State of California v. US Department of Education
132 F.4th 92
1st Cir.2025Background
- Congress directed the Secretary of Education to provide grants for teacher and principal recruitment and training, especially for underserved communities, under several statutory programs (TQP and SEED).
- The U.S. Department of Education awarded 109 such grants, most of which were operational until the Department suddenly issued termination letters to 104 recipients, citing possible noncompliance with Department priorities (including DEI initiatives).
- Eight states, within which many affected entities operate, challenged the terminations and obtained a temporary restraining order (TRO) from the District Court, requiring restoration of the grants pending litigation.
- The Department appealed the TRO and simultaneously moved for a stay of the district court's order pending appeal.
- The First Circuit Court's opinion addresses only the Department's motion for a stay, not the underlying merits of the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| District Court Jurisdiction | District court can review under the APA (not just contract). | Only the Court of Federal Claims has jurisdiction over grants. | District court has jurisdiction; APA claim is proper. |
| Reviewability of Agency Action | Agency's termination authority is cabined by statute/regulation. | Discretionary grant terminations are unreviewable in court. | Terminations are reviewable due to regulatory limits. |
| Arbitrary & Capricious Standard (APA) | Termination notices were vague, lacked reasoned explanation. | Notices listed reasons; allowed for later clarification. | Agency’s action likely arbitrary & capricious. |
| Irreparable Harm & Stay Factors | Harm to teacher pipelines; practical impacts cannot wait. | TRO risks unrecoverable grant disbursements to recipients. | No strong showing of irreparable harm by Department. |
Key Cases Cited
- Sampson v. Murray, 415 U.S. 61 (regarding when a TRO is appealable and reviewable).
- Lincoln v. Vigil, 508 U.S. 182 (discussing the principle of unreviewable agency discretion with appropriated funds).
- FCC v. Prometheus Radio Project, 592 U.S. 414 (stating the APA’s arbitrary-and-capricious requirement means agency action must be reasonable and explained).
- Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (arbitrary and capricious review requires a rational connection between facts and decision).
- SEC v. Chenery Corp. (Chenery II), 332 U.S. 194 (agency’s reasons must be stated with clarity for judicial review).
- Bowen v. Massachusetts, 487 U.S. 879 (suits for compliance with statutory mandates are not Tucker Act contract claims).
- Nken v. Holder, 556 U.S. 418 (listing factors for granting a stay pending appeal).
- DHS v. Regents of the Univ. of Cal., 591 U.S. 1 (agency required to consider reliance interests when changing policy).