A State Department legal team said that the White House Office of Management and Budget (OMB) could not legally block aid, Bloomberg reported, citing sources familiar with the matter.
According to the media report, the State Department decision stemmed from a legal finding made earlier in the year and conveyed in a classified memorandum to US Secretary of State Michael Pompeo.
The Trump administration halt on aid to Ukraine - including a separate $250 million package of military aid from the US Department of Defence - has become a central issue in the impeachment trial of the US president, after a September whistleblower complaint alleged that Trump ordered the aid held back to force Ukraine to investigate whether the business dealings of former Vice President Joe Biden and his Hunter Biden in Ukraine involved corrupt practices.
According to the media report, the law requires both the State and the Defence Departments to spend the money by the end of the fiscal year - on 30 September - or lose it. In reality, the aid needed to begin moving through the system two weeks earlier - around 15 September - due to the requirement of a two-week notification to Congress, Bloomberg said.
The memo to Pompeo reportedly determined that the State Department had the authority to spend the money, regardless of what Trump was saying through the OMB, and would start the process by 7 September, according to the media report.
Then-National Security Adviser, John Bolton, reportedly green-lighted the aid to Ukraine on 9 September by telling the State Department that the funding could go ahead, Bloomberg said.
White House officials, however, viewed the move as a violation of protocol and stated that it had come as a surprise to acting Chief of Staff Mick Mulvaney, Bloomberg reported, citing a source familiar with the matter.
House Democrats launched an impeachment inquiry into Trump after a whistleblower report highlighted a telephone conversation the US president had with Ukrainian President Zelensky in which the former appeared to request favors from the latter allegedly in exchange for the aid.
The inquiry is being held primarily on the grounds of abusing presidential powers and withholding military aid for Ukraine in exchange for the investigation - thereby inviting a foreign power to interfere in the US election. Trump denies the charges, describing them as a political "witch hunt".
