On February 5, 2025, the U.S. Department of Education issued an internal directive requiring a comprehensive review of previously awarded mental health-related grants issued to schools and state education entities. Acting under that directive, the Department reviewed both new grant awards and previously issued grants according to revised policy objectives. The Department then sent identical discontinuation notices to 138 grantees located in sixteen states, informing them that the agency would discontinue their multi-year grants. The notices listed four potential grounds for discontinuation but did not identify which ground applied to any specific grant or explain the particular deficiencies in the affected projects. Instead, the Department relied on generally applicable policy criteria contained in the internal directive to justify the mass discontinuations.
Sixteen states, including Washington, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, New Mexico, New York, Nevada, Oregon, Rhode Island, and Wisconsin, filed suit against the U.S. Department of Education and the Secretary of Education, seeking declaratory and injunctive relief. The states alleged that the Department unlawfully discontinued the grants and violated federal law governing agency decision-making. On December 19, 2025, the U.S. District Court for the Western District of Washington granted summary judgment in favor of the states and entered a permanent injunction. The court held that the Department’s discontinuation of the grants violated the Administrative Procedure Act (APA) because the agency acted arbitrarily and capriciously and contrary to law. The Department appealed to the Ninth Circuit and filed an emergency motion for a stay pending appeal. The Department asked the Ninth Circuit to suspend the district court’s injunction while the appeal proceeds.
The Ninth Circuit evaluated whether the Department demonstrated a strong likelihood of success on the merits and whether it would suffer irreparable harm without a stay. The panel concluded that the Department failed to show a likelihood of success under both the General Education Provisions Act (GEPA) and the Administrative Procedure Act (APA).
The Ninth Circuit explained that the Department discontinued the grants based on generally applicable policy criteria derived from an internal directive. Because those criteria effectively established binding rules governing federal financial assistance, the panel concluded that the Department likely had to comply with GEPA’s rulemaking requirements. GEPA requires the Department of Education to conduct notice-and-comment rulemaking before imposing generally applicable requirements affecting federal education funding. The Department did not engage in rulemaking before implementing those criteria, which supported the states’ claim that the agency acted contrary to law.
The Ninth Circuit also concluded that the Department likely violated the APA’s requirement of reasoned decision-making. The Department issued boilerplate discontinuation notices that listed several possible grounds for terminating the grants but did not identify which ground applied to each grantee or explain the factual basis for the decision. By failing to connect specific facts to the termination of each grant, the Department failed to provide the reasoned explanation required for agency action.
The Ninth Circuit also rejected the Department’s argument that it would suffer irreparable harm absent a stay. The Ninth Circuit explained that the district court’s injunction did not require the immediate disbursement of funds. Instead, the injunction required the Department to make new continuation or discontinuation determinations consistent with existing statutory and regulatory requirements. The panel concluded that requiring the Department to comply with its legal obligations does not constitute irreparable harm.
The Ninth Circuit therefore denied the Department’s emergency motion for a stay pending appeal