Case Summary and Outcome

A U.S. district court granted a temporary restraining order, ordering the U.S. Agency for Global Media (USAGM) to disburse funds to Radio Free Europe/Radio Liberty, Inc. (RFE/RL), a non-profit broadcasting organization. RFE/RL, funded almost entirely through congressional appropriations, faced a funding disruption after the federal agency withheld disbursements and attempted to impose new grant terms following an Executive Order from U.S. President Donald Trump. RFE/RL, which had historically relied on regular monthly disbursements, sought emergency relief to access its congressionally appropriated funds. The Court highlighted the USAGM’s failure to provide a reasoned explanation for the termination of the funding and, given the risk of undermining the organization’s ability to continue its mission of providing news and disseminating information, ordered a temporary restraining order for the immediate disbursement of funds to the organization. The Court later partially granted a preliminary injunction compelling the agency to execute a grant agreement for FY 2025 on materially identical terms to those previously governing prior months, while declining to rule on the legality of proposed provisions for future fiscal years due to an incomplete record.

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Facts

On March 14, 2025, the American President Donald Trump issued Executive Order 14238 (EO) titled “Continuing the Reduction of the Federal Bureaucracy,” mandating the dissolution of “non-statutory components and functions” within the U.S. Agency for Global Media (USAGM). The following day, the USAGM sent a letter to Radio Free Europe/Radio Liberty, Inc. (RFE/RL), one of its grantee networks, of the termination of its grant agreements, citing the EO and that RFE/RL “no longer effectuates agency priorities”. [p. 5 of April 29 Memorandum Order]

RFE/RL delivers news coverage to twenty-three jurisdictions across Europe, Central and South Asia, and the Middle East. Its operational funding is primarily derived from annual congressional appropriations, administered by the USAGM, an independent federal agency responsible for overseeing U.S. international broadcasting services (the Government). These funds are provided through grant instruments mandated under the International Broadcasting Act of 1994. Customarily, USAGM and RFE/RL conclude a Master Grant Agreement on a yearly basis, with only incremental revisions to its established framework, enabling the disbursement of monthly funding at the commencement of each month.

Under the 2024 Appropriations Act, Congress allocated $142.2 million to RFE/RL for Fiscal Year (FY) 2024. For FY 2025, appropriations for USAGM were maintained at equivalent levels through a series of three continuing resolutions. The third of these, enacted on March 15, 2025, provided approximately $77 million for RFE/RL, effective through September 30, 2025. The most recent fully executed Master Grant Agreement between the parties pertained to FY 2024. In the interim, following the first two continuing resolutions for FY 2025, the parties entered into preliminary agreements extending the FY 2024 grant terms and conditions until February 28, 2025.

In February 2025, the USAGM commenced negotiations for a FY 2025 Master Grant Agreement with RFE/RL. A final draft was transmitted on February 27, 2025, which RFE/RL signed and returned the same day. USAGM acknowledged receipt and indicated no impediment to countersignature; however, it did not countersign the agreement and offered no justification.

On March 18, 2025, and following the EO and the receipt of the USAGM letter, RFE/RL initiated litigation against Kari Lake, in her official capacity as Senior Advisor to the Acting CEO of USAGM on March 18, 2025, seeking a temporary restraining order (TRO) (a short-term measure to freeze the situation and prevent harm) for the release of funds covering for March 1 to 15, and a preliminary injunction (a longer interim order to maintain funding until the case is decided) through to September 30, 2025.

On March 24, 2025, USAGM disbursed the March 1-15 funds “just hours before a scheduled hearing”, and the Court nevertheless granted the TRO, preventing USAGM from carrying out its “close-out” procedures (steps to wind down and terminate the grant). [p. 5]

On March 26, 2025, USAGM formally rescinded the termination, restoring the grant’s effect.

Subsequently, on April 3, 2025, USAGM sent a short-term grant agreement covering March 15–31 under FY 2024 terms, which RFE/RL executed and received payment for on April 8, 2025. No further funds were disbursed to RFE/RL for April 2025 or thereafter.

On April 9, 2025, USAGM proposed a revised FY 2025 Master Grant Agreement incorporating provisions not previously negotiated, including a clause granting USAGM authority over RFE/RL’s Board composition, an authority Congress had expressly revoked. RFE/RL rejected these terms, describing them as unreasonable and obstructive, and filed a renewed TRO motion seeking $12,178,590 for April operations. The motion argued that without immediate relief the organization would be compelled to suspend operations and that USAGM’s proposed terms were pretextual measures to withhold appropriated funds. RFE/RL requested a one-month extension of the prior grant arrangement, mirroring the temporary March agreement, but USAGM declined to grant such an extension.

