Happy Friday and welcome to Overnight Defense. I’m Rebecca Kheel, and here’s your nightly guide to the latest developments at the Pentagon, on Capitol Hill and beyond. CLICK HERE to subscribe to the newsletter.

THE TOPLINE: A federal appeals court in California ruled Friday that the Trump administration’s use of Pentagon funding to build a wall along the U.S.-Mexico border is illegal.

In a 2-1 ruling, the 9th Circuit Court of Appeals found that President Trump’s diversion of defense, military and other funding — billions of dollars that were not originally earmarked for border wall construction — violated the Appropriations Clause of the Constitution, which gives Congress the exclusive power of the purse.

“These funds were appropriated for other purposes, and the transfer amounted to ‘drawing funds from the Treasury without authorization by statute and thus violating the Appropriations Clause,’ ” the majority wrote. “Therefore, the transfer of funds here was unlawful.”

Background: Legal challenges arose early last year after Trump declared a national emergency at the southern border. Trump’s declaration sought to free up additional funding after a congressional spending bill allocated some $1.3 billion for border security, far short of the nearly $5 billion Trump said was needed to complete his signature project.

Last year, after Trump declared the emergency, he took $3.6 billion from military construction funds for the wall. Separately last year, the administration also moved $2.5 billion from various Pentagon accounts into its counterdrug account to fund the wall. 

This year, the administration moved another $3.8 billion, largely from weapons programs, into the counterdrug fund for the wall.

Friday’s ruling focused on last year’s $2.5 billion transfer into the counterdrug account.

Other cases: The practical effect of the ruling was not entirely clear because the Supreme Court last July ruled 5-4 that Trump could begin spending $2.5 billion in reallocated Pentagon funds to build the border wall while the legal challenges proceeded through the courts.

A related challenge brought by House Democrats is pending before the U.S. Court of Appeals for the D.C. Circuit. In April, the D.C. Circuit heard arguments that centered on whether courts have the power to referee the fight between Congress and the White House, or if its resolution should be left up to the political process.

ESPER HUDDLES WITH NATO: Defense Secretary Mark Esper was in Brussels on Friday meeting with NATO Secretary-General Jens Stoltenberg.

The international travel and in-person meeting, a rarity in the time of coronavirus, comes after Trump blindsided allies by announcing plans to withdraw thousands of U.S. troops from Germany.

In a statement after the meeting, Stoltenberg said the “U.S. military presence in Europe is important for Europe, and it’s also important for North America. Because only by working together can we address the great challenges we face.”

A Pentagon statement on the meeting said Esper “reaffirmed the U.S. commitment to NATO and transatlantic security, and the importance of working together to address security challenges.”

The pair also discussed NATO’s response to the coronavirus pandemic, Russian behavior in the region, arms control, the counter-ISIS fight, efforts at Afghanistan peace talks, defense spending and “the importance of key partnerships,” according to the Pentagon statement.

NDAA AMENDMENTS ROLL IN: Hundreds of amendments to the Senate’s National Defense Authorization Act (NDAA) have already been filed this year.

As we’ve noted before, few, if any, amendments typically get votes amid disputes about which ones will be considered, but that doesn’t stop senators from filing them.

As previously reported, Sen. Josh Hawley (R-Mo.) introduced his amendment to take out the requirement that the Pentagon rename Confederate-named bases.

After tweeting she would, Sen. Kirsten Gillibrand (D-N.Y.), along with Sen. Susan Collins (R-Maine), introduced an amendment to grant anti-discrimination protections to LGBTQ service members. The amendment comes after the Supreme Court ruling barring discrimination against LGBT workers.

Sen. Bernie Sanders (I-Vt.) and other progressives are touting his amendment to cut the Pentagon budget by 10 percent to pay for a grant program for health care, housing, childcare and educational opportunities in areas with high poverty rates. In a floor speech Thursday, he described the amendment as “investing that money in human needs.”

As of Friday afternoon, congress.gov lists 529 amendments. Take a gander here.

The Senate is scheduled to vote Monday on the motion to proceed to the bill. The first procedural vote Thursday easily passed 90-7.

RUSSIAN INTEL UNIT REPORTEDLY OFFERED BOUNTIES FOR TROOP DEATHS IN AFGHANISTAN: A Russian military unit secretly sought to offer rewards to Taliban-linked militants in order to incentivize them to hunt and kill coalition forces in Afghanistan as the Trump administration engaged in peace talks to end the nearly two-decade long war, U.S. intelligence officials have reportedly concluded.

The New York Times, citing officials briefed on the matter, reported Friday that the U.S. intelligence apparatus has known for months about the alleged efforts of the Russian military intelligence unit, which reportedly provided rewards to militants for successful attacks last year.

U.S. troops were among the targeted coalition forces, according to the Times, which reported that some militants or associated entities are believed to have received reward money.

While 20 Americans died last year in combat in Afghanistan, it is unclear how many — or which specific cases — are linked to the killing bounties, the newspaper reported.

Trump and other intelligence officials on the National Security Council reportedly discussed the matter in a meeting in late March, where they weighed a series of potential responses. However, no formal steps have been made, the Times reported.

ON TAP FOR MONDAY

Deputy Secretary of State Stephen Biegun will speak at the German Marshall Fund’s virtual Brussels Forum at noon. https://bit.ly/3fSCUqq

ICYMI

— The Hill: Trump administration to extend troops at the border through 2021

— The Hill: US puts visa restrictions on Chinese officials over tensions with Hong Kong

— Inside Defense: House Democrats probing Navy after Trump’s ‘location’ remarks in Wisconsin

— Navy Times: US Navy’s chief learning officer announces departure as Pentagon exodus continues

— Washington Post: Coronavirus sweeps through Afghanistan’s security forces

— New York Times: Defense secretary faces White House pressure on aides and a military promotion

— Foreign Policy: Trump mulls ending heads-up to Congress on U.S. weapons sales