Administrative – District court erred when it ordered restoration of government grants

Where the district court issued a permanent injunction directing the federal government to restore frozen environmental and agricultural grants it had previously awarded to several nonprofit organizations and local governments, it erred.

Background

In early 2025, the federal government suspended or terminated environmental and agricultural grants it had previously awarded to several nonprofit organizations and local governments. The grantees sued, alleging that the government violated the Administrative Procedure Act, or APA, certain appropriations statutes and the Constitution by terminating or suspending their grants.

The district court issued a permanent injunction on plaintiffs’ APA claims, “[s]et[ting] aside the freeze and/or termination” of plaintiffs’ grants and directing the government to “restore Plaintiffs[’] access to grant funds immediately.” It also issued a preliminary injunction on plaintiffs’ ultra vires and nonstatutory review claims, enjoining the government “from freezing and/or terminating” plaintiffs’ grants and again “direct[ing] that Plaintiffs[’] access to funding for these grants be immediately restored.”

The government appealed, and this court stayed the district court’s injunctions pending appeal.

Jurisdiction

The government first argues that the district court lacked jurisdiction over plaintiffs’ APA claims because those claims are essentially contractual and therefore belong in the Court of Federal Claims. The court agrees.

The Tucker Act gives the Court of Federal Claims jurisdiction over “any claim against the United States founded . . . upon any express or implied contract with the United States.” When it applies, the Tucker Act “vest[s] subject matter jurisdiction exclusively in” the Court of Federal Claims. To determine whether a claim is “at its essence a contract claim,” courts examine “the source of the rights upon which the plaintiff[s] base[] [their] claims” and “the type of relief sought (or appropriate).”

The Supreme Court’s recent decision in Department of Education v. California is instructive. Like in California, the government here froze or terminated grants en masse, allegedly without individualized analysis. Like in California, plaintiffs here sought restoration of their specific grants under the APA. And like in California, that relief is exactly what the district court awarded. If the California district court lacked jurisdiction to issue its order, it follows that the district court here did as well.

Plaintiffs insist that their APA claims “arise from the Constitution and federal statute, not from contracts.” The Supreme Court, however, considered and rejected the same argument in California and National Institutes of Health v. American Public Health Association. The upshot is that the alleged statutory and constitutional violations do not alter the essentially contractual nature of plaintiffs’ APA claims before this court on appeal.

Plaintiffs next argue that their APA claims are not essentially contractual because they seek “forward-looking injunctive and declaratory relief.” The court again disagrees. To start, the relief ordered by the district court here and the relief ordered by the district courts in California and National Institutes of Health are substantially the same. This court sees no meaningful distinction between the relief ordered here and the relief ordered in those cases, which the Supreme Court determined was sufficiently contractual to trigger the Tucker Act.

For these reasons, the district court lacked jurisdiction to adjudicate plaintiffs’ APA claims challenging the freezing or termination of their grants and to order enforcement of those grants. The permanent injunction is therefore vacated.

Preliminary injunction

Turning to the preliminary injunction the district court entered on “Plaintiffs’ Separation of Powers and ultra vires claims,” the government argues that plaintiffs’ claims exceed the limited bounds of nonstatutory review. The court agrees.

Both of plaintiffs’ constitutional claims assert that because executive officials and agencies violated statutes, they also violated the Constitution. At their core, both claims “simply alleg[e] that the [government] has exceeded [its] statutory authority.” The claims are therefore “statutory one[s].” Plaintiffs’ attempt to cast their claims as constitutional, and not statutory, fails under Supreme Court precedent.

Because plaintiffs’ claims are statutory, they must stay within “the painstakingly delineated procedural boundaries” of “nonstatutory ultra vires review.” One of these boundaries is that plaintiffs must show that the government “has taken action entirely in excess of its delegated powers and contrary to a specific prohibition in a statute.” Thus far, they have failed to do so. The preliminary injunction based on those claims is therefore vacated.

Vacated and remanded.

The Sustainability Institute v. Trump, Case No. 25-1575, Jan. 21, 2026. 4th Cir. (Rushing), from DSC at Charleston (Gergel). Sean R. Janda for Appellants. Kimberley Hunter for Appellees. VLW 026-2-024. 31 pp.