Court rules Trump’s ousting of Inter-American Foundation head unlawful

After months of legal back-and-forth, a federal judge has ruled in favor of the Inter-American Foundation, an independent aid agency of the U.S. government that until earlier this year funded community-led development in Latin America and the Caribbean. “Defendants’ reasoning essentially puts the Constitution at war with itself,” wrote U.S. District Judge Loren Alikhan in her opinion, which was published on Aug. 14. “Granting the President unfettered discretion to appoint who he pleases at the expense of fundamental checks and balances would not be faithful to the Constitution — it would enable the very “eighteenth[-]century despotism” the Framers [of the constitution] worked so desperately to prevent.” Shortly after returning to office, President Donald Trump began to steadily dismantle the IAF and installed loyalists to positions of power. In early February, Trump declared that IAF — along with the U.S. African Development Foundation and the U.S. Institute of Peace — were "unnecessary.” And in the weeks that followed, all three institutions faced an existential crisis. Staff from the Department of Government Efficiency, the budget-slashing office led by billionaire Elon Musk, immediately began to gut staff, grants, and contracts. In less than a week, IAF’s chief executive officer, Sara Aviel, was ousted from her role. The Trump administration then appointed Peter Marocco, the State Department official who at the time was leading the dismantling of the U.S. Agency for International Development, as acting chairman of IAF’s board — and the very same day, Marocco held an “emergency board meeting” with just himself and two other DOGE officials in attendance. Unable to get inside the IAF’s office, Marocco conducted that meeting outside its doors — and on Feb. 28, Marocco appointed himself the acting president and chief executive officer of the 56-year-old organization. Over the next two days, nearly every one of IAF’s grants and contracts was canceled, according to the latest court filing. By early March, IAF’s entire staff was placed on administrative leave, blocked from the organization’s systems, and told they would be subject to a reduction-in-force in the coming weeks. “If this Court does not take action, what remains of the IAF — created by an Act of Congress and sustained for the past fifty-six years — will soon be destroyed,” read the first court filing from Aviel, who sued Marocco, DOGE, and others in the Trump administration on March 17. “The wholesale gutting of the IAF by the Government flies in the face of the law.” Nearly five months later, Alikhan agreed. On Aug. 14, she declared that Aviel’s removal was “unlawful,” and as a result, “without legal effect.” The judge also blocked Marocco from serving as an acting board member of IAF and from “carrying out any of the duties of that position in any way, shape, or form.” The decision followed similar rulings from Alikhan, who ordered a preliminary injunction on April 4 that temporarily rolled back all actions taken against the agency by Marocco. Before DOGE began carving away at IAF, the organization supported some 400 active grants, according to Aviel’s first court filing. The vast majority of those grants went toward local organizations — but by March 17, only a single grant worth $66,000 remained. Over the next several months, the case went back and forth through the courts, with the judge’s April 4 injunction canceling the reduction-in-force for all staff members and bringing employees back within three days. Within two weeks, the organization had reactivated all 365 grants to local organizations, IAF’s Rebecca Nelson told Devex, and restored most contracts. “We estimate that shutting down and then restarting the IAF’s operations directly cost the U.S. government at least $6.3 million (13% of our enacted appropriation in FY 2024), primarily due to the loss of withdrawn private sector partnership funding as well as the loss of staff labor and administrative fees for canceling and restarting contracts,” said Nelson, the organization’s communications director, over email. At the same time, similar cases were brought against the Trump administration by the heads of USADF and USIP. Initially, a district judge had ruled against USADF’s head, Ward Brehm — but a case brought by a USADF grantee, Rural Development Innovations, continued ahead. On July 1, the judge found that it was “unlikely” that the president had the authority to appoint Marocco as a board member of USADF, and that there was “little hope” that the government’s argument would “win the day.” Later that month, both parties submitted a joint status report that said neither intended to pursue an appeal — and that the case involving USADF would be informed by the one brought by IAF. As for the USIP, that case — which had initially brought wins for the peacebuilding institution — is currently making its way through an appeals court. At the end of June, that court stayed a district court ruling that had blocked the Trump administration from continuing to dismantle USIP. Two weeks later, 200 employees at the USIP were fired, and at the end of July, the Trump administration installed a controversial academic — Darren Beattie — as acting president of USIP. During the first Trump administration, Beattie was fired from his job as a speechwriter after speaking at a conference attended by white nationalists. During Trump’s second administration, Beattie returned to government as a senior official at the State Department, currently serving as both USIP’s head and the undersecretary for public diplomacy. His appointment sent shockwaves across the Democratic side of the congressional aisle, with 44 lawmakers urging Secretary of State Marco Rubio to “immediately and permanently dismiss him” from the agency in March. “We have serious concerns that Beattie’s loyalty to white nationalist ideology supersedes his duty to advance the foreign policy interests of the United States,” the representatives wrote. “Darren Beattie’s position is an affront to U.S. public diplomacy efforts and he is unfit for any role at the State Department.” Regardless of the legal battles, political appointments, and court decisions affecting these agencies, all three were also affected by President Trump’s rescissions package — a $9 billion clawback of previously approved foreign aid codified into law last month. IAF was hit with a $27 million rescission, slicing away nearly 60% of the organization’s budget for 2025. USADF saw clawbacks of around the same: $22 million out of $45 million, a nearly 50% drop in 2025 funding. And USIP saw a lesser, but still significant drop, a loss of $15 million, some 27% of the organization’s 2025 budget. The package described the organizations’ programs as “wasteful,” “littered with anti-American activities,” “duplicative,” and, in the case of the USIP, potentially harmful to “American interests.” “This best serves the American taxpayer,” wrote Russell Vought, the White House’s budget chief, in his explanation for cuts at all three agencies.