The Fourth Circuit Court of Appeals vacated and remanded a district court’s injunctions that enjoined federal defendants from freezing or terminating funding awarded to plaintiffs under the Inflation Reduction Act and other laws. Regarding the permanent injunction granted on the plaintiffs’ Administrative Procedure Act (APA) claims, the Fourth Circuit ruled that the district court lacked jurisdiction because the plaintiffs’ claims were essentially contractual in nature and subject matter jurisdiction therefore was vested exclusively in the Court of Federal Claims. The Fourth Circuit found “no meaningful difference” between the district court’s order and the district court’s order in Department of Education v. California, in which the Supreme Court stayed the district court order pending appeal, finding that the federal government was likely to succeed in showing that the district court lacked jurisdiction to enjoin termination of federal grants because the APA’s “limited waiver of immunity” did not extend to enforcing contractual obligations to pay money. The Fourth Circuit concluded that the Supreme Court’s subsequent decision in National Institutes of Health v. American Public Health Association “further confirmed” the conclusion that the district court in this case lacked jurisdiction. Regarding the plaintiffs’ claims that the federal defendants’ actions violated separation of powers and the Presentment Clauses of the Constitution and were ultra vires, the Fourth Circuit found that the constitutional claims were merely statutory claims “recast” as constitutional claims and therefore were not reviewable. The Fourth Circuit further found that because the plaintiffs failed to identify a specific prohibition on the freezing or termination of their grants, their ultra vires claim did not fall within “the painstakingly delineated procedural boundaries” of nonstatutory ultra vires review. Because the district court had focused on the freezing and termination of the plaintiffs’ particular grants, the Fourth Circuit did not express a view on the merits of the plaintiffs’ “program cancellation” theory, which alleged that the defendants effectively terminated entire programs that were statutorily mandated. The Fourth Circuit indicated the district court could consider this theory on remand.

Community groups' and cities' lawsuit alleging that the Trump administration had unlawfully and arbitrarily frozen federal grant funds, including for programs and projects to reduce greenhouse gas emissions.

Sustainability Institute v. Trump

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Fourth Circuit Vacated Injunctions on Federal Government Terminations of Funding Under Inflation Reduction Act and Other Laws

Filed

United States of America

South Carolina

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Fourth Circuit Vacated Injunctions on Federal Government Terminations of Funding Under Inflation Reduction Act and Other Laws

Policy instrument

Risk

Impacted group

Economic sector

Finance