It's been a minute since the Trump administration notched a notable win in the appellate courts, but Wednesday brought another one for them. This one involves issues undergirding a number of the legal challenges brought against the government since President Trump retook office one year ago: federal grant suspension/termination.
The case is The Sustainability Institute v. Trump and involves the federal government's suspension or termination of environmental and agricultural grants previously awarded to non-profit organizations and local governments. Those entities sued Trump and several members of his administration and related agencies, asserting that those suspensions/terminations violated the Administrative Procedure Act, certain appropriations statutes, and the Constitution.
South Carolina District Court Judge Richard Gergel granted a permanent injunction on the APA claims and a preliminary injunction on the ultra vires and nonstatutory review claims in May, and the administration appealed to the 4th Circuit. On Wednesday, a three-judge panel, consisting of Judge Paul Niemeyer (Bush 41), Judge Allison Jones Rushing (Trump), and Judge Toby Heytens (Biden), vacated the district court's order and remanded the case to the district court for further proceedings consistent with their opinion.
The key to the 4th Circuit's ruling is that the APA claims are essentially contractual in nature, and thus, as the Supreme Court noted in its ruling last April in Department of Education v. California, "the Tucker Act grants the Court of Federal Claims jurisdiction over suits based on 'any express or implied contract with the United States.'” From the 4th Circuit's opinion:
The upshot is that the alleged statutory and constitutional violations do not alter the essentially contractual nature of Plaintiffs’ APA claims before us on appeal. “The core of [P]laintiffs’ suit alleges that the Government unlawfully terminated their grants.” Id. at 2665 (Kavanaugh, J., concurring in part and dissenting in part). And Plaintiffs identify no source of law, besides their grant agreements, guaranteeing them the relief they seek: continued payments on those grants. At bottom, Plaintiffs’ “injury and alleged right to payment stem from the government’s refusal to pay promised grants according to the terms and conditions that accompany them.” Id. at 2664 (Gorsuch, J., concurring in part and dissenting in part). Under the Supreme Court’s recent decisions, “the source of the rights upon which the plaintiff[s] base[] [their] claims” is thus contractual. Megapulse, 672 F.2d at 968.
Since the claims in question belong in the Court of Federal Claims, the South Carolina District Court does not have jurisdiction over them.
That Didn't Take Long: D.C. Circuit Places Stay on Key Ruling That Favored Trump Administration
As to the appropriations/constitutional claims, the 4th Circuit similarly found the plaintiffs' arguments unavailing, determining that plaintiffs failed to show the government's action was "entirely in excess of its delegated powers and contrary to a specific prohibition in a statute."
The problem, however, is that Plaintiffs have identified no statute “specific[ally] prohibit[ing]” the Government from freezing or terminating their grants. Nuclear Regul. Comm’n, 145 S. Ct. at 1776 (internal quotation marks and emphasis omitted). The appropriations statutes cited by Plaintiffs appropriate funds for particular programs and goals. But none of them purport to tell the Government that it must contract specifically with Plaintiffs. Cf. Lincoln v. Vigil, 508 U.S. 182, 192 (1993) (explaining that “the very point of a lump-sum appropriation is to give an agency the capacity to adapt to changing circumstances and meet its statutory responsibilities in what it sees as the most effective or desirable way”). Absent a statute specifically prohibiting the Government from freezing or terminating Plaintiffs’ grants, the district court erred in finding that the Government likely acted ultra vires in freezing or terminating those grants. See Nuclear Regul. Comm’n,145 S. Ct. at 1776. It follows that the court’s awarded remedy—“direct[ing] that Plaintiffs[’] access to funding for [their] grants be immediately restored”—was also error. Sustainability Inst., 784 F. Supp. 3d at 878.
So, this is definitely a win for the Trump administration — for now. Plaintiffs may well seek rehearing en banc, which could, of course, reverse the panel decision, though the makeup of the 4th Circuit is such that it may be a closer call, particularly given that one of the judges signing off on this opinion is a Biden appointee.
While a similar victory in the D.C. Circuit was subsequently reversed by that court en banc, I've a sneaking suspicion that the bulk of the cases involving federal grant suspensions and terminations are going to ultimately go the way of this one. We'll certainly be keeping tabs on how they play out and report on any developments as warranted.
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