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  Mr. Morrison also testified that there was a discussion at the July 23 meeting about the legality of the hold, and specifically whether it is “actually legally permissible for the President to not allow for the disbursement of the funding.”349 Mr. Morrison recalled that DOD raised concerns about possible violations of the Impoundment Control Act.350 The Impoundment Control Act gives the President the authority to delay spending, or not spend, funds only if Congress is notified of those intentions and approves the proposed action (see below for further discussion of the act).351

  With the exception of OMB, all agencies present at the July 23rd meeting advocated for the lifting of the hold.352 Ambassador Taylor explained that the State Department “made a strong statement about the importance of this assistance” and that Ms. Cooper, on behalf of DOD, “made a very strong case and continued to make a very strong case for the effectiveness” of the security assistance.353 Lt. Col. Vindman, who also attended the meeting, testified that there was agreement that the issue should be elevated to the Agency deputies “as quickly as possible to recommend a release of security assistance.”354

  The third interagency meeting, a Deputies Small Group meeting at the Cabinet Deputies level, was held on July 26, 2019. Mr. Duffey was the OMB representative, and Mr. Sandy prepared Mr. Duffey for the meeting.355 Mr. Sandy explained that he prepared Mr. Duffey to get policy guidance on six critical issues: (1) the reason for the hold; (2) the extent of the hold; (3) the duration of the hold; (4) the Congressional affairs approach; (5) the public affairs approach; and (6) and the diplomatic approach.356 Mr. Sandy testified that on July 26, OMB still did not have an understanding of the reason for the hold.357 According to Mr. Sandy, at that time, there was no discussion within OMB about the amount of money that was being contributed to Ukraine by other countries, or whether that topic was the reason for the President’s hold.358

  Mr. Morrison, Lt. Col. Vindman, Ms. Cooper, Under Secretary of State for Political Affairs David Hale, and Mr. Duffey attended the July 26 meeting. At the meeting, OMB stated that “they had guidance from the President and from Acting Chief of Staff Mulvaney to freeze the assistance.”359 It also was “stated very clearly” that the hold applied to both the State Department and Defense Department security assistance funds.360 Ambassador Hale, as the representative for the Department of State, “advocated strongly for resuming the assistance,” as did representatives from all agencies other than OMB.361

  Mr. Morrison testified that, at the meeting, “OMB represented that—and the Chief of Staff’s Office was present—that the President was concerned about corruption in Ukraine, and he wanted to make sure that Ukraine was doing enough to manage that corruption.”362 Ms. Cooper had a similar recollection but received no further understanding of what OMB meant by “corruption.”363 Ms. Cooper recalled that the deputies did not consider corruption to be a legitimate reason for the hold because they unanimously agreed that Ukraine was making sufficient progress on anti-corruption reforms, as had been certified by DOD on May 23.364

  President Trump Continued the Hold Despite Agency Concerns About Legality

  Prior to the passage of the Impoundment Control Act, presidents had frequently impounded—i.e., refused to spend—Congressionally-appropriated funds to enforce their policy priorities when they diverged from Congress’. However, most of these impoundments were small (i.e., no more than a few percent of the total program budget) or temporary (i.e., funds were released in time for them to be spent before the end of the fiscal year) and rooted in policy, rather than political interests of the President. It was not until President Nixon that presidential impoundment of funds would prompt Congress to take action citing constitutional concerns.365

  Unlike his predecessors, Nixon undertook impoundments that were both substantial and, in some cases, permanent, which raised concerns for Congress over its Article I powers. In fact, between 1969 and 1972, Nixon impounded between 15% and 20% of Congressionally-appropriated funds in various accounts.366

  To reassert Congressional authority over the budget, in 1973, Congress established the Joint Study Committee on Budget Control, which held a series of hearings and produced more than 4,600 pages of testimony and reports. The Joint Study Committee’s findings ultimately led to the overwhelmingly bipartisan passage—over President Nixon’s veto—of the Impoundment Control Act of 1974, one of a series of reform bills designed to reign in presidential power. Looking back at that moment in history, Rep. Bill Archer (R-TX), a fiscal conservative who served 30 years in the House of Representatives, including as the Chairman of the Ways and Means Committee, remarked, “the culture then was that the president had too much power…the president is abusing his power.”367

  In addition to establishing the Congressional Budget Committees and the independent Congressional Budget Office, the Impoundment Control Act also limits the circumstances under which a president can legally impound Congressionally-appropriated funds. According to the Act, although the President may request authority from Congress to withhold or permanently cancel the availability of budget authority, such an action is not allowed without Congressional approval. Any amount of budget authority proposed to be deferred (i.e., temporarily withheld) or rescinded (i.e., permanently withheld) must be made available for obligation unless Congress, within 45 legislative days, completes action on a bill rescinding all or part of the amount proposed for rescission.368 The Impoundment Control Act does not permit the withholding of funds through their date of expiration, which would be a de facto rescission without Congressional approval.369

  At the July 26 interagency meeting, senior agency officials raised serious concerns about the legality of the hold under the Impoundment Control Act. Ms. Cooper testified:

  A:

  Well, I’m not an expert on the law, but in that meeting immediately deputies began to raise concerns about how this could be done in a legal fashion because there was broad understanding in the meeting that the funding—the State Department funding related to an earmark for Ukraine and that the DOD funding was specific to Ukraine security assistance. So the comments in the room at the deputies’ level reflected a sense that there was not an understanding of how this could legally play out. And at that meeting the deputies agreed to look into the legalities and to look at what was possible.

