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Home Source documents Memorandum of Law in Opposition (non-motion), State of New York et al. v. U.S. Department of Education, No. 1:25-cv-02990 (S.D.N.Y.), Doc. 100 (May 29, 2025)

Memorandum of Law in Opposition (non-motion), State of New York et al. v. U.S. Department of Education, No. 1:25-cv-02990 (S.D.N.Y.), Doc. 100 (May 29, 2025)

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     Case 1:25-cv-02990-ER          Document 100    Filed 05/29/25    Page 1 of 29




UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK


STATE OF NEW YORK, et al.,

                     Plaintiffs,

       - against –                           No. 25 Civ. 2990 (ER)

UNITED STATES DEPARTMENT OF
EDUCATION, et al.,

                     Defendants.



           DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION TO
            PLAINTIFFS’ MOTION FOR A PRELIMINARY INJUNCTION




                                             JAY CLAYTON
                                             United States Attorney for the
                                             Southern District of New York
                                             Attorney for the United States
                                             86 Chambers Street, 3rd Floor
                                             New York, New York 10007
                                             Tel: (212) 637-2761/2741
                                             Attorney for Defendants

CHRISTOPHER K. CONNOLLY
DANA WALSH KUMAR
Assistant United States Attorneys
       – Of Counsel –
            Case 1:25-cv-02990-ER                      Document 100                  Filed 05/29/25               Page 2 of 29




                                                    TABLE OF CONTENTS

                                                                                                                                        PAGE
PRELIMINARY STATEMENT .....................................................................................................1

BACKGROUND .............................................................................................................................2

     I.         The Education Stabilization Fund..................................................................................2

     II.        The March 28 and April 3 Letters..................................................................................3

     III.       Plaintiffs’ First Motion for a Preliminary Injunction and the Court’s Order.................5

     IV.        The May 11 Letter and Plaintiffs’ Second Motion for a Preliminary Injunction ..........6

STANDARD OF REVIEW .............................................................................................................8

ARGUMENT ...................................................................................................................................9

     I.         The Court Lacks Jurisdiction .........................................................................................9

     II.        The Department Will Suffer Irreparable Harm if the Court Grants Plaintiffs’
                Motion ..........................................................................................................................16

     III.       A Preliminary Injunction Would Not Serve the Public Interest ..................................17

     IV.        Plaintiffs Do Not Demonstrate a Likelihood of Success on the Merits .......................18

CONCLUSION ..............................................................................................................................23




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                                               TABLE OF AUTHORITIES

                                                                                                                                Page(s)
Cases

Abbott Laboratories v. Gardner,
  387 U.S. 136 (1967) .................................................................................................................. 20

A.H. by & through Hester v. French,
  985 F.3d 165 (2d Cir. 2021) ...................................................................................................... 10

Amoco Prod. Co. v. Hodel,
 815 F.2d 352 (5th Cir. 1987) ..................................................................................................... 11

Bennett v. Spear,
  520 U.S. 154 (1997) .................................................................................................................. 20

Bionpharma Inc. v. CoreRx, Inc.,
  582 F. Supp. 3d 167 (S.D.N.Y. 2022) ....................................................................................... 19

Bowen v. Massachusetts,
  487 U.S 879 (1988). ........................................................................................................... passim

Brighton Village Associates v. United States,
  52 F.3d 1056 (Fed. Cir. 1995) ................................................................................................... 14

Citizens to Preserve Overton Park, Inc. v. Volpe,
  401 U.S. 402 (1971) .................................................................................................................. 21

Coggeshall Dev. Corp. v. Diamond,
  884 F.2d 1 (1st Cir. 1989) ............................................................................................. 11, 14, 15

Consolidated Edison Co. of New York v. U.S., Dep’t of Energy,
 247 F.3d 1378 (Fed. Cir. 2001) ................................................................................................. 16

Dalton v. Specter,
 511 U.S. 462 (1994) .................................................................................................................. 20

Davis v. Pension Ben. Guar. Corp.,
 571 F.3d 1288 (D.C. Cir. 2009) ................................................................................................ 19

Dep’t of Educ. v. California,
 145 S. Ct. 966 (2025) ................................................................................................................ 12

Diaz v. Johnson,
  No. 19-1501, 2020 WL 9437887 (1st Cir. Nov. 12, 2020) ....................................................... 11



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FAA v. Cooper,
  566 U.S. 284 (2012) .................................................................................................................. 10

Faiveley Transport Malmo AB v. Wabtec Corp.,
  559 F.3d 110 (2d Cir. 2009) ...................................................................................................... 17

FDA v. Wages & White Lion Investments, L.L.C.,
 145 S. Ct. 898 (2025) ................................................................................................................ 21

Freedom Holdings, Inc. v. Spitzer,
  408 F.3d 112 (2d Cir. 2005) ...................................................................................................... 17

FTC v. Standard Oil Co. of California,
  449 U.S. 232 (1980) .................................................................................................................. 20

Glidden Co. v. Zdanok,
  370 U.S. 530 (1962) .................................................................................................................. 15

Grand River Enterprises Six Nations, Ltd. v. Pryor,
  481 F.3d 60 (2d Cir. 2007) .................................................................................................... 9, 18

Great-West Life & Annuity Ins. Co. v. Knudson,
  534 U.S. 204 (2002) ...................................................................................................... 12, 13, 14

Ingersoll-Rand Co. v. United States,
  780 F.2d 74 (D.C. Cir. 1985) .................................................................................................... 11

Kakar v. USCIS,
  29 F.4th 129 (2d Cir. 2022) ....................................................................................................... 21

Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak,
 567 U.S. 209 (2012) .................................................................................................................. 15

Megapulse, Inc. v. Lewis,
 672 F.2d 959 (D.C. Cir. 1982) .................................................................................................. 16

Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,
 463 U.S. 29 (1983) .................................................................................................................... 21

New York v. DHS,
  969 F.3d 42 (2d Cir. 2020) ........................................................................................................ 17

Nken v. Holder,
  556 U.S. 418 (2009) .................................................................................................................. 18

NRDC v. EPA,
 658 F.3d 200 (2d Cir. 2011) ...................................................................................................... 21


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Rodriguez ex rel. Rodriguez v. DeBuono,
  175 F.3d 227 (2d Cir. 1999) ...................................................................................................... 18