As a result of the funding interruption, RFE/RL incurred immediate and significant operational harm, including termination of freelance contracts, missed lease obligations, furloughing 122 employees with further reductions anticipated, loss of unarchived content, suspension of cybersecurity and security measures for personnel in high-risk locations, and imminent cessation of core operations.

The Court addressed the matter of the TRO on April 29, 2025, and ruled on RFE/RL’s motion for a preliminary injunction on July 18, 2025.

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Decision Overview

Judge Royce C. Lamberth of the United States District of Columbia delivered the memorandum and order. The central issue before the Court was whether the USAGM’s refusal to enter a one-month extension of the prior grant arrangement, necessary to immediately disburse $12,178,590 in congressionally appropriated funds to RFE/RL for April 2025, constituted an arbitrary and capricious action in violation of the Administrative Procedure Act (APA).

RFE/RL argued that the refusal by USAGM to conclude a one-month extension for April funding constituted a final agency action (meaning an agency decision that marks the end of its decision-making process and has legal consequences) under the APA (a federal statute that allows courts to review and set aside unlawful or arbitrary agency actions). It emphasized that repeated inaction had the same effect as a direct refusal and that the agency offered no adequate explanation for withholding funds, while attempting to introduce new grant conditions that would affect its governance in a manner previously prohibited by Congress. On the issue of irreparable harm and public interest, RFE/RL argued that the suspension of funding threatened to interrupt its operations, resulted in staff furloughs, terminated contracts with freelance journalists, disrupted lease payments, and caused the loss of essential content and security infrastructure. Given that almost all its financial resources derive from congressional appropriations, RFE/RL argued that the lack of funds risked halting its mission of providing independent journalism across twenty-three countries which would hinder the flow of reliable information to audiences abroad and compromise a mission that has been recognized by Congress as serving the interests of the United States for decades.

The USAGM argued that, with respect to the APA, no final agency action had occurred, as the refusal to enter a one-month extension was part of ongoing negotiations rather than a definitive decision subject to judicial review. It submitted that any alleged harm could have been avoided had RFE/RL accepted its proposed grant agreement, which would have provided access to the appropriated funds. In challenging RFE/RL’s assertion of irreparable harm, the USAGM stated that financial loss alone does not typically meet this threshold and disputed that the organization faced an existential threat and maintained that RFE/RL had a practical means to mitigate its financial difficulties by engaging with USAGM and accepting the terms offered.

The Court, set out the standard for granting a TRO, relying on Winter v. Natural Resources Defense Council, and explained that RFE/RL was required to demonstrate: (i) a likelihood of success on the merits; (ii) a risk of irreparable harm absent preliminary relief; (iii) that the balance of equities tips in its favor; and (iv) that the TRO serves the public interest. Where the Government is the opposing party, the third and fourth factors merge.

On the first factor, the Court considered RFE/RL’s APA claim and identified two aspects RFE/RL must demonstrate under the APA: (1) that there was a final agency action; and (2) that the action was arbitrary and capricious (an action lacking a rational basis, relying on improper factors, failing to consider a material aspect of the problem, or resting on an implausible or unsupported rationale). The Court held that USAGM’s refusal to enter a one-month extension for April constituted final agency action because it marked the “consummation of the agency’s decisionmaking process” and produced legal consequences, namely the withholding of appropriated funds, citing Bennett v. Spear. [p. 10] The Court highlighted USAGM’s persistent non-response to repeated extension requests and noted Environmental Defense Fund v. Hardin in that “when administrative inaction has precisely the same impact on the rights of the parties as denial of relief, an agency cannot preclude judicial review by casting its decision in the form of inaction.” [p. 11]

The Court concluded that USAGM’s “apparent stonewalling” rendered its decision to refuse an April extension the “consummation” of the agency’s decision-making process. [p. 12] Legal consequences clearly flowed from this, as RFE/RL faced the withholding of congressionally appropriated funds for April, leading to imminent operational harm. The USAGM’s actions therefore constituted “final agency action”.

