APA Jurisdiction Bar to Injunctions Compelling Federal Grant Disbursements: Grant-Freezes and Terminations Sounding in Contract Must Proceed Under the Tucker Act

1. Introduction

Ten nonprofit grantees under U.S. Citizenship and Immigration Services’ “Citizenship and Integration Grant Program” sued the Department of Homeland Security (DHS), USCIS, and agency leadership after DHS (i) froze grant disbursements and (ii) later terminated the awards. The freeze followed an executive order directing DHS to review immigration-related grants and pause funding during review; DHS Secretary Kristi Noem implemented that directive through a January 28, 2025 memorandum, and USCIS notified grantees by a February 4, 2025 letter. On March 27, 2025, DHS procurement formally terminated grants, citing 2 C.F.R. § 200.340(a)(2) and “the Department’s priorities.”

The grantees alleged that the “dismantling” of the Grant Program violated the Administrative Procedure Act (APA), separation of powers, due process, ultra vires limits, and the First Amendment (retaliation). For preliminary relief, they asked the district court to stop “terminating grant awards” and “pausing, freezing, impeding, or blocking the disbursement of grant funds,” emphasizing cash-flow harms, staffing cuts, and service disruption.

The district court denied a preliminary injunction, holding plaintiffs were unlikely to succeed because (primarily) the court likely lacked subject-matter jurisdiction: the claims were essentially contract-based and belonged in the Court of Federal Claims under the Tucker Act; and (alternatively) plaintiffs failed to identify a discrete, reviewable “final agency action” for their broader “dismantling” theory under the APA.

2. Summary of the Opinion

The Fourth Circuit affirmed. The majority held that the requested preliminary injunction was, in substance, an order to enforce the government’s alleged contractual obligation to pay under grant agreements. Under the Supreme Court’s recent stay orders in Department of Education v. California and National Institutes of Health v. Public Health Association, the APA’s waiver of sovereign immunity does not supply jurisdiction for such relief. Because the plaintiffs’ motion sought to “restore” funding and prevent “blocking the disbursement of grant funds,” the district court did not abuse its discretion in concluding plaintiffs were unlikely to succeed on jurisdictional grounds.

The majority also endorsed the district court’s view that plaintiffs’ separation-of-powers and ultra vires theories lacked adequate supporting legal authority—specifically, plaintiffs identified no statutory language compelling the expenditure of the appropriated funds in the way plaintiffs demanded.

Judge Heytens dissented, arguing that National Institutes of Health v. American Public Health Association (as discussed in the dissent) suggests district courts may have jurisdiction to consider vacatur of certain “internal guidance” even if grant-payment relief is barred, and that plaintiffs had at least a colorable argument based on appropriations language providing that funds “remain available.”

