Certified copy ISSUED, State of New York et al. v. U.S. Department of Education, No. 25-1424 (2d Cir.), Doc. 41-2 (June 20, 2025)

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Doc. 41-2 in State of New York et al. v. U.S. Department of Education, No. 25-1424 (2d Cir.), a two-page dissent by Circuit Judge Park, with a certified copy issued June 20, 2025. The dissent would grant the Government’s request for a stay pending appeal. It states that the Government seems likely to succeed in showing that the district court lacked jurisdiction under the Tucker Act and in defeating the States’ APA claims. It also states that the Government is likely to suffer irreparable harm, noting that recipients of Education Stabilization Funds sought over $200 million in reimbursements in the hours after the district court’s initial injunction.

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              Park, Circuit Judge, dissenting:

                        I would grant the Government’s request for a stay pending appeal.

                       First, the Government seems likely to succeed in showing that the district court lacked
              jurisdiction. As the Supreme Court stated just three months ago, “the Tucker Act grants the Court
              of Federal Claims jurisdiction over suits based on ‘any express or implied contract with the United
              States.’” Dep’t of Educ. v. California, 145 S. Ct. 966, 968 (2025) (quoting 28 U.S.C.
              § 1491(a)(1)). Although the States styled their challenge as an APA suit, “the APA’s limited
              waiver of immunity does not extend to orders ‘to enforce a contractual obligation to pay money’
              along the lines of what the District Court ordered here.” Id. at 968 (quoting Great-West Life &
              Annuity Ins. Co. v. Knudson, 534 U.S. 204, 212 (2002)). It is difficult to see why the Tucker Act
              would likely apply to a suit about the statutorily authorized education grants at issue in California,
              but not to similar grants here. The district court’s preliminary injunction bars the Government
              from “attempting to modify” its own previously approved periods for States to liquidate Education
              Stabilization Funds (“ESF”)—i.e., the period of performance—and directs the Government to
              “process Plaintiffs’ outstanding and future requests for liquidation of ESF without delay”—i.e., an
              obligation to pay money. Dist. Ct. Dkt. 106, at 2. Instead of cancelling grants outright as in
              California, the Government here rescinded a previous extension of the period of performance. So
              this suit, like the one in California, is “at its essence a contract action,” Up State Fed. Credit Union
              v. Walker, 198 F.3d 372, 375 (2d Cir. 1999) (quotation marks omitted), and thus subject to the
              Tucker Act. 1

                      Second, the Government also seems likely to succeed in defeating the States’ APA claims.
              The Government’s May 11, 2025 Letter acknowledged its change of position. See May 11 Ltr.
              at 3. It also offered a reasoned explanation for rescinding the previous “effectively blanket
              extensions.” See id. at 2-3 (explaining that recipients were using ESF for projects that “Congress
              did not intend,” that ending the extensions would allow the Government to put the money “to better
              uses than simply serving as a slush fund for state educational spending unrelated either to COVID
              mitigation or even direct academic services to students,” and that the original extensions may have
              been granted without adequate verification). Finally, the Government considered “any reliance
              interests that grant recipients may possess in the extensions.” Id. at 4. The Letter explained that
              the Government accounted for such interests by allowing recipients “14 days to liquidate expenses
              as they wind down their ESF-funded programs.” Id. To the extent that 14 days is not enough
              time to wind down some projects, the Government “will consider extension requests on a project-
              specific basis.” Id. In my view, this seems sufficient to survive arbitrary-and-capricious review.
              See DHS v. Regents of the Univ. of Cal., 591 U.S. 1, 33 (2020) (agencies must “assess whether
              there were reliance interests, determine whether they were significant, and weigh any such interests
              against competing policy concerns”).




                        Other circuits have similarly understood California to distinguish Bowen v. Massachusetts, 487
                        1

              U.S. 879 (1988), when a court orders the Government to perform on a grant obligation. See, e.g.,
              Sustainability Inst. v. Trump, No. 25-1575, 2025 WL 1587100, at *2 (4th Cir. June 5, 2025); Widakuswara
              v. Lake, No. 25-5144, 2025 WL 1288817, at *4 (D.C. Cir. May 3, 2025).




  CERTIFIED COPY ISSUED ON 06/20/2025
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                       Finally, the Government is likely to suffer irreparable harm if the States continue to
              liquidate funds. ESF recipients sought over $200 million in reimbursements in the hours after the
              district court’s initial injunction. As a practical matter, the Government is unlikely to recover
              those funds if it prevails on the merits, and in the meantime, it is restrained from directing hundreds
              of millions of dollars to worthier causes. By contrast, if the States prevail on the merits, they
              could seek reimbursement or pursue Tucker Act claims in the Court of Federal Claims. They
              could also apply for project-specific extensions right now. Moreover, the public has a strong
              interest in seeing that education funds are spent as Congress intended. I respectfully dissent.




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