
What is “impounding” of funds, and is it legal for a president to freeze funds already approved and passed by Congress? Here’s a plain English explanation, by a real lawyer, of impoundment, freezing Federal funds, and the Constitution. If you have been following the saga of President Trump’s announcement of a complete freezing of Federal funds on Tuesday, January 28, 2025, then of a court temporarily stopping it from going forward that evening, and then of the Trump administration rescinding that order the next day (1/29/2025), you may understandably have cognitive whiplash.
What is Impoundment of Funds?
Most people are familiar with the term “impound” from when, for example, your car is towed to the impound lot. Impoundment of funds is basically the same, only the President tried to tow the previously-approved Federal funds to the monetary impound lot.
Put simply, in plain English, in this context impoundment means specifically means when the President of the United States stops the flow of Federal funds that have already been approved and passed as law by the Congress.
In other words, the Congress, through it’s “power of the purse”, as is provided in the Constitution, comes up with, say, a budget, and approves that budget, and that budget becomes law upon congressional approval and the President signing off on it. All of that happened with the funds which the current administration tried to freeze (the funding was signed off on by former President Biden, as of course this budget was passed during the Biden administration).
Text of Article I, Section 9, Clause 7 of the Constitution
“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”
What this means is that no Federal funds can be removed from the Treasury except under a law made by Congress. That includes removing funds from the Treasury to the monetary impound lot.
Is it Legal for a President to Stop the Flow of (Impound) Previously Approved Federal Funds?
The short answer is “no, it is not legal for a president in 2025 to impound previously approved, passed, and signed Federal funds.”
BUT, there’s a reason that I say “in 2025”.
A Brief History of the Ability of a President to Impound Federal Funds
Here’s the thing: ever since the founding of the United States, up until 1974, presidents used impoundment in one way or another. In fact, previous to 1974 several presidents did use impounding to get what they wanted, or to stop what they didn’t want from happening.
The first known use of impoundment by a president was in 1801, when President Jefferson impounded $50,000 that was earmarked to purchase boats for the Navy.
The last known use of impoundment was by President Nixon in 1972, when he tried to impound funds earmarked for an environmental project. He had first vetoed the law that Congress had passed funding that project, and Congress overrode his veto. So he tried to impound the funds. It went up to the Supreme Court, whicih ruled, Train v. City of New York, that “the impoundment power cannot be used to frustrate the will of Congress under such circumstances.”
As a result of Nixon’s attempted abuse of the impoundment power, in 1974 Congress passed “The Congressional Budget and Impoundment Control Act of 1974, removing the impoundment power of the president.
The Impoundment Control Act of 1974
The Impoundment Control Act of 1974 requires that if the President wants to rescind and stop the flow of already-approved Federal funds (in other words impound them), the President must let Congress know that he wants to rescind them and then both the Senate and the House must approve the rescission within 45 days. If they don’t approve it, within the 45 day limit, then the funds cannot be impounded.
So What’s Next?
Given what we know about this administration, and given that up until about 50 years ago a president did have the power to impound, I believe there is a pretty good chance that this administration will appeal up to the Supreme Court to try to get Train v. City of New York overturned, so as to restore the power of impoundment to the President.
In fact, it’s quite likely that they knew their freezing of the funds would be challenged, and that it was a tactic through which they were inviting it as a way to get this before the Supreme Court, as this administration continues with its efforts to reshape both the power of the President, and the law of the land.