Sharp v. Weinberger,
  798 F.2d 1521 (D.C. Cir. 1986) ................................................................................................ 15

Students for Fair Admissions v. U.S. Military Academy at West Point,
  709 F. Supp. 3d 118 (S.D.N.Y. 2024) ......................................................................................... 9

U.S. Army Corps of Engineers v. Hawkes Co., Inc.,
  578 U.S. 590 (2016) .................................................................................................................. 20

United States v. Sherwood,
 312 U.S. 584 (1941) .................................................................................................................. 10

Winter v. NRDC,
 555 U.S. 7 (2008) ........................................................................................................................ 9

Widakuswara v. Lake,
  No. 25-5144, 2025 WL 1288817 (D.C. Cir. May 3, 2025)……………………………………12

Regulations

2 C.F.R. § 200.342 .......................................................................................................................... 5

2 C.F.R. § 200.344(c)............................................................................................................. passim

34 C.F.R. Part 76............................................................................................................................. 4

Rules

Fed. R. Civ. P. 65(c) ..................................................................................................................... 24

Statutes

5 U.S.C. § 702 ......................................................................................................................... 11, 15

5 U.S.C. § 704 ................................................................................................................... 11, 16, 19

5 U.S.C. § 706(2)(A)..................................................................................................................... 20

20 U.S.C. § 1226a ......................................................................................................................... 23

28 U.S.C. § 1491(a)(1).................................................................................................................. 15




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        Defendants the United States Department of Education (“ED” or the “Department”) and

Linda McMahon, in her official capacity as Secretary of Education (together, “Defendants”), by

their attorney, Jay Clayton, United States Attorney for the Southern District of New York,

respectfully submit this memorandum of law in opposition to the motion for a preliminary

injunction filed by the Plaintiff States.

                                  PRELIMINARY STATEMENT

        Under applicable statutes and regulations, the deadline to liquidate funds appropriated by

Congress for COVID-relief funding to schools was in January 2025. Although the Department

had previously granted fourteen-month extensions to liquidate funds, in March 2025, it changed

its policy, and on March 28, 2025, rescinded those previously-granted blanket extensions. In

announcing the policy change, the Department provided that states could still request liquidation

extensions on a project-specific basis. On May 6, 2025, this Court enjoined the Department from

implementing these new directives. Pursuant to the Court’s Order, the Department reverted to its

pre-March 28 process, has been reviewing requests submitted by Plaintiffs, and has disbursed

millions of dollars. After the Court’s May 6 Order, the States have submitted additional requests

for hundreds of millions of dollars, which reflect a drastic increase over requests that had

previously been submitted.

        On May 11, 2025, as permitted by the Court’s May 6 Order, the Department issued a letter

to Plaintiffs explaining why it rescinded its previously-granted extensions and providing Plaintiffs

fourteen days to submit liquidation requests relating to properly obligated funds, wind down

contracts where necessary, and transition to the Department’s project-specific process for

requesting liquidation extensions. In response, the States filed the instant motion, not only seeking
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that the Department be enjoined from implementing its new process for obtaining extensions, but

also that the Department be ordered to promptly pay funds requested by the States.

         The Court should not enter this second injunction. First, this Court lacks jurisdiction over

Plaintiffs’ claims because by seeking to compel payment, they sound in contract. The Supreme

Court has recently held that the Department is likely to succeed in showing that the Court of

Federal Claims is the only proper jurisdiction for similar claims. Second, Plaintiffs fail to show

that they are entitled to preliminary relief. Plaintiffs have not shown irreparable harm; rather, it is

the Department that will be irreparably harmed if the Court orders it to disburse funds that it will

not be able to recover if it prevails in the litigation. For that reason, the public interest also favors

denying Plaintiffs’ motion. Finally, Plaintiffs have failed to establish that they are likely to succeed

on the merits of their Administrative Procedure Act (“APA”) claims.

         Accordingly, Plaintiffs’ second motion for a preliminary injunction should be denied.

                                          BACKGROUND

    I.      The Education Stabilization Fund

         Defendants assume the Court’s familiarity with the background of this case. Briefly, in

2020 and 2021, Congress enacted statutes to provide funding to support schools and students

experiencing challenges stemming from the COVID-19 pandemic: the Coronavirus Aid, Relief,

and Economic Security Act (“CARES”), Pub. L. No. 116-136 (2020), 134 Stat. 281; the

Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (“CRRSA”), Pub. L.

No. 116-260 (2020), 134 Stat. 1182; and the American Rescue Plan of 2021 (“ARP”), Pub. L. No.

117-2, 135 Stat. 4 (2021). Together, these statutes established the Education Stabilization Fund

(“ESF”) and the three ESF programs that are relevant here: (i) the Elementary and Secondary




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School Emergency Relief (“ESSER”) program; (ii) the Homeless Children and Youth (“HCY”)

program; and (iii) the Emergency Assistance to Non-Public Schools (“EANS”) program.

         The Department, through its Office of Elementary and Secondary Education (“OESE”),

was tasked with administering the disbursement of these funds to state educational agencies

(“SEAs”) for the purpose of providing local education agencies (“LEAs”) with the emergency

relief. See 34 C.F.R. Part 76. Pursuant to the relevant statues, recipients of the ESSER, HCY, and

EANS funds appropriated through the ARP were required to obligate those funds by September

30, 2024. Pursuant to applicable regulations, the recipients of these funds then had until January

28, 2025—120 calendar days “after the conclusion of the period of performance”—to liquidate all

financial obligations incurred. 2 C.F.R. § 200.344(c). The Department possesses the discretionary

authority to extend this liquidation deadline “[w]hen justified.” 2 C.F.R. § 200.344(c). According

to the complaint, prior to March 28, 2025, the Plaintiff States received extensions to liquidate

EANS, ESSER, and/or HCY funds, which, in most instances relevant here, extended the

liquidation deadline to March 28, 2026. Compl., ECF No. 1, ¶¶ 87-157. The States allege that

they “were relying on the extension approvals permitting Plaintiffs to draw upon the ES funding

through the expiration of the extended liquidation periods in executing agreed-upon plans to

deliver services to students and engage in building projects aimed at combating the long-term

effects of the pandemic.” Id. ¶ 158.