  Q:

  Okay. So is it fair to say the deputies thought the President was not authorized to place a hold on these funds?

  A:

  They did not use that term, but the expression in the room that I recall was a sense that there was not an available mechanism to simply not spend money that has been in the case of USAI [DOD security assistance] already notified to Congress.370

  Lt. Col. Vindman testified that the issue needed to be “elevated to a PC [Principals Committee] as quickly as possible to release the hold on security assistance” so that the funds could be obligated before the end of the fiscal year.371

  A Principals Committee meeting was never convened.372 According to Mr. Morrison, National Security Advisor John Bolton “believed that it was unnecessary, that he already had a reasonable idea of where the principals were, and he wanted to get directly to the President as early as possible in the most effective way.”373 Ambassador Bolton understood that the principals “were all supportive of the continued disbursement of the aid.” 374 As had been clear since the very first interagency meeting on July 18, the lifting of the hold was “the unanimous position of the entire interagency.”375 At this point, it remained unclear to many officials why the President continued to hold the funds.

  On July 31, 2019, a fourth and final interagency meeting was held at the Policy Coordination Committee level. Ms. Cooper attended the meeting on behalf of DOD. According to Ms. Cooper, the agenda “was largely focused on just routine Ukraine business, postelection follow up,” and “security
assistance was not actually an explicit agenda item.”376 Ms. Cooper nevertheless raised security assistance and expressed her understanding, after consulting with DOD counsel, that there were only two legally available options to implement the hold: a Presidential rescission notice to Congress (i.e., requesting that Congress “take back” funds it had already appropriated) or for the Defense Department to do a reprogramming action (i.e., use Congressionally-appropriated funds for a different purpose).377 In either case, the law requires that the Executive Branch notify, and seek approval from, Congress before taking any action.378

  At the July 31 meeting, Ms. Cooper emphasized to the participants that because “there are only two legally available options and we do not have direction to pursue either,” DOD would have to start obligating the funds on or about August 6.379 She explained at her deposition that DOD would have had to begin obligating the funds by that date or risk violation of the Impoundment Control Act.380

  The Administration, however, never proposed a rescission or reprogramming of funds for Ukraine security assistance and never notified Congress of its intent to withhold funds.381

  OMB Used Unusual Process to Implement President’s Hold, Skirting Legal Concerns

  OMB plays a critical role in the release of security assistance funding. The Antideficiency Act requires that, before any department or agency may spend Congressionally-appropriated funding, the Director of OMB or his delegates must “apportion” (i.e., make available to spend) the funds in writing.382 Through this mechanism, OMB has the ability to directly impact security assistance funding or funding of any kind that is appropriated by Congress.

  In parallel with the interagency meetings that occurred during the latter half of July 2019, OMB devised a way to implement the President’s hold on security assistance to Ukraine, notwithstanding DOD’s Congressional notifications of February 28 and May 23. Over the course of his twelve-year career at OMB, Mr. Sandy could not recall any other time when a hold had been placed on security assistance after a Congressional notification had been sent.383

  When speaking with Mr. Duffey on or about July 18 or 19, Mr. Sandy immediately raised concerns about how to implement the hold without violating the Impoundment Control Act, which required that the funds be obligated (i.e. spent) before they expired at the end of the fiscal year, on September 30.384 In light of that legal requirement, the hold would have to be temporary.385 An additional hurdle was the fact that OMB had already authorized DOD to spend the security assistance funds DOD administered for fiscal year 2019.386 Therefore, when President Trump directed the hold in July, OMB scrambled to reverse that prior authorization.

  From July 19 through July 24, Mr. Sandy consulted with the OMB Office of General Counsel as well as Ms. McCusker at DOD on how to legally implement a hold on the funds.387 Mr. Sandy’s staff at OMB also conferred with OMB’s Budget Review Division.388 Based on these consultations, OMB decided to implement the hold through a series of nine funding documents, known legally as “apportionments.”389 Apportionments typically are used to convey authority to an agency to spend funds, not to withhold funds; thus, in order to bar DOD from spending money, these particular apportionments included footnotes that would impose the holds while using creative language to skirt legal concerns. Mr. Sandy testified that “the purpose of the footnote was to preclude obligation for a limited period of time but enable planning and casework to continue.”390 He also testified that this use of footnotes was unusual and that in his 12 years of OMB experience, he could “not recall another event like it.”391

  On July 25, OMB issued the first funding document implementing the hold. In this document, the relevant footnote notified DOD that the Ukraine Security Assistance Initiative funds “are not available for obligation until August 5, 2019, to allow for an interagency process to determine the best use of such funds.” The footnote also stated that:

