Labor & Employment Law Daily Wrap Up, REMEDIES, DAMAGES—1st Cir.: DOE fails in attempt to stay TRO blocking termination of grant funding for teacher recruitment and training, (Mar 24, 2025)

By Kathleen Kapusta, J.D.

“As the careful reader will note,” the grant termination letters do not specify why any given program is no longer consistent with and no longer effectuates DOE policy.

Denying the Department of Education’s motion to stay pending appeal the TRO entered by a federal court in Massachusetts, which requires the DOE to, among other things, restore the status quo as it stood before it terminated 104 grants awarded to programs that provide for the recruitment and training of teachers and school leaders in traditionally underserved areas, the First Circuit found the DOE failed to properly explain why the programs were being terminated. “This lack of proper explanation,” said the court, “‘will not do,’ because ‘a court [cannot] be expected to chisel that which must be precise from what the agency has left vague and indecisive’” (State of California v. U.S. Department of Education, No. 25-1244 (1st Cir. Mar. 21, 2025)).

Due to concerns about a shortage of qualified teachers and principals in underserved areas, Congress, the court observed, directed the Secretary of Education to earmark certain funds to provide for, among other things, the recruitment and training of teacher and others in these areas. As a result, the Secretary, as relevant here, awarded 109 grants for Teacher Quality Partnership (TQP) and Supporting Effective Educator Development (SEED) programs.

Grant terminations. After President Trump’s inauguration, however, 104 of those programs received boilerplate letters from the DOE purporting to terminate their grants. According to the termination letters, each terminated grant was inconsistent with DOE priorities because it “provides funding for programs that promote or take part in [diversity, equity, and inclusion (DEI)] initiatives or other initiatives that unlawfully discriminate on the basis of race, color, religion, sex, national origin, or another protected characteristic; that violate either the letter or purpose of Federal civil rights law; that conflict with the Department's policy of prioritizing merit, fairness, and excellence in education; that are not free from fraud, abuse, or duplication; or that otherwise fail to serve the best interests of the United States.”

“As the careful reader will note,” said the court, “the letters do not specify why any given program is no longer ‘[]consistent with’ and no longer ‘effectuates[] Department priorities.’ Rather, the letters list in the disjunctive five possible reasons.”

TRO. After eight states within which numerous grant recipients operate sued the DOE, the district court issued a temporary restraining order requiring the Department to, among other things, restore the status quo as it stood prior to the purported terminations. The DOE appealed the TRO and sought a stay pending appeal.

Likelihood of success. Addressing the first of four factors it considers in assessing a motion to stay—the likelihood of success on the merits—the First Circuit turned to the DOE’s claim the district court lacked jurisdiction to hear this lawsuit. The lawsuit, the DOE argued, should have been brought in the Court of Federal Claims because each grant award is a contract between the recipient and the government. While the court agreed that the terms and conditions of the grant awards were at issue, it found that “essence" of the claims were not contractual.

Rather, the court noted, the states challenge the DOE's actions as insufficiently explained, insufficiently reasoned, and otherwise contrary to law, all arguments derived from the Administrative Procedure Act. “The States' claims are, at their core, assertions that the Department acted in violation of federal law -- not its contracts.”

Nor are the states seeking damages owed on a contract or compensation for past wrongs, the court observed, pointing out that they instead are asking the DOE to again make available already-appropriated federal funds for existing grant recipients. Thus, the court found no jurisdictional bar to the TRO on this basis.

Unreviewable? As to the DOE’s contention that these terminations are part of the narrow class of agency actions that are unreviewable in federal court, the court observed that “applicable regulations cabin the Department’s discretion as to when it can terminate existing grants.” In addition, said the court, the statutes establishing the TQP and SEED programs set forth the purposes of the grants, including the recruitment of highly qualified minorities to teach and the directive that recipients provide assurances to the Secretary that participants are trained in providing instruction to diverse populations.