   II.      The March 28 and April 3 Letters

         On March 28, 2025, Secretary McMahon issued a letter to all state recipients of ES funding,

including Plaintiffs, advising them that the Department had modified the deadline to liquidate all

obligations under the ESF, including all programs funded by the CRRSA and ARP. March 28 Ltr.

(ECF No. 1-1). In the March 28 Letter, Secretary McMahon indicated that the Department had



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modified the liquidation period to end on March 28, 2025, the date of the letter, rather than the

previously extended deadline of March 28, 2026. Id. The letter explained that states “were entitled

to the full award only if [they] liquidated all financial obligations within 120 days of the end of the

period of performance,” and that the “period to liquidate obligations for these Grant Awards [had]

expired.” Id. Secretary McMahon further noted that, because the COVID pandemic had ended,

extending the deadlines for COVID-related grants “is not consistent with the Department’s

priorities and thus not a worthwhile exercise of its discretion” to extend liquidation deadlines. Id.

But the letter also stated that “even though the COVID pandemic and the liquidation period under

the applicable regulations [had] ended, the Department will consider an extension to [a state’s]

liquidation period on an individual project-specific basis.” Id.

       On April 3, 2025, Hayley B. Sanon, the Principal Deputy Assistant Secretary and Acting

Assistant Secretary in OESE, issued a “Dear Colleague Letter” explaining that “even though the

COVID pandemic and the liquidation period under the applicable regulations [had] ended, the

Department will consider an extension to [a state’s] liquidation period on an individual project-

specific basis.” Apr. 3 Ltr., available at https://www.ed.gov/media/document/dear-colleague-

letter-follow-esf-funding-april-3-2025-109779.pdf (last visited May 29, 2025). The April 3 Letter

identified information that states were required to submit to apply for project-specific extensions

of the liquidation deadline and stated that the Department would “review each request as it is

received and work to provide a response as quickly as possible.” Id. The Department has since

indicated that a “State agency whose project-specific request is denied may request an appeal of

these decisions consistent with 2 C.F.R. § 200.342” within “30 calendar days from the receipt of a

denial.” U.S. Dep’t of Education, Education Stabilization Fund Liquidation Extension, available

at   https://www.ed.gov/grants-and-programs/formula-grants/response-formula-grants/covid-19-



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emergency-relief-grants/education-stabilization-fund-liquidation-extensions (“ESF Liquidation

Extensions Website”) (last visited May 29, 2025). According to the Department’s website, as of

May 9, 2025, 32 states and outlying areas have submitted over 250 project-specific extension

requests, and the Department had reviewed and issued determinations for 129 project-specific

requests. Id. Non-Plaintiff states continue to make requests through this process and the

Department is adjudicating those requests. Declaration of Ruth E. Ryder, dated May 29, 2025

(“Ryder Decl.”) ¶ 9.

   III.      Plaintiffs’ First Motion for a Preliminary Injunction and the Court’s Order

          The Plaintiff States commenced this action on April 10, 2025, challenging the March 28

Letter’s recission of the prior extensions for liquidating ES grant funds as both “arbitrary and

capricious” and “contrary to law” under the APA. See Compl. ¶¶ 192-215. In their complaint, the

States alleged that they have received ES funding grants and also received extensions of the

liquidation deadline in connection with those grants. See id. ¶¶ 47-157. They further alleged that

rescission of the prior extensions “is already having and will continue to have devastating effects”

on state and local programs designed to address the impact of the COVID-19 pandemic. See id.

¶¶ 162-91.

          Plaintiffs moved for a preliminary injunction on April 11, 2025, asserting that they were

entitled to preliminary injunctive relief because they are likely to succeed on the merits of their

claims that the Department’s actions violate the APA, they would suffer irreparable harm absent

an injunction, and the public interest and equities favored granting their motion.

          On May 6, 2025, following oral argument, the Court granted Plaintiffs’ motion and entered

Plaintiffs’ proposed preliminary injunction order. The Order enjoined the Department from

“enforcing or implementing as against Plaintiffs during the pendency of this litigation or until



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further order of the Court the directives in the March 28, 2025 letter from Education Secretary

Linda McMahon” which “rescinded the prior approvals granted by the U.S. Department of

Education (‘ED’) extending the periods of time for Plaintiffs to liquidate their obligations under

the Education Stabilization Fund.” Preliminary Injunction Order, ECF No. 77 (the “Order”) ¶ 1.

In addition, the Order enjoined the Department from “modifying ED’s previously-approved

periods for Plaintiffs to liquidate their obligations under the ESF without providing notice to

Plaintiffs at least fourteen (14) days prior to the effective date of such modification.” Id. ¶ 2.

   IV.      The May 11 Letter and Plaintiffs’ Second Motion for a Preliminary Injunction

         Since May 6, 2025, the Department has complied with the terms of the Order and has been

processing reimbursement requests submitted by the Plaintiff States (and by non-Plaintiff States

on a project-specific basis). Ryder Decl. ¶¶ 9-10.

         On May 11, 2025, the Department issued a new “Dear Colleague Letter” to the Plaintiff

States, informing them of the Department’s decision to modify the period to liquidate obligations

under the ESF program to terminate on May 25, 2025, as permitted by Paragraph 2 of the Order.

Thompson Aff. Ex. A, ECF No. 84-1 (“May 11 Ltr.”). The May 11 Letter states that “[t]he amount

of federal funds available under [the ESF] programs was unprecedented;” “[p]rior to the pandemic,

the largest ED grant program in history had provided only $16.5 billion annually to all States and

outlying areas.” May 11 Ltr. 1-2. The letter also stated that the Department’s prior extension of

the relevant liquidation deadlines was also “unprecedented; the Department had never previously

offered such a broad-based opportunity to all States to liquidate funds in a grant program for years

after the original obligation period set by Congress.” Id. 2.

         Accordingly, the May 11 Letter explains that the Department is “exercising its discretionary

authority [to terminate the prior extensions] under 2 CFR § 200.344(c).” Id. First, the letter



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indicates that, “[i]n the time since the pandemic ended, States have increasingly tapped ESF funds

in ways that are less and less connected to direct academic services to students and the ongoing

educational harms caused by COVID.” Id. Next, the letter explains that the Department has

“revisited [its] threadbare determination” that prior extensions were warranted and “now concludes

that the continued use of federal funds for COVID-related harms more than two years after the

pandemic ended is unwarranted.” Id. In particular, the letter notes “the extensions’ extreme length:

for the ARP Act, the extension was more than three times the length of the default period.” Id.

