Labor & Employment Law Daily Wrap Up, LITIGATION NEWS, TRENDS—Court vacates Education Department directive targeting DEI-related teacher training grants, (Sep 18, 2026)

By Brandi O. Brown, J.D.

Finding multiple APA violations, a Massachusetts federal court vacated the agency’s February 2025 directive that prompted the mass termination of teacher-training grants associated with DEI initiatives.

A federal court in Massachusetts has struck down a U.S. Department of Education directive that led to the cancellation of more than 100 teacher-training grants tied to diversity, equity, and inclusion initiatives, and worth hundreds of millions of dollars, ruling that the policy violated federal administrative law and conflicted with statutes governing federal education funding.

Yesterday, U.S. District Judge Angel Kelley granted summary judgment to eight Democratic-led states that challenged the department's February 2025 directive ordering the review and termination of grants supporting DEI-related programs. The plaintiffs included California, Massachusetts, New Jersey, Colorado, Illinois, Maryland, New York, and Wisconsin. The court vacated the directive in its entirety and declared it unlawful under the Administrative Procedure Act.

Ed’s directive. The dispute stems from the Department of Education's February 5, 2025, directive titled "Eliminating Discrimination and Fraud in Department Grant Awards." Issued shortly after President Donald Trump signed executive orders directing federal agencies to remove DEI-related programs, the directive instructed department personnel to review grants and terminate those promoting DEI initiatives deemed inconsistent with department priorities. Within about two weeks, the department terminated 104 of 109 grants reviewed under the policy, including over 40 held by entities in the plaintiff states.

TQP and SEED grants. Many of the canceled awards came through the Teacher Quality Partnership (TQP) program and the Supporting Effective Educator Development (SEED) program, which Congress established to address teacher shortages, improve educator preparation, and expand access to qualified teachers in high-need schools. The states argued that the department unlawfully targeted programs that federal laws expressly contemplate and support.

Litigation. After filing suit and obtaining a temporary restraining order in March 2025, the plaintiff states saw that order stayed by the U.S. Supreme Court while appeals proceeded. The states amended their complaint, the court later ruled it lacked jurisdiction over challenges to individual grant terminations (which should instead go the Court of Federal Claims), but it allowed prospective challenges to the February 2025 directive to continue. The parties then filed cross-motions for summary judgment, leading to yesterday’s ruling.

“DEI” not defined. On the merits, the court found that the directive was both arbitrary and capricious and contrary to law. A central issue was the department's failure to adequately define DEI or explain what activities were prohibited. “A foundational principle of administrative law is that an agency must “define[] and explain[] the criteria the agency is applying,” the court explained. The court said the policy contained no meaningful standards for agency employees or grant recipients. "The Directive nowhere defines 'DEI' or provides examples of prohibited activities," the opinion notes. As a result, the court concluded that the policy failed to provide "the explanation necessary to guide implementation, give TQP and SEED grantees and applicants fair notice, and permit meaningful judicial review."

Prior practice departure. The court also found that the department reversed years of prior policy without acknowledging the change, explaining it “fails to acknowledge, much less explain, the Department’s departure from its prior practice of encouraging DEI programs in TQP and SEED grants.” Through previous grant competitions and priorities published in the Federal Register, the department had encouraged efforts to recruit diverse educators, support underserved students, and create inclusive educational environments. Yet the February 2025 directive abruptly declared DEI-related initiatives unlawful without addressing the agency's prior position. The court noted that "the Department previously expressly encouraged DEI programs in TQP and SEED grants through multiple rules and documents," but the directive "simply announces a new policy without engaging with the factual record or reasoning that supported the Department's prior approach."

Reliance interests. Another major flaw identified by the court related to the failure of the department to consider the states’ substantial reliance interests related to the grants. States, universities, school districts, teachers, and students had developed programs and invested resources in reliance on existing grant requirements and funding expectations. The court wrote that "the reliance interests are many, substantial, and deep-rooted," but found the administrative record devoid of evidence that the department considered those interests before issuing the directive.

The opinion highlighted evidence from several states showing disruptions to teacher-residency programs, professional development initiatives, mentoring efforts, and special education training. The court noted that "teachers across America had significant reliance interests in TQP and SEED grant funding" and concluded that the department acted arbitrarily and capriciously by failing to account for those consequences.

Alternatives not considered. The court also faulted the department for failing to consider less drastic alternatives. Federal grant regulations and civil rights enforcement procedures generally contemplate notice and an opportunity to address compliance concerns before funding is terminated. The court found that the department instead proceeded directly to cancellation. The agency had a reasonable alternative available, including "providing notice and an opportunity to cure," but the administrative record showed no evidence that officials considered that option.

Contrary to law. Beyond procedural deficiencies, the court concluded that the directive conflicted with federal statutes governing the grant programs themselves. The Teacher Quality Partnership law encourages recruitment of minorities and individuals from underrepresented populations into teaching, while the Supporting Effective Educator Development program aims in part to serve traditionally underserved communities. Additionally, the General Education Provisions Act (GEPA) requires grant applicants to address barriers affecting participation based on race, gender, national origin, disability, age, and other characteristics.

The court determined that the department could not lawfully treat diversity- and equity-related activities as suspect when Congress had directed grant recipients to address those issues. It noted that the directive “effectively makes the promotion of DEI-related programs a factor for terminating a grant, even though the statutes require grantees to prioritize funding those very objectives.” The court explained that "agencies may not choose to reject, terminate, or otherwise penalize grant applications based on the very criteria Congress expressly require[s] the agency to promote."

Notice-and-comment. The ruling also found that the department failed to follow notice-and-comment procedures required by the GEPA. The court concluded that the directive established broadly applicable standards with legally binding effects on grant recipients and therefore could not be implemented solely through an internal memorandum.

Not moot. The government also argued that the case was moot because it later adopted separate guidance for continuation grants and had stopped relying on the February 2025 directive. The court rejected that argument, finding that the later guidance neither rescinded nor replaced the challenged policy and that the government had not shown the directive could not be used again. The court also held that the states faced a sufficient risk of future harm to establish standing because new grant applications were pending and could be affected by the directive.

Relief. As a remedy, the court vacated the directive nationwide and issued declaratory relief, but it declined to enter a permanent injunction. The court said those remedies were sufficient because vacatur would "void and rescind the Directive" and ensure that the department could no longer rely on it. In the final order, the court directed that it "VACATES and SETS ASIDE, in its entirety" the February 2025 directive and declared that it "is unlawful because it violates the APA."

The case is No. 1:25-cv-10548.

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