  Based on OMB’s communication with DOD on July 25, 2019, OMB understands from the Department that this brief pause in obligations will not preclude DOD’s timely execution of the final policy direction. DOD may continue its planning and casework for the Initiative during this period.392

  Mr. Sandy explained that the “interagency process” referenced in the footnote referred to the NSC-led interagency meetings convened during the latter half of July, and that the August 5 date provided a “reasonable timeframe for an interagency process” to produce “clear guidance” on the hold.393 The August 5 date was determined in consultation with Mr. Duffey at OMB and Ms. McCusker at DOD.394

  Mr. Sandy further testified that the second sentence in the footnote—which states, in relevant part, that “OMB understands from the Department that this brief pause in obligations will not preclude DOD’s timely execution of the final policy direction”—was critical to the implementation of the hold:

  Well, that gets to the heart of that issue about ensuring that we don’t run afoul of the Impoundment Control Act, which means that you have to allow for the timely execution. And this reflects my conversation with—conversations plural with Elaine McCusker that they can confirm that, during this brief period, they would not foresee any problem fully executing the program by the end of the fiscal year.395

  The sentence, in effect, affirmed that if the hold remained in place only until August 5, DOD would still have sufficient time to spend all security assistance funds by September 30, 2019. President Trump, however, would continue the hold long past August 5.

  Trump Appointee Took Over Signing Authority from Career Budget Expert

  Since becoming Deputy Associate Director for National Security in 2013, Mr. Sandy was responsible for approving release of the funding for programs within his portfolio, including the Ukraine Security Assistance Initiative.396 Mr. Sandy approved and signed the July 25 funding document.397 On July 29, however, Mr. Duffey—a political appointee of President Trump whose prior position had been as Executive Director of the Republican Party of Wisconsin—told Mr. Sandy—a career civil servant with decades of experience in this area—that he would no longer be responsible for approving the release of funding for Ukraine Security Assistance Initiative.398 Mr. Duffey also revoked the authority for approving the release of funding for Foreign Military Financing from Mr. Sandy’s colleague at OMB.399 Instead, Mr. Duffey would himself assume authority for the $250 million in DOD-administered Ukraine security assistance and authority for approving the release of funding for the $141 million in State Department-administered Foreign Military Financing to Ukraine. 400

  Mr. Duffey did not tell Mr. Sandy whether he requested this change in authority but did say that “it was in essence a joint decision reflecting both guidance from the Acting Director and also his support.”401 Over the course of several days, Mr. Duffey explained to Mr. Sandy and others in the National Security Division that “there was interest among the leadership in tracking the uses of moneys [sic] closely.”402 Mr. Duffey expressed an “interest in being more involved in daily operations” and “regarded this responsibility as a way for him to learn more about specific accounts within his area.”403

  Mr. Sandy testified that prior to July 29, he had never heard Mr. Duffey state any interest in approving the release of funding.404 Furthermore, when they learned that Mr. Duffey was taking on this new responsibility, Mr. Sandy and other staff relayed their concerns to Mr. Duffey that it was a substantial workload.405 Mr. Sandy also testified that “people were curious what he thought he would learn from apportionments about the accounts as opposed to the other, you know, sources of information.”406 Mr. Sandy agreed that there are more efficient ways of learning about accounts and programs, and that “I can think of other ways—other materials that I personally would find more informative.”407

  Mr. Sandy was not aware of any prior instance when a political appointee assumed this kind of funding approval authority.408

  After the July 31 interagency meeting at which Ms. Cooper announced that DOD would
have to start obligating the funds on or about August 6, Mr. Duffey sought clarification. 409 Ms. Cooper explained to Mr. Duffey that at a certain point DOD would not have sufficient time to fully obligate the funds before they expired at the end of the fiscal year. In response, Mr. Duffey “wanted more information on the precise nature of how long does it take to obligate, and how many cases, and that sort of thing.” 410 Ms. Cooper referred Mr. Duffey to the DOD comptroller and to the Defense Security Cooperation Agency.411 During the month of August, Mr. Duffey and Ms. McCusker communicated about the implementation of the hold on the Ukraine Security Assistance Initiative funds.412

  On August 6 and August 15, Mr. Duffey approved two more funding documents that contained footnotes with language nearly identical to the footnote in the July 25 funding document that initiated the hold; the only difference was that the date funds would become available for spending was changed from August 5 to August 12.413

  The August 6 and 15 footnotes, and all subsequent footnotes through September 10, continued to state that the hold was in place “to allow for an interagency process to determine the best use of such funds,” even though the final interagency meeting regarding Ukraine security assistance occurred on July 31.414 Not only was there no active interagency process after July, but Ms. Cooper also was not aware of any review of the funding conducted by DOD in July, August, or September.415 In fact, Ms. Cooper noted that months before, DOD had completed its review of whether Ukraine “had made sufficient progress in meeting defense reform and anticorruption goals consistent with the NDAA,” and certified to Congress in May 2019 that Ukraine had met the requirements to receive funding.416 Similarly, Mr. Kent testified that the State Department did not conduct, and was never asked to conduct, a review of the security assistance funding administered by the State Department.417