3. Analysis

3.1 Precedents Cited

• Megapulse, Inc. v. Lewis, 672 F.2d 959 (D.C. Cir. 1982)
  The district court applied Megapulse’s framework (source of rights and type of relief) to determine whether claims styled as APA or constitutional challenges are actually contract claims. The Fourth Circuit did not re-run that test in detail, but it endorsed the district court’s core move: looking through labels to the practical effect of the requested injunction—payment and continued funding under grant agreements.
• United States v. J&E Salvage Co., 55 F.3d 985 (4th Cir. 1995)
  The opinion notes the Fourth Circuit previously adopted the Megapulse approach in J&E Salvage. This anchors the district court’s “contract-disguised-as-APA” analysis in circuit precedent, but the majority’s decisive authority becomes the Supreme Court’s more recent grant-termination stay decisions.
• Department of Education v. California, 604 U.S. 650 (2025)
  The majority treats California as governing. There, the Supreme Court stayed an injunction that required the government to pay “past-due grant obligations” and continue paying as obligations accrued, holding the government was likely to succeed in showing the APA did not confer jurisdiction to order payment of money under grants. The Fourth Circuit reads the plaintiffs’ requested “restore” order here as materially similar—functionally compelling disbursement/reimbursement under grant agreements.
• National Institutes of Health v. Public Health Association, 145 S. Ct. 2658 (2025)
  The majority relies on NIH to reinforce California, emphasizing that district courts lack APA jurisdiction to adjudicate claims “based on” grant agreements or to order relief designed to enforce an “obligation to pay money” pursuant to those grants. The Fourth Circuit underscores that the conduct at issue—terminations/freezes and an injunction effectively reinstating funding—tracks the pattern in NIH.
• Great-West Life & Annuity Ins. v. Knudson, 534 U.S. 204 (2002)
  Quoted through California for the principle that the APA’s waiver does not extend to orders “to enforce a contractual obligation to pay money.” This functions as the doctrinal bridge: even “equitable” forms of relief may be jurisdictionally barred if they operate as contract enforcement for payment.
• Bowen v. Massachusetts, 487 U.S. 879 (1988)
  Plaintiffs invoked Bowen to argue district courts can order relief that may incidentally require disbursement of funds. The majority responds that California addressed and rejected that reliance when the relief is, in substance, enforcing a contractual payment obligation—placing this case on the barred side of the line.
• Norton v. S. Utah Wilderness Alliance, 542 U.S. 55 (2004)
  Cited for the APA requirement that review must be tethered to discrete agency action, not broad programmatic challenges. The district court’s alternative holding—that plaintiffs failed to identify a discrete “final agency action” underlying the “dismantling” claim—draws support from SUWA.
• Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) and Real Truth About Obama, Inc. v. Fed. Election Comm'n, 575 F.3d 342 (4th Cir. 2009)
  These cases supply the preliminary-injunction framework: likelihood of success is mandatory and must be shown by a “clear showing.” The majority uses that threshold to affirm without reaching the other factors once jurisdictional likelihood of success fails.
• Trump v. Boyle, 145 S. Ct. 2653 (2025)
  Cited for the idea that Supreme Court stay decisions “inform how a court should exercise its equitable discretion in like cases.” The Fourth Circuit uses this to justify treating California and NIH as practically controlling at the preliminary-injunction stage.
• The Sustainability Institute v. Trump, No. 25-1575, 2026 WL 157120 (4th Cir. Jan. 21, 2026) (dissent)
  The dissent references this decision to argue the present case is different because the district court here did address (and reject) jurisdiction over directives like the Noem memorandum and the USCIS freeze letter.
• National Veterans Legal Servs. Prog. v. United States Dep't of Def., 990 F.3d 834 (4th Cir. 2021) (dissent)
  The dissent invokes this case to frame what might qualify as reviewable agency action: a “final determination” regarding obligations. It proposes the district court should analyze whether the memorandum/letters were final agency determinations that DHS had no obligation to spend the appropriated funds.

3.2 Legal Reasoning

The majority’s reasoning is less about the merits of the grant freeze/termination and more about forum and remedy: whether a district court can, via the APA and equitable relief, order the federal government to resume or continue grant disbursements.

(a) Focusing on the motion’s requested relief.
The court repeatedly emphasizes the procedural posture: only the denial of a preliminary injunction is on appeal. That matters because the requested order was explicit: stop dismantling, including by “blocking the disbursement of grant funds.” The majority treats that requested order as the functional equivalent of compelling payment under the grant agreements.

(b) Sovereign immunity and the APA/Tucker Act line.
The opinion frames the jurisdictional question through the “two statutes” that waive sovereign immunity in different ways:

• APA (5 U.S.C. § 702; § 704): permits district-court review of agency action only for “relief other than money damages” and only where there is “no other adequate remedy.”
• Tucker Act (28 U.S.C. § 1491(a)(1); § 1346(a)(2)): channels contract claims against the United States seeking more than $10,000 in monetary relief to the Court of Federal Claims.

Applying California and NIH, the court holds that a district court lacks APA jurisdiction where the requested injunction is “designed to enforce” an “obligation to pay money” under grant agreements. The majority treats plaintiffs’ “restore the program” phrasing as a label that cannot change the remedy’s substance: unfreezing funds and paying reimbursements/continuing payments.

(c) Rejection of the Bowen framing.
Plaintiffs attempted to recast the injunction as forward-looking, non-damages relief. The majority answers that the Supreme Court in California already considered and limited Bowen v. Massachusetts: even if vacatur/set-aside sometimes leads to funds being disbursed, the APA does not authorize orders that are, in practical effect, contract-payment enforcement.

(d) Ultra vires and separation of powers as an “independent basis.”
The majority accepts the district court’s additional point: plaintiffs’ non-APA theories did not show a likelihood of success because plaintiffs cited no statutory text or other controlling law establishing that DHS/USCIS were legally required to disburse the appropriated funds in the manner plaintiffs sought. In other words, even if Tucker Act channeling did not completely resolve these theories, plaintiffs had not shown an enforceable legal mandate to support preliminary relief.