       As the May 11 Letter explains, the Department concluded that “[t]he most effective way to

allay” its concerns regarding the propriety of prior extensions “is to run a new, individualized

process that considers the unique circumstances of each grantee in light of their past performance,

their intended use of the funds, and the lengthy period they have already enjoyed for liquidating

the funds.” Id. In support of that determination, it points to grantees’ “rapid[]” draw-down of

funds after having received extension requests: “These changes in grantee practices justifies a more

individualized review process to determine how funds are being used and whether an extension is

appropriate.” Id.

       In light of the Department’s discretion in extending liquidation periods, and because states

“have already enjoyed nearly twice” the time provided by regulation “to liquidate their funds,” the

May 11 Letter states that “no valid reliance interests exist” in the prior extensions. Id. 4.

Nonetheless, the letter also explains that the Department has “properly accounted” for any reliance

interests that do exist by providing the Plaintiff States with “14 days to liquidate expenses as they

wind down their ECF-funded programs” by “seek[ing] reimbursement for authorized costs that

they have already incurred and that are appropriately substantiated and otherwise justified.” Id.




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Further, the letter provides instructions for seeking project-specific extensions of the liquidation

deadline. Id. 6-7.

       In response to the May 11 Letter, on May 14, 2025, the States moved for an ex parte

temporary restraining order (“TRO”) and preliminary injunction enjoining the Department from

implementing the May 11 Letter and directing the Department to “process Plaintiff’s pending

payment requests without delay.” Plaintiffs’ Brief in Support of Motion for Injunctive Relief, ECF

No. 85 (“Pls.’ Br.”) at 18. The Court granted Plaintiffs’ Motion for a TRO and temporarily enjoined

the Department from “enforcing or implementing as against Plaintiffs the directives in the May 11

Rescission Letter pending the Court’s decision on Plaintiffs’ motion for a preliminary injunction.”

ECF No. 95 at 2.

                                   STANDARD OF REVIEW

       “A preliminary injunction ‘is an extraordinary and drastic remedy, one that should not be

granted unless the movant, by a clear showing, carries the burden of persuasion.’” Students for

Fair Admissions v. U.S. Military Academy at West Point, 709 F. Supp. 3d 118, 129 (S.D.N.Y. 2024)

(quoting Grand River Enterprises Six Nations, Ltd. v. Pryor, 481 F.3d 60, 66 (2d Cir. 2007)); see

also Winter v. NRDC, 555 U.S. 7, 24 (2008) (“A preliminary injunction is an extraordinary remedy

never awarded as of right.”). To demonstrate its entitlement to this “extraordinary and drastic

remedy,” id., a movant must clearly demonstrate: “(1) irreparable harm absent injunctive relief,

(2) a likelihood of success on the merits, [] (3) public interest weighing in favor of granting the




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injunction,” and (4) “that the balance of equities tips in his or her favor,” A.H. by & through Hester

v. French, 985 F.3d 165, 176 (2d Cir. 2021) (quotation marks and footnotes omitted).

                                           ARGUMENT

       Plaintiffs are not entitled to injunctive relief because this Court lacks jurisdiction to hear

these claims. Moreover, Plaintiffs do not make a showing that they will be harmed irreparably

absent an injunction, that the balance of equities and the public interest weighs in their favor, or

that they are likely to succeed on the merits of their APA claims.

   I. The Court Lacks Jurisdiction

       This Court lacks jurisdiction over Plaintiffs’ claims for payment of money pursuant to the

grants, which should be brought in the Court of Federal Claims. In their second motion for a

preliminary injunction, Plaintiffs ask the Court to enjoin the Department from implementing the

procedures set forth in the May 11 Letter and to direct the Department “to process Plaintiffs’

outstanding and future requests for liquidation of Education Stabilization Funds without delay.” It

is now apparent that this is the relief that Plaintiffs are seeking—the Court-ordered payment of

federal funds to Plaintiffs purportedly pursuant to grant agreements. Plaintiffs are thus not just

objecting to the Department’s rescission of the previously-granted liquidation extensions; they are

seeking an order compelling grant payments from the Department and enjoining any withholding

of funds—i.e., to continue to pay money to the States under the grants.

       This Court lacks jurisdiction over these claims. “The United States, as sovereign, is

immune from suit save as it consents to be sued.” United States v. Sherwood, 312 U.S. 584, 586

(1941). To sue a federal agency and its officials, a plaintiff must therefore identify an express

waiver in the text of a federal law and show that its claim falls within the waiver’s scope. See FAA

v. Cooper, 566 U.S. 284, 290 (2012) (“a waiver of sovereign immunity must be ‘unequivocally



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expressed’ in statutory text”). In this case, Plaintiffs seek to rely on the limited waiver of sovereign

immunity contained in the APA. First, the waiver does not apply to claims seeking “money

damages.” 5 U.S.C. § 702. Second, the waiver does not apply where “any other statute that grants

consent to suit expressly or impliedly forbids the relief which is sought.” Id. Third, the waiver

does not apply to claims for which another court could provide an “adequate remedy.” 5 U.S.C.

§ 704. Plaintiffs, by asserting that the Department be compelled to conduct a “cursory ministerial

review” that would require the payment of funds to the States, seek money damages. See

Transcript of May 6, 2025 Oral Argument (“Tr.”) at 10. Under the Tucker Act, another court—the

Court of Federal Claims—has jurisdiction over Plaintiffs’ claims.

       The fact that the complaint seeks only declaratory and injunctive relief “does not decide

the issue” of whether an action, at its core, seeks money damages. Ingersoll-Rand Co. v. United

States, 780 F.2d 74, 79 (D.C. Cir. 1985); see also Bowen v. Massachusetts, 487 U.S. 879, 916

(1988) (Scalia, J., dissenting) (“district court jurisdiction is not established merely because a suit

fails to pray for a money judgment”). A plaintiff may not avoid the APA’s carve-out for money

damages by “couch[ing] [its] claims in the language of equitable and declaratory relief,” when the

alleged injury “is pecuniary in nature and at bottom what [it] seeks is monetary relief based on . .