“Certainly,” the court wrote, “given these statutory mandates, the Department could not terminate a grant merely because a recipient program attempts to prepare participating school leaders to serve in traditionally underserved communities; nor could it treat assurances that a program provides training in the instruction of ‘diverse populations’ as a reason to terminate an award.”

Arbitrary and capricious. Addressing the “core of the merits,” the court pointed out that under the APA’s arbitrary-and-capricious standard, an agency action must be reasonable and reasonably explained. While the DOE challenged the district court's conclusion that its termination letters lacked reasoned explanation, the court again pointed out that the termination letters “list up to five disjunctive reasons why the supposedly offending programs are now ‘inconsistent with... Department priorities.’"

DEI. Not only did this leave the grant recipients in a position where they had to guess at the theory underlying the DOE's action, this left the court unable to say whether the Department properly considered all relevant data. Nor could the court say whether the agency had relied on factors that Congress did not intend it to consider in disfavoring programs that feature DEI principles.

The DOE, in an affidavit from its Chief of Staff, asserted that its actual reason for terminating the grants was each program's use of those funds to teach DEI principles, but “that supposed specificity,” the court observed, “is nowhere to be found in the termination letters, which state in the disjunctive five possible grounds for termination.” Instead, the court found the DOE’s “newfound claim of clarity approaches the sort of ‘post hoc rationalization’ that we cannot allow.”

Nor was the court persuaded that the district court erred in rejecting the DOE’s attempts to invoke new priorities as grounds for the terminations. Citing the U.S. Supreme Court’s 2009 FCC v. Fox Television Stations, Inc., decision, the court noted that an agency must show "good reasons for the new policy" and account for "serious reliance interests" engendered by the old one. In addition, this failed to rebut the states' credible assertions that the DOE's priorities must, per federal regulation, be established through formal rulemaking, which the DOE did not do.

Irreparable harm. The DOE also argued that it faces irreparable harm because the TRO allows grant recipients to request up to the entirety of their award monies in a short time-period with limited ability for it to recoup the funds should it prevail on the merits. But, as the states pointed out, recipients submit reimbursement requests for expenses already incurred and there was no evidence of any attempt at any such a withdrawal by any recipient.

Acknowledging that the district court’s order required the DOE to continue making payments that would otherwise be due but for the terminations, the court found the DOE might incur some irreparable harm it if were unable to recoup the money. However, the court pointed out, the DOE has not yet shown recoupment is implausible and the funds would go to programs for which Congress intended. Moreover, the states provided evidence of the practical impacts of cutting off grants, including staff layoffs, program disruptions, and the halting of stipends to currently enrolled teachers and the DOE provided no compelling rebuttal. Accordingly, the court found unavailing the DOE’s assertion the public interest aligns with its interests.

Overbroad. Finally, the DOE’s argued that the TRO is overbroad because it applies to several grant recipients that are located within the states but that are only affiliated with the state or that are local school districts rather than state instrumentalities and the district court did not meaningfully explain its understanding that each recipient is in fact an instrumentality of a state. Because the parties have not yet briefed the relationship between the states, their school districts, and nonprofit entities "affiliated" with the states, the court found it premature to address the adequacy of this explanation given that hearing for a preliminary injunction was scheduled to be held shortly.

Accordingly, the court denied the DOE’s motion for a stay pending appeal.

The case is No. 25-1244.

Judge: Kayatta, W., Jr.

Attorneys: Yaakov M. Roth, Acting Assistant Attorney General, for U.S. Department of Education. Rob Bonta, Attorney General of California, Andrea Joy Campbell, Attorney General of Massachusetts, Matthew J. Platkin, Attorney General of New Jersey, Philip J. Weiser, Attorney General of Colorado, Kwame Raoul, Attorney General of Illinois, Anthony G. Brown, Attorney General of Maryland, and Joshua L. Kaul, Attorney General of Wisconsin, for the State Plaintiffs.

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