbia·Decided August 11, 2025·No. Civil Action No. 2025-0648·Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

NATIONAL ENDOWMENT FOR DEMOCRACY,

Plaintiff,

No. 25-cv-00648 (DLF)

v.

UNITED STATES OF AMERICA, et al., Defendants.

MEMORANDUM OPINION

National Endowment for Democracy brings this action to enjoin the federal government and federal executive agencies from withholding congressionally appropriated funds. Before the Court is the plaintiff’s Motion for a Preliminary Injunction. Pl.’s Mot., Dkt. 40. For the reasons that follow, the Court will grant the plaintiff’s motion. I. BACKGROUND National Endowment for Democracy is a private, nonprofit organization formally recognized under the National Endowment for Democracy Act of 1983 (NED Act), 22 U.S.C. §§ 4411 et seq. The Endowment’s mission is to “encourage free and democratic institutions throughout the world through private sector initiatives, including activities which promote the individual rights and freedoms (including internationally recognized human rights) which are essential to the functioning of democratic institutions.” Id. § 4411(b). As a grantmaking organization, the Endowment funds grantees both directly and through four “core institutes”: the International Republican Institute, the National Democratic Institute, the Center for International Private Enterprise, and the Solidarity Center. Wilson TRO Decl. ¶¶ 3, 9, Dkt. 5-2.

On a yearly basis, the Endowment and its core institutes support approximately 2,000 nongovernmental projects in over 100 countries. Id. ¶ 3. The Endowment’s projects aim to promote “long-term U.S. interests by fostering stability, countering authoritarian influence, and reducing the drivers of extremism and migration.” Wilson Supp. Decl. ¶ 3, Dkt. 40-2. Grantees work with local partners to, for example, “heighten public pressure on the Iranian regime by highlighting government diversion of funds to opaque security and defense channels”; “identify, analyze, monitor, and expose the Chinese Communist Party’s influence operations in South and Southeast Asia”; and support “democratic activists . . . as they adapt and plan the next steps in their movements to counter . . . authoritarian regimes.” Id. ¶ 74. Many grantees operate in high- risk environments, under oppressive regimes, and depend on the Endowment’s financial support. Id. ¶¶ 64, 74, 82.

Congress funds the Endowment through annual appropriations. The NED Act provides that the State Department “shall make an annual grant to the Endowment to enable the Endowment to carry out its purposes” and that “[s]uch grants shall be made with funds specifically appropriated for grants to the Endowment.” 22 U.S.C. § 4412(a). When providing grants, the State Department “may not require the Endowment to comply with requirements other than those specified in” the Act. Id.

Every year since the Endowment’s founding in 1982, Congress has enacted appropriations that the Endowment has received in full over the same fiscal year. Wilson Supp. Decl. ¶ 32. After Congress appropriates funding, the Office of Management and Budget (OMB) “apportions” those funds by setting a schedule to determine when they will become available to the relevant executive agency—here, the State Department. See GAO, A Glossary of Terms Used in the Federal Budget Process, GAO-05-734SP, at 12–13 (Sept. 1, 2005). In recent years, OMB has apportioned the full

amount of the Endowment’s funds upon the enactment of a full-year appropriations law. See Pl.’s Mot., at 7 n.2. The State Department then “obligates” those funds to the Endowment, and the money is set aside for the Endowment in its Treasury account. See Wilson TRO Decl. ¶ 16. The Endowment, and its grantees, obtain money on an as-needed periodic basis. Wilson Supp. Decl. ¶ 8 (“NED can only access the obligated funds [in its Treasury account] by regularly requesting payment drawdowns based on spending.”); id. ¶ 13 (“[A] grantee does not receive the full amount of the grant up front[.] . . . [P]ayments are tied to submission of scheduled progress reports and other deliverables.”).

For fiscal year 2024, Congress appropriated $315,000,000 in “no-year” funds for the Endowment’s use. The relevant Further Consolidated Appropriations Act provided “[f]or grants made by the Department of State to the National Endowment for Democracy, as authorized by the National Endowment for Democracy Act (22 U.S.C. 4412), $315,000,000, to remain available until expended.” Pub. L. No. 118-47, 138 Stat. 460, 737 (2024). For fiscal year 2025, Congress passed three continuing resolutions providing that same level of funding, “under the authority and conditions provided” in the 2024 appropriations act. See Pub. L. No. 118-83, 138 Stat. 1524 (2024); Pub. L. No. 118-158, 138 Stat. 1722 (2024); Pub. L. No. 119-4, 139 Stat. 9 (2025). “No- year” appropriations—denoted by the “available until expended” language—are available for multiple fiscal years and do not expire. See GAO, Principles of Federal Appropriations Law (Red Book), at 5-7 to 5-9 (3d ed. 2004); Wilson Supp. Decl. ¶ 7 (“Congress typically appropriates “no- year” funds to the Endowment, which means that the money does not expire, affording the Endowment vital flexibility to fund long-term projects that incur expenses over multiple years.”).

At the end of January 2025, the Endowment began encountering difficulties in accessing its money. It did not receive roughly $97 million in routine drawdown requests from its Treasury

account, and the State Department delayed the obligation of an additional $72 million in apportioned funds. Wilson TRO Decl. ¶¶ 26–31. Unable to meet ongoing operational costs, the Endowment was forced to furlough significant numbers of staff and default on obligations to grantees. Id. ¶¶ 35, 40.

On March 5, 2025, the Endowment filed suit. Compl., Dkt. 1. It also moved for a temporary restraining order. TRO Mot., Dkt. 5. Five days later, on March 10, the Endowment received the $97 million in requested drawdowns and the State Department represented that it was in the process of obligating the additional $72 million in funds. Dkt. 14. The Court granted the parties’ request to hold these proceedings in abeyance. See Minute Order of Mar. 11, 2025.

The defendants continued to slow-walk disbursements. On March 13, after the Endowment submitted a $450,000 drawdown request, State Department officials informed the Endowment that a “waiver” was required to access the funds. Wilson Supp. Decl. ¶ 17. The requirement was later withdrawn and the Endowment received the requested funds on March 21. Id. In April and May, OMB apportioned funds to the Endowment in 30-day increments, deviating from its previous practice of making full annual appropriations available upon enactment. Dkt. 17. In early May, the Director of OMB submitted a budget request for fiscal year 2026 to the Senate, proposing to eliminate the Endowment’s funding entirely. See Letter from Russell T. Vought, Dir., OMB, to Sen. Susan Collins, Chair, Comm. on Appropriations (Vought Letter), at 3 (May 2, 2025), https://www.whitehouse.gov/wp-content/uploads/2025/05/Fiscal-Year-2026-Discretionary- Budget-Request.pdf. Id.

Later that month, the State Department submitted a full-year spending plan to Congress that did not contemplate any additional apportionments or obligations to the Endowment for fiscal

year 2025. Administrative Record (AR) 3–4, Dkt. 39-1. The spending plan provided that unobligated funds would be “subject to review for alignment with Administration priorities.” Id.

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