The Court found USAGM’s action to be arbitrary and capricious as USAGM offered no explanation for its refusal to enter a “mini-agreement” asserting only that RFE/RL lacked a legal entitlement to April funds without a signed grant or an approved financial plan. [p. 12] The Court rejected that rationale as legally deficient because it ignored the fact that Congress had expressly appropriated funds to RFE/RL; treating the absence of a signed grant as a jurisdictional or substantive bar effectively allowed the agency to withhold statutorily allocated funds. The Court stated that USAGM’s posture resembled an effort to compel RFE/RL to accept a new FY 2025 Master Grant Agreement with terms RFE/RL could not lawfully or practically accept, rather than to provide a reasoned basis for denying the requested temporary extension. USAGM’s proposed FY 2025 Master Grant Agreement would have given the agency authority to appoint RFE/RL’s board members, a power Congress eliminated in the National Defense Authorization Act for Fiscal Year 2023.

The Court concluded that the agency failed to account for RFE/RL’s significant reliance interests, decades of predictable monthly disbursements and routine annual renegotiations, and found USAGM’s abrupt reversal, including its refusal to provide a one-month extension after RFE/RL had executed a fully negotiated FY 2025 agreement that USAGM never countersigned, to be arbitrary and capricious.

The Court concluded that USAGM appeared to be trying to “strongarm RFE/RL into signing their latest version of the Master Grant Agreement,” an action that “upends the longstanding relationship” and “disregards RFE/RL’s significant reliance interests, sounding the death knell for RFE/RL – a 75-year-old, statutorily created, congressionally funded entity.” [p. 15]

Regarding the second factor, irreparable harm, the Court found that RFE/RL had made a “significant and comprehensive showing,” in support of this as 99 percent of its funding derives from congressional appropriations. [p. 17] The withholding of April funds had already resulted in terminated journalist contracts, missed lease payments, and the furlough of 122 employees, with further reductions anticipated. The Court concluded that RFE/RL faced irreparable harm that “threatens the very existence of [the] business” citing Wisconsin Gas Co. v. Federal Energy Regulatory Commission. [p. 17] The Court further highlighted risks of data loss, shuttered cyber defenses, and the cancellation of critical security services in hostile jurisdictions, amounting to a “complete gutting of RFE/RL’s infrastructure.” [p. 17] Such harm, the Court found, threatened the very viability of a nonprofit news organization tasked with broadcasting to regions where independent journalism is most vulnerable, thereby undermining its mission of information dissemination to those nations, a goal enshrined by Congress.

The Court held, for the last two factors, that the balance of equities and public interest favored granting relief for RFE/RL, reiterating Shawnee Tribe v. Mnuchin: “there is generally no public interest in the perpetuation of unlawful agency action.” [p. 17] Congress had explicitly mandated the funding, and “the Executive has no residual constitutional power to refuse to spend these appropriations once enacted.” [p. 18] Ensuring RFE/RL’s continued operation, the Court held, upheld both statutory and constitutional imperatives by preserving congressionally mandated broadcasting and safeguarding its role in facilitating the global exchange of ideas.

The Court concluded with a statement, noting that “[u]nder the Administrative Procedure Act, actors within the Executive Branch do not have carte blanche to unilaterally change course, withhold funds that the President and the Legislature jointly agreed to spend, and functionally dismantle an agency that the President and Legislature jointly agreed to support. If the Executive wishes to withhold or reallocate these funds, there is a statutory rescission process in place for them to seek the approval of Congress to do so. This process assures that the will of the people, expressed through their elected representatives, is borne out. But the defendants have not followed that process here. As I see it, if the defendants are aggrieved by these decisions, their problem is not with the Court, but with Congress and the President, and it is with them that the defendants should seek redress.” [p. 21]

Accordingly, the Court granted RFE/RL’s motion for a TRO, directing USAGM to disburse $12,178,590 for April 2025 “under the same terms and conditions applicable to the most recent master grant agreement between the parties, in materially identical terms to the agreement between the parties pertaining to March 2025.” [p. 22]

Regarding RFE/RL’s motion for a preliminary injunction, on July 18, 2025 the Court granted the motion in part and denied it in part. The Court ordered USAGM to immediately enter into a Master Grant Agreement with RFE/RL for FY 2025. This agreement was to be under the same terms and conditions as the most recent Master Grant Agreement and the prior extender agreements that governed the parties’ relationship for March, April, May, and June. The Government was further directed to restore monthly disbursement of RFE/RL’s congressionally appropriated funds pending final resolution of the lawsuit, and to file monthly status reports on their compliance. However, the Court denied RFE/RL’s request for relief regarding the inclusion of specific provisions in future grant negotiations for subsequent fiscal years, explaining that it lacked a sufficient factual record and substantive responses from the Government to adjudicate the legality of each contested term.

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