Judicial Safeguard Against Unlawful Agency Closure Through Mass Terminations

Introduction

The case of State of New York v. McMahon (First Circuit, June 4, 2025) arises from a sweeping reduction in force (“RIF”) announced by the U.S. Department of Education that eliminated roughly half of its workforce. Twenty-one States and, separately, five labor organizations and two public school districts sued the Secretary of Education, the Department, and the President in the District of Massachusetts. They argued that the RIF—and a presidential directive to transfer key department functions to other agencies—violated the Constitution’s separation of powers and the Administrative Procedure Act (APA). The district court consolidated the suits, made extensive factual findings, and granted a preliminary injunction blocking the RIF and the planned transfers. The Department and the executive officials now seek a stay of that injunction pending appeal.

Summary of the Judgment

The First Circuit denied the stay application. It applied the four-factor test for interim relief (Nken v. Holder and Hilton v. Braunskill) and concluded that:

Likelihood of success: The appellants failed to make a strong showing of error in the district court’s detailed factfinding that the RIF “effectively disable[d]” the Department from performing its statutorily assigned functions, and in its APA ruling that the RIF and transfers were ultra vires and “arbitrary and capricious.”
Irreparable harm: While the government would suffer some harm if required to continue paying reinstated employees, the plaintiffs would face unrecoverable harms—loss of education‐related services—if the injunction were stayed.
Balance of the equities: The risk of disabling the Department’s core functions outweighs the government’s asserted management burdens.
Public interest: Courts have a strong public‐interest stake in enforcing federal statutes and preserving agencies’ ability to discharge their duties.

Accordingly, the stay was denied and the injunction stands.

Analysis

1. Precedents Cited

Administrative Procedure Act (APA): 5 U.S.C. § 706(2)(A) (agency action “contrary to law”) and § 706(2)(C) (arbitrary and capricious review).
Department of Education Act: 20 U.S.C. §§ 3401–3510, establishing the Department and assigning it specific statutory functions.
Nken v. Holder (556 U.S. 418, 2009): Four‐factor test for stays of preliminary injunctions.
Hilton v. Braunskill (481 U.S. 770, 1987): Framework for balancing equities and public interest in stay analysis.
Clapper v. Amnesty International USA (568 U.S. 398, 2013): Standard for Article III standing requiring injuries to be “certainly impending.”
CSRA Jurisprudence: Berrios v. Dept. of Army, Fausto, and related cases discussing the Civil Service Reform Act as an exclusive remedy for certain personnel disputes.
Block v. Community Nutrition Institute (467 U.S. 340, 1984): Limits on judicial review where Congress provided a specific review scheme.
American Federation of Government Employees v. OPM (stay granted, April 2025): Supreme Court’s stay of a district court injunction restoring probationary employees—but distinguished here by scope and impact.

2. Legal Reasoning

The court’s reasoning unfolded in two principal strands: Article III standing and APA review.

a. Article III Standing

The Department’s mass terminations—implemented as part of an effort to “shut down” the agency—caused “certainly impending” injuries: inability to carry out research, administer student aid, and enforce civil rights laws.
Clapper’s “speculation” bar was inapplicable: the harm was already occurring, not merely feared.
Comparisons to narrower RIFs affecting only probationary staff (e.g., American Federation of Government Employees) failed because this RIF reached senior positions and “entire offices.”

b. APA Review

The RIF and function‐transfer directives were “contrary to law” (5 U.S.C. § 706(2)(A)) because they violated the Department’s organic statute and other federal mandates.
They were “arbitrary and capricious” (5 U.S.C. § 706(2)(A)) for lack of reasoned explanation and for ignoring foreseeable harms to students, states, and institutions.
The appellants’ invocation of the CSRA as an exclusive review scheme was unpersuasive, given the lack of any clear congressional intent to channel claims about disabling an entire cabinet agency into employee‐only proceedings.
The court distinguished Block (milk‐order review) and Sampson (specific employee‐contract context) as inapposite to a wholesale agency‐shutdown scenario.

3. Potential Impact

This decision reinforces the judiciary’s role in policing executive actions that undermine an agency’s statutory functions. Key takeaways include:

District courts may enjoin mass RIFs that effectively disable a department’s core duties, even at the preliminary stage.
APA review remains open for ultra vires and arbitrary agency actions, notwithstanding the CSRA’s remedies for individual employees.
Separation‐of‐powers and public‐interest principles weigh heavily in preserving an agency’s ability to execute Congress’s will.
Future administrations must craft workforce reductions with legally adequate justifications and must heed statutory obligations before reallocating or abolishing functions.

Complex Concepts Simplified

Preliminary Injunction: A court order that halts a challenged action while a case proceeds, granted when the movant shows likelihood of success, irreparable harm, favorable balance of harms, and that the injunction serves the public.
Article III Standing: Plaintiffs must show they suffered a concrete, imminent injury that a favorable decision will redress.
Ultra Vires: Actions taken “beyond the powers” granted by statute; if an agency exceeds its statutory authority, courts can set aside those actions.
Arbitrary and Capricious: Agency actions lacking a reasoned basis or adequate explanation, or that ignore important factors.
Civil Service Reform Act (CSRA): A comprehensive scheme for reviewing federal personnel decisions, but not a blanket bar to all agency challenges.

Conclusion

The First Circuit’s denial of a stay in State of New York v. McMahon underscores that federal courts will enforce Congress’s statutes by preventing executive maneuvers—such as mass terminations and function transfers—that effectively shutter an agency. The decision affirms:

The judiciary’s vital role in ensuring agencies remain staffed and equipped to carry out their statutory mandates.
The availability of APA review for ultra vires and arbitrary executive actions, even amid complex personnel disputes.
The principle that public interest favors adherence to the rule of law over expedient but unlawful policy shifts.

As a new precedent, it sends a clear message: mass terminations aimed at disabling a cabinet department will face immediate judicial scrutiny and, if unlawful, be met with injunctive relief to preserve statutory functions and protect affected stakeholders.