. a contract.” Diaz v. Johnson, No. 19-1501, 2020 WL 9437887, at *2 (1st Cir. Nov. 12, 2020). To

determine whether an action seeks money damages, courts must instead look to the substance of

the complaint, “irrespective of how it is packaged.” Coggeshall Dev. Corp. v. Diamond, 884 F.2d

1, 4 (1st Cir. 1989); see also Amoco Prod. Co. v. Hodel, 815 F.2d 352, 361 (5th Cir. 1987) (“one

of the few clearly established principles is that the substance of the pleadings must prevail over

their form”).




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       The substance of Plaintiffs’ allegations makes clear that they seek money damages.

“Almost invariably . . . suits seeking (whether by judgment, injunction, or declaration) to compel

the defendant to pay a sum of money to the plaintiff are suits for ‘money damages,’ as that phrase

has traditionally been applied, since they seek no more than compensation for loss resulting from

the defendant’s breach of legal duty.” Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S.

204, 210 (2002) (citation omitted). More specifically, “[a] claim for money due and owing under

a contract is ‘quintessentially an action at law.’” Id. (citation omitted). Here, Plaintiffs are now

asking the Court for two forms of relief: to enjoin the Department from implementing the directives

in the May 11 letter and to compel the Department to “process Plaintiffs’ outstanding and future

requests for liquidation of Education Stabilization Funds without delay.” Pls.’ Proposed Order,

ECF No. 87. Both of these requested forms of relief amount to claims for the payment of money,

purportedly pursuant to grant agreements, by the Department. With respect to Plaintiffs’ request

to enjoin the May 11 letter, which would have directed the Plaintiff States to the “project-specific”

extension request process after May 25, Plaintiffs have made clear that they expect the Department

to revert to its prior, pre-March 28, 2025 process by which it granted all of the States’ payment

requests upon only “cursory” or “ministerial” review. Tr. at 10. Plaintiffs are thus, in sum and

substance, seeking an order compelling grant payments from the Department and enjoining any

withholding of funds.

       And this is precisely what the Supreme Court has recently ruled on in a similar case. The

Court acknowledged that an APA claim “is not barred by the possibility” that the requested relief

“may result in the disbursement of funds.” Dep’t of Educ. v. California, 145 S. Ct. 966, 968 (2025)

(per curiam) (citing Bowen, 487 U.S. at 910). But it emphasized that “the APA’s limited waiver of

immunity does not extend to orders ‘to enforce a contractual obligation to pay money’ along the



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lines of what” Plaintiffs request here. Id. (citing Great-West Life & Annuity Ins. Co. v. Knudson,

534 U.S. 204, 212 (2002)). The Court therefore found that “the Government is likely to succeed

in showing” that this Court “lack[s] jurisdiction” over that case. Id. The D.C. Circuit recently

came to the same conclusion in Widakuswara v. Lake, No. 25-5144, 2025 WL 1288817 (D.C. Cir.

May 3, 2025), in which it granted a stay of district court preliminary injunctions pending appeal

in cases challenging, among other things, the termination of grants an agency. Similarly, this Court

lacks jurisdiction over Plaintiffs’ claims, which seek to compel payment related to grant funding

that is akin to seeking contractual relief.

        Nor does Bowen v. Massachusetts establish jurisdiction over Plaintiffs’ claims. In Bowen,

Massachusetts sued the Secretary of Health and Human Services to enforce a provision of the

Medicaid Act that required the payment of certain amounts to participating states. 487 U.S. at 887.

Massachusetts provided services to mentally challenged individuals that involved training by State

Department of Education employees, but the Secretary determined that the Medicaid program only

covered such services if provided by State Department of Mental Health employees. Id. at 886.

The Secretary therefore “disallowed” the expenditures for these services and refused to provide

reimbursement for them. Id. at 887. Massachusetts then sued in district court under the APA,

seeking injunctive relief requiring the Secretary to reimburse the disputed expenditures. Id.

        The Supreme Court held that the APA’s waiver of immunity applied because the lawsuit

was an action seeking relief other than money damages. Id. at 893. In so doing, the Court defined

the term “money damages” as compensation for a loss—as opposed to specific relief enforcing a

statutory mandate moving forward. Id. at 895. The Court held that “[t]he State’s suit to enforce

§ 1396b(a) of the Medicaid Act . . . [was] not a suit seeking money in compensation for the damage




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sustained by the failure of the Federal Government to pay,” but, rather, “a suit seeking to enforce

the statutory mandate itself, which happens to be one for the payment of money.” Id. at 900.

       Bowen is distinguishable from this action, which is not seeking to enforce some statutory

mandate; instead, Plaintiffs seek the payment of money the Department is allegedly withholding.

Indeed, the only regulation relevant here is 2 C.F.R. § 200.344(c), which explicitly gives the

Department discretion to grant liquidation extensions beyond the 120-day statutorily allowed

period. At bottom, Plaintiffs are asking the Court to compel the payment of funds pursuant to

grants (contracts) that were previously extended. But “Bowen has no bearing on the unavailability

of an injunction to enforce a contractual obligation to pay money past due.” Great-West, 534 U.S.

at 212. Again, “[a] claim for money due and owing under a contract is ‘quintessentially an action

at law.’” Id. at 210 (citation omitted). Thus, courts “have consistently read Bowen to reinforce the

jurisdictional role of the Court of Federal Claims in resolving contract disputes outside the

complex Medicaid arena.” Brighton Village Associates v. United States, 52 F.3d 1056, 1059 n.3

(Fed. Cir. 1995) (emphasis added); see also Coggeshall, 884 F.2d at 5 (“Bowen was not an action

for breach of contract”).

       Moreover, in Bowen, the Supreme Court explained that setting aside the Secretary’s

disallowance decision would not “properly [be] characterized as an award of ‘damages’” because

disallowance decisions under the Medicaid statute involve “an adjustment—and, indeed, usually

a relatively minor one—in the size of the federal grant” paid on an “open account” in quarterly

installments. 487 U.S. at 893. Thus, the requested relief in Bowen sought “an injunction to correct

the method of calculating payments going forward.” Great-West, 534 U.S. at 212. Here, by

contrast, Plaintiffs have made clear that they are not only challenging the rescission of a deadline




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to submit payment requests; they seek to have the Court order the Department to make payments

to the States.

