On January 20th, 2025, President Donald Trump signed an executive order aimed at pausing for 90 days federal agencies from distributing funds already approved by Congress. However, the U.S. Supreme Court set a precedent with the Congressional Budget and Impoundment Control Act of 1974 that the President of the United States doesn’t have the authority to impound a budget voted by the U.S. Congress.
Proponents of the Impoundment Control Act argue that presidents have always operated within limits when it comes to canceling federal spending, with the act simply reinforcing those boundaries— a perspective consistently upheld by the courts. On the other hand, Trump and his allies contend that he should have the authority to withhold funds, despite these legal constraints. However, it is illegal for any administration to refuse to spend funds appropriated by Congress. The Impoundment Control Act allows the president to temporarily postpone spending or request Congress to rescind allocated funds, but it explicitly forbids withholding funds for ideological reasons.
Some think it is a very smart political move. The Trump administration gives the appearance of trying to push back on the IRA and on renewable energy incentives, satisfying a campaign trail promise to its political base. The almost certain decision by the courts to uphold the IRA will result in economic benefits for the republican states where over 80% of the IRA incentives have gone towards. On the other hand, Trump’s recent Stargate announcement for the $500 billion investment in AI marks a huge expansion in the electrical grid and infrastructure.
What is the Congressional Budget and Impoundment Control Act of 1974?
The Congressional Budget and Impoundment Control Act of 1974 is a key U.S. federal law defining Congress’s role in the budget process. It created a formal procedure for Congress to address instances where the executive branch withholds budget authority. The President must notify Congress of any withholdings and comply with Congress’s review outcomes.
Title X of the Act, known as the Impoundment Control Act of 1974, allows the President to request that Congress rescind appropriated funds. However, if Congress (both the Senate and House) does not approve the request by passing legislation within 45 days, the withheld funds must be released. Congress is not required to vote on these requests and often ignores them, prompting some to advocate for a line-item veto to strengthen the President’s authority.
The Act gained renewed attention in 2019 during the Trump impeachment investigation over the withholding of military aid to Ukraine. Two budget office staffers resigned over concerns about the delay, which had been decided by Michael Duffey, a political appointee. Emails revealed that Acting Undersecretary of Defense Elaine McCusker warned the White House in July 2019 that the delay could violate the Act.
President Trump's Executive Orders & The Impoundment Control Act
The Trump Administration is reportedly considering whether it can withhold- or "impound"- funds appropriated by Congress through legislation. Advocates for this approach argue that the Impoundment Control Act of 1974 imposes unnecessary restrictions on the President’s ability to impound funds and have suggested its repeal.
However, the claim that the ICA is the sole barrier to presidential authority over impoundments misrepresents both legal precedent and constitutional principles. The Constitution grants Congress the "power of the purse," which explicitly prevents the President from unilaterally refusing to spend funds appropriated by Congress. Courts, including the Supreme Court, have consistently upheld this power, striking down attempts by Presidents to bypass it. Notably, President Nixon’s impoundments- all of which occurred before the ICA was enacted- were overturned, reinforcing Congress’s authority over federal spending.
The debate over presidential authority to withhold federal funds is longstanding. Advocates of the Impoundment Control Act argue that presidents have historically had limited power to cancel federal spending, with the act merely reinforcing existing restrictions—a stance consistently upheld by the courts. Meanwhile, Trump and his supporters contend that presidents hold broad constitutional authority to withhold funds and that the Impoundment Control Act unlawfully curtails that power.
Can Trump Overrule Congress’ Spending Decisions?
President Trump does not have the authority to bypass Congress on federal spending decisions. By law, an administration cannot withhold funds that Congress has already allocated. The Impoundment Control Act allows a president to temporarily delay spending or request that Congress rescind funds, but it does not permit holding money back for ideological purposes.
During his Senate Budget Committee confirmation hearing on Wednesday, Russell Vought, the nominee set to oversee federal funds if confirmed, defended the president’s actions. Vought argued that Trump did not violate the Impoundment Control Act when he issued an executive order temporarily halting certain federal funding. He described the move as a pause to allow the administration time to evaluate the situation.
However, Vought refrained from fully committing to adherence to the Impoundment Control Act, deeming the law unconstitutional—a stance he shares with the president. While he assured senators that the administration would operate within legal boundaries, he avoided directly stating whether it would comply with the Act as it is currently written.
How Could the Supreme Court Rule on Impoundment?
The ongoing dispute over the Impoundment Control Act and whether Trump can block congressionally approved funds will ultimately be resolved by the Supreme Court. This issue echoes the 1975 Supreme Court case Train v. City of New York, where the court ruled against President Nixon’s attempt to withhold funding for water treatment programs. While the Impoundment Control Act was enacted during the Train case, the court noted that its ruling neither influenced nor was influenced by the new legislation.
The Future of the IRA Under the Trump Administration
A full repeal of the IRA under Trump is highly unlikely. Why? The legislation has driven massive job creation in clean energy industries like wind and solar, with 80% of investments landing in Republican-led states such as Oklahoma, Arkansas, and Mississippi. According to projections, clean energy projects announced in the IRA's first two years are expected to generate 621,000 direct and indirect new jobs, including 154,000 permanent roles over the next five years.
Businesses and individuals involved in these projects could gain up to $1.2 trillion in tax credits over the law’s 10-year span. Without these incentives, many clean energy companies warn of financial losses, layoffs, and closures. For Republican districts, the stakes are high—factory closures and job losses could anger constituents, making a repeal politically risky. Some House Republicans have acknowledged this, writing to Speaker Mike Johnson to praise the legislation and urge caution with any changes.
A significant portion of the funding has already been allocated. Much of the money for loans and grants to reduce carbon emissions is “obligated,” with contracts finalized. By November 2024, at least $92.5 billion in grants had been awarded— 80% of the funding for the fiscal year ending in September. This makes it unlikely a Trump administration could revoke funds already distributed to states, local governments, nonprofits, or businesses.
How Renewable Energy Developers Can Stay Ahead
The potential repeal of the Inflation Reduction Act presents a challenge for clean energy developers, but it is far from an insurmountable hurdle. By focusing on strategies such as maximizing operational efficiency, diversifying revenue streams, leveraging data-driven insights, forging strategic partnerships, engaging with local communities, and innovating financing models, developers can adapt and continue to thrive in a shifting landscape.
Tools like those provided by LandGate offer essential insights and support to help navigate this uncertainty. To stay ahead, renewable energy developers must embrace proactivity, adaptability, and resilience. With the right approach and resources, challenges can be transformed into opportunities for growth and long-term success. To explore how LandGate’s tools can empower your site selection, project due diligence, and financial planning, learn more here. If you're ready to take the next step, book a free demo with our energy markets team today:
Disclaimer: The information provided by LandGate is for educational purposes only and does not constitute legal advice. LandGate does not provide legal, financial, or tax advice, and you should not rely on this information as a substitute for consulting with qualified professionals.