(e) Alternative APA defect: “final agency action” and discreteness.
The district court also held plaintiffs failed to identify a discrete agency action for the “dismantling” theory, invoking Norton v. S. Utah Wilderness Alliance. The majority does not substantially elaborate, because its principal holding—jurisdictional bar to relief compelling grant payment—already defeats the motion. The dissent, however, would force a more granular analysis of whether the Noem memorandum, freeze letter, and termination letters are discrete and final.

3.3 Impact

(1) Practical rule for grant litigation in the Fourth Circuit. The opinion signals a strong, post-California/NIH skepticism toward preliminary injunctions in district court that would, in effect, require agencies to resume paying under terminated or frozen grants. Litigants seeking continued funding should expect courts to characterize such relief as contract enforcement and direct the dispute toward the Court of Federal Claims under the Tucker Act—particularly where the asserted entitlement to funds is grounded in individual award terms rather than a statute conferring a clear payment right.

(2) Labeling a dispute “program dismantling” may not avoid Tucker Act channeling. Even when plaintiffs frame the issue as a broader APA challenge to “dismantling” a program, the Fourth Circuit will scrutinize whether the requested order still operates as payment enforcement for grant recipients.

(3) Narrow opening suggested by the dissent (but not adopted). The dissent reads NIH to leave room for district-court jurisdiction over vacatur of certain guidance or directives—even when the directives relate to grants—provided the relief is legally distinct from compelling payment. While not controlling, the dissent sketches a roadmap for future plaintiffs: plead and seek relief aimed at invalidating a discrete directive as unlawful (and show “final agency action”), while avoiding an injunction that directly compels disbursement under particular grant agreements.

(4) Appropriations language “remain available” as a possible future battleground. The majority deemed plaintiffs’ separation-of-powers and ultra vires support insufficient; the dissent suggests the “remain available” appropriations phrasing could support a claim that executive-branch directives contradict Congress’s funding availability decision. Future cases may test what additional statutory hooks (e.g., mandatory spending language, apportionment constraints, or specific program directives) are needed to make such a theory viable.

4. Complex Concepts Simplified

• Sovereign immunity: The federal government cannot be sued unless it clearly consents. Statutes like the APA and Tucker Act are “waivers” that allow some suits—but only within their limits.
• APA “relief other than money damages”: Even if a plaintiff asks for “injunction” or “vacatur,” courts ask what the order would do. If it effectively forces the government to pay money because of a contract, it may fall outside the APA waiver.
• Tucker Act channeling: Contract-based monetary claims against the United States generally belong in the Court of Federal Claims (and not in district court), especially when the amounts exceed $10,000.
• “Money damages” vs. “specific relief”: Plaintiffs often argue they seek “specific relief” (the funds promised) rather than “damages.” The Supreme Court decisions the majority relies on stress that, for grants, an order compelling payment under the agreement is treated as enforcing a payment obligation and thus not within the APA waiver.
• Final agency action / discrete agency action: The APA usually allows review only of a concrete, final agency decision (like a definitive termination letter), not a general complaint that an agency is running a program badly or “dismantling” it in the abstract.
• Ultra vires: A claim that officials acted beyond their legal authority. Courts generally require a clear legal limit that was exceeded.
• Separation of powers in spending: Congress appropriates funds; the executive executes the law. Disputes arise when the executive delays or halts spending. To win, plaintiffs typically must identify a legal command that spending must occur (not merely that spending is permitted).

5. Conclusion

Solutions in Hometown Connections v. Noem applies the Supreme Court’s recent grant-termination stay decisions to hold that district courts in the Fourth Circuit are unlikely to have APA jurisdiction to issue preliminary injunctions that, in practical effect, compel federal agencies to unfreeze or resume paying grant funds—because such relief enforces alleged contractual payment obligations and is channeled to the Court of Federal Claims under the Tucker Act. The decision also signals that separation-of-powers and ultra vires theories will not supply an “independent” path to preliminary relief without a clearly identified statutory mandate. The dissent highlights a potential narrower path—vacatur of discrete directives as reviewable agency action—but the majority’s holding makes continued-grant-funding injunctions in district court markedly harder to obtain.