        In addition to excluding claims for money damages, the APA’s waiver of immunity does

not apply “if any other statute that grants consent to suit expressly or impliedly forbids the relief

which is sought.” Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 567 U.S.

209, 215 (2012) (citing 5 U.S.C. § 702). This carve-out “prevents plaintiffs from exploiting the

APA’s waiver to evade limitations on suit contained in other statutes.” Id.

        Another statute—the Tucker Act—grants consent to suits founded upon contracts with the

United States. 28 U.S.C. § 1491(a)(1). And it has long been accepted that the Tucker Act authorizes

the Court of Federal Claims “only to award damages, not specific relief,” such as specific

performance of a contract. Glidden Co. v. Zdanok, 370 U.S. 530, 557 (1962). Indeed, no court has

“the power to order specific performance by the United States of its alleged contractual

obligations.” Coggeshall, 884 F.2d at 3. The D.C. Circuit has observed that it “know[s] of no case

in which a court has asserted jurisdiction either to grant a declaration that the United States was in

breach of its contractual obligations or to issue an injunction compelling the United States to fulfill

its contractual obligations.” Sharp v. Weinberger, 798 F.2d 1521, 1524 (D.C. Cir. 1986).

        Notably, Congress added the limited waiver of sovereign immunity to the APA in 1976.

Pub. L. 94-574, 90 Stat. 2721, 2721 (1976). And the legislative history of this amendment confirms

that it was not intended to undo the Tucker Act’s implied prohibition on granting specific

performance:

        [T]he amendment to 5 U.S.C. section 702 is not intended to permit suit in circumstances
        where statutes forbid or limit the relief sought . . . For example, in the [Tucker Act],
        Congress created a damage remedy for contract claims with jurisdiction limited to the
        Court of Claims except in suits for less than $10,000. The measure is intended to foreclose
        specific performance of government contracts. In the terms of the proviso, a statute
        granting consent to suit, i.e., the Tucker Act, “impliedly forbids” relief other than the

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       remedy provided by the Act. Thus, the partial abolition of sovereign immunity brought
       about by this bill does not change existing limitations on specific relief, if any, derived
       from statutes dealing with such matters as government contracts.

H.R. Rep. No. 94-1656, at 12-13 (1976) (emphasis added).

       Whether the Tucker Act impliedly forbids granting specific performance turns on whether

the action sounds in contract. In determining whether “a particular action” is “at its essence a

contract action” subject to the Tucker Act, courts have looked at both “the source of the rights upon

which the plaintiff bases its claims” and “the type of relief sought (or appropriate).” Megapulse,

Inc. v. Lewis, 672 F.2d 959, 968 (D.C. Cir. 1982). Here, both the source of the rights asserted (to

receive funds pursuant to grant programs) and the type of relief sought (for the Department to

disburse funds promptly) confirm that Plaintiffs’ lawsuit sounds in contract.

       This Court also lacks jurisdiction over Plaintiffs’ complaint because a money judgment in

the Court of Federal Claims would provide an adequate remedy for the injuries of which Plaintiffs

complain. The APA provides for judicial review only where “there is no other adequate remedy in

a court.” 5 U.S.C. § 704. “In other words, a claimant with an alternative adequate remedy in

another court, such as the Court of Federal Claims, cannot seek review of agency action in a district

court under the APA.” Consolidated Edison Co. of New York v. U.S., Dep’t of Energy, 247 F.3d

1378, 1383 (Fed. Cir. 2001).

       Moreover, even if this Court finds it does have jurisdiction over these claims, it should not

grant the States’ request to direct the Department to make specific payments because the

Department is continuing to review submissions and issue payments and the Court should allow

the Department to continue that process. Ryder Decl. ¶¶ 9-10. As explained in more detail below,

Plaintiffs have not established irreparable harm or a likelihood of success on the merits. Because

the Department continues to review requests and disburse payments, and will continue to do so



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pursuant to the project-specific process set forth in the May 11 Letter once the current TRO expires,

the Court should not grant preliminary relief at this juncture.

   II.      The Department Will Suffer Irreparable Harm if the Court Grants Plaintiffs’
            Motion

         Even if the Court finds there is jurisdiction, the Court should not grant Plaintiffs’ motion

for a preliminary injunction because the Department will suffer irreparable harm. Since the Court

entered the preliminary injunction order on May 6, 2025, Plaintiffs have submitted over $250

million in liquidation requests. Ryder Decl. Ex. A. This reflects a much larger amount than

requests that were made by previously. Id. ¶¶ 4-5. The largest single drawdown request submitted

in the weeks before March 28, 2025 was approximately $13 million. Id. ¶ 5. Since May 6, 2025,

however, Maryland, Massachusetts, and Michigan together have requested over $120 million. Id.

Ex. A. As noted in the May 11 Letter, these requests are “unprecedented.” May 11 Ltr. 2.

Moreover, if the Department is compelled to pay funds pursuant to the pre-March 28 procedures

but ultimately prevails in the litigation, it will be onerous to recover disbursed funds from the

States. Ryder Decl. ¶ 7. The funds are disbursed to state and local educational authorities, which

would make recovery particularly difficult. Id.

         In contrast, Plaintiffs have failed to show irreparable harm, which is the “single most

important prerequisite for the issuance of a preliminary injunction.” Faiveley Transport Malmo

AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009) (quotation marks and citation omitted).

“Irreparable harm is injury that is neither remote nor speculative[.]” New York v. DHS, 969 F.3d

42, 86 (2d Cir. 2020). Such injuries “cannot be remedied if a court waits until the end of trial to

resolve the harm.” Freedom Holdings, Inc. v. Spitzer, 408 F.3d 112, 114 (2d Cir. 2005) (citation

omitted). Accordingly, “[o]nly when the threatened harm would impair the court’s ability to grant




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an effective remedy is there really a need for preliminary relief.” Rodriguez ex rel. Rodriguez v.

DeBuono, 175 F.3d 227, 235 (2d Cir. 1999) (quotation marks omitted).

          Here, the States have not shown that they will suffer irreparable harm. The money that the

States claim should be “promptly” awarded to them is still available. In fact, since May 6, the

Department has paid out millions of dollars to Plaintiffs. Ryder Decl. Ex. A. In addition, the States

may follow the project-specific process provided for in the April 3 and May 11 Letters for the

States in order to access ES funding, and in case of any denied project-specific extension request,

may appeal that denial. Accordingly, any alleged harm to the States is speculative. See Grand

River Enterprises, 481 F.3d at 66 (injury must be “neither remote nor speculative”). The funds are

still available to States, which may avail themselves of the project-specific process. In contrast, if

the Court grants the preliminary injunction, the Department will be compelled to disburse funds

that it will be unable to recover, pursuant to a process that it has attempted, through administrative

action, to supersede. Ryder Decl. ¶ 7. The Court should therefore deny the preliminary injunction

since Plaintiffs have not shown irreparable harm and if the Court grants the motion, the Department

will be compelled to pay funds that it will be unable to recover even if it prevails in the litigation.

   III.      A Preliminary Injunction Would Not Serve the Public Interest

          The balance of equities and the public interest also weigh in the Department’s favor. See

Nken v. Holder, 556 U.S. 418, 435–36 (2009) (final two factors merge when the government is the

party opposing a motion for preliminary injunctive relief). “In determining whether the balance

of the equities tips in the plaintiff’s favor and whether granting the preliminary injunction would

be in the public interest, the Court must balance the competing claims of injury and must consider

the effect on each party of the granting or withholding of the requested relief, as well as the




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consequences in employing the extraordinary remedy of injunction.” Bionpharma Inc. v. CoreRx,

Inc., 582 F. Supp. 3d 167, 178 (S.D.N.Y. 2022) (quotation marks omitted).

       Because Plaintiffs cannot establish the other factors necessary to obtain a preliminary

injunction, “it is clear they cannot make the corresponding strong showings [on the second two

factors] required to tip the balance in their favor.” Davis v. Pension Ben. Guar. Corp., 571 F.3d

1288, 1295 (D.C. Cir. 2009).

       Moreover, the May 11 Letter explains that the public interest is better served if the

Department implements the project-specific process outlined in the letter and which is being

utilized with respect to the non-plaintiff States and outlying areas. See May 11 Ltr. The

Department is charged with administering these funds and, five years after the start of the

pandemic, it has an interest in ensuring that the funds requested by the States are being utilized for

their intended purposes. Accordingly, the May 11 Letter directs states seeking to liquidate further

grant funds to explain “[w]hether the particular project mitigates the educational effects of COVID

and, if so, how.” May 11 Ltr. 5. And as explained above, if the Court compels the payment of

funds by the Department, it will be nearly impossible to recover those funds if the Department

prevails in the litigation. Ryder Decl. ¶ 7. The public interest thus weighs in favor of denying

Plaintiffs’ motion for preliminary relief.

   IV. Plaintiffs Do Not Demonstrate a Likelihood of Success on the Merits

       Finally, Plaintiffs have not demonstrated a likelihood of success on the merits of their APA

claims as those claims relate to the Department’s May 11 Letter.

       To begin, the May 11 Letter (like the March 28 and April 3 letters) does not constitute final

agency action. The APA limits review to “final agency action[s],” and expressly excludes review

of “preliminary, procedural, or intermediate agency action[s] or ruling[s].” 5 U.S.C. § 704; accord



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Dalton v. Specter, 511 U.S. 462, 469 (1994). This finality requirement seeks to avoid “piecemeal

review which at the least is inefficient and upon completion of the agency process might prove to

have been unnecessary.” FTC v. Standard Oil Co. of California, 449 U.S. 232, 242 (1980). And

agency action is final only when it (1) “‘mark[s] the consummation of the agency’s

decisionmaking process’” and (2) is “‘one by which rights or obligations have been determined,

or from which legal consequences will flow.’” U.S. Army Corps of Engineers v. Hawkes Co., Inc.,

578 U.S. 590, 597 (2016) (quoting Bennett v. Spear, 520 U.S. 154, 177-78 (1997)).

       By its terms, the May 11 Letter’s “determination is merely that the extreme, broad-based

liquidation extensions previously granted are inappropriate.” May 11 Ltr. 4. But it “recognizes

that, in certain instances, ESF funds may still positively contribute to providing direct academic

services to students for combatting learning loss or other lasting harms inflicted by the pandemic.”

Id. Accordingly, it outlines the process for seeking project-specific extensions. Id. 6-7. In other

words, the letter does not determine whether any particular project’s liquidation deadline may be

extended. Indeed, the Department has granted, and continues to grant, project-specific extensions

for non-plaintiff states. Ryder Decl. ¶ 9. Moreover, where those extension requests have been

denied, states have availed themselves of the Department’s administrative appeal procedure. Id.

In light of that demonstrated viability of the project-specific extension process, and given the

“flexible” and “pragmatic” nature of the finality inquiry, Abbott Laboratories v. Gardner, 387 U.S.

136, 149 (1967), the Court should reconsider its prior determination that recission of the prior

extensions in favor of a case-by-case review process constitutes reviewable final action under the

APA, Tr. at 44.

       Even if the May 11 Letter does constitute reviewable final agency action, the Department’s

actions are not “arbitrary and capricious.” See 5 U.S.C. § 706(2)(A). Judicial review under the



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APA “is narrow and deferential,” Kakar v. USCIS, 29 F.4th 129, 132 (2d Cir. 2022) (citations and

quotation marks omitted), and the reviewing court may not “substitute its judgment for that of the

agency,” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). Agency

action may be set aside as arbitrary and capricious only where “‘the agency has relied on factors

which Congress has not intended it to consider, entirely failed to consider an important aspect of

the problem, offered an explanation for its decision that runs counter to the evidence before the

agency, or is so implausible that it could not be ascribed to a difference in view or the product of

agency expertise.’” NRDC v. EPA, 658 F.3d 200, 215 (2d Cir. 2011) (quoting Motor Vehicle Mfrs.

Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).

       The May 11 Letter’s explanation of the Department’s reasoning survives APA review. To

begin, that reasoning is grounded is grounded in the Department’s authority to grant extensions

where it determines they are “justified.” 2 C.F.R. § 200.344(c); see also May 11 Ltr. 3. The May

11 Letter adequately explains why, in its exercise of that discretion and subject to a 14-day notice

period, it determined to rescind the prior extensions. See FDA v. Wages & White Lion Investments,

L.L.C., 145 S. Ct. 898, 917 (2025) (“[a]gencies are free to change their existing policies as long as

they provide a reasoned explanation for the change, display awareness that [they are] changing

position, and consider serious reliance interests” (quotation marks omitted; alterations in original)).

       Plaintiffs’ arguments to the contrary, see Pls.’ Br. 10-15, are unavailing. To begin, the May

11 Letter does not justify the Department’s change in position merely on the basis that the

pandemic health emergency has ended. Contra Pls.’ Br. 10. Rather, the letter explains that the

relevant appropriations statutes “generally require ESF funds to be used to prepare, prevent, and

respond to coronavirus,” but that “[i]n the time since the pandemic ended, States have increasingly

tapped ESF funds in ways that are less and less connected to direct academic services to students



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and the ongoing educational harms caused by COVID.” May 11 Ltr. 3. The Department’s plan to

consider extensions on a project-specific basis is therefore meant to ensure that ongoing projects

are consistent with the objectives of the appropriations statutes. That certain projects identified by

the May 11 Letter might arguably be permitted under those statutes, see Pls.’ Br. 10-11, does not

render case-by-case review of requests for extensions of the liquidation period arbitrary and

capricious. Similarly, Plaintiffs’ arguments concerning the limited timeframe covered by the

NAEP scores referenced in the May 11 Letter, see Pls.’ Br. 12, do not render the Department’s

determination unreasonable: those scores postdate the relevant appropriations acts and the

expenditure of grant funds under the ESF programs, see May 11 Ltr. 3-4, and it is not unreasonable

for the Department to cite them in explaining why project-specific consideration of liquidation

extensions.

       The Department also adequately explained its basis for taking a second look at the prior

extension approvals. Contra Pls.’ Br. 13-14. To begin, Defendants did not concede at oral

argument that there was no basis for questioning those approvals, only that there was “no reason

to believe” based on the record, and taking the allegations in the Complaint as true, that the

Department had not undertaken a “careful review” of the States’ prior extension requests. Tr. at

27. In the May 11 Letter, however, the Department explains that “the original extension letters

included no explanation for the extensions, and the Department has serious questions about the

verification process that resulted in the approval of effectively blanket extensions.” May 11 Ltr.

4. Nor does the May 11 Letter fail to provide a rationale for its characterization of the prior

extensions as “extreme.” Contra Pls.’ Br. 14. To the contrary, it explains that “the Department

had never previously offered such a broad-based opportunity to all States to liquidate funds in a

grant program years after the original obligation period set by Congress,” May 11 Ltr. 3, and notes



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that the extension for the ARP Act “was more than three times the length of the default period,”

id. 4.

         The Department also reasonably grounded the exercise of its discretion in the recent pace

of the States’ draw-down requests. Contra Pls.’ Br. 14-15; see Ryder Decl. ¶¶ 3-6 & Ex. A. Nor

does the May 11 Letter ignore any reliance interests, contra Pls.’ Br. 15-16, which the May 11

Letter addressed both by providing a “14-day period . . . to seek reimbursement for authorized

costs,” May 11 Ltr. 5, and a process for seeking individualized extensions, id. 6-7. Effectively,

under Plaintiffs’ view of their reliance interests, the Department would never be able to modify the

prior blanket extensions of the liquidation period. That is inconsistent with the discretion provided

to the Department by regulation.

         Lastly, Plaintiffs have not established a likelihood of success on their claim that the May

11 Letter is contrary to law. Pls.’ Br. 16. The relevant statutes provided a deadline for obligation

of these appropriations: September 30, 2024. ARP § 2001(a); 20 U.S.C. § 1226a. And the

applicable regulation provided an additional 120 days to liquidate all financial obligations and

gave the Department discretion to extend that deadline “[w]here justified.” 2 C.F.R. § 200.344(c).

Moreover, the May 11 Letter continues to permit states to seek further extensions on a project-

specific basis. May 11 Ltr. 6-7. Even acknowledging the Court’s observation, at oral argument,

that “Congress intended that these funds remain available,” Tr. at 45, there is nothing in the statutes

Congress passed that precludes the Department from rescinding a prior extension and evaluating

further extension requests on a project-specific basis.




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                                         CONCLUSION

        For the foregoing reasons, the Court should deny Plaintiffs’ motion for a preliminary

injunction. 1


 Dated: New York, New York                         Respectfully submitted,
        May 29, 2025


                                                   JAY CLAYTON
                                                   United States Attorney

                                                   By: /s/ Dana Walsh Kumar
                                                   CHRISTOPHER K. CONNOLLY
                                                   DANA WALSH KUMAR
                                                   Assistant United States Attorneys
                                                   86 Chambers Street, 3rd Floor
                                                   New York, NY 10007
                                                   Telephone: (212) 637-2761/2741
                                                   Email: christopher.connolly@usdoj.gov
                                                          dana.walsh.kumar@usdoj.gov




        1
           In accordance with Fed. R. Civ. P. 65(c) and the President’s March 11, 2025,
memorandum titled “Ensuring the Enforcement of Federal Rule of Civil Procedure 65(c),” if the
Court enters a preliminary injunction, the government respectfully requests that the Court require
Plaintiffs to post a bond of $10,000. See Fed. R. Civ. P. 65(c) (“The court may issue a preliminary
injunction or a temporary restraining order only if the movant gives security in an amount that the
court considers proper to pay the costs and damages sustained by any party found to have been
wrongfully enjoined or restrained.”); www.whitehouse.gov/presidential[1]actions/2025/03/
ensuring-the-enforcement-of-federal-rule-of-civil-procedure-65c/.        The government further
requests that, if a preliminary injunction is entered, the Court enter a stay of this action pending
the disposition of any appeal authorized by the Solicitor General.
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     Case 1:25-cv-02990-ER       Document 100      Filed 05/29/25    Page 29 of 29




                               Certificate of Compliance

Pursuant to Local Civil Rule 7.1(c), the above-named counsel hereby certifies that this

memorandum complies with the word-count limitation of this Court’s Local Civil Rules. As

measured by the word processing system used to prepare it, this memorandum contains 7,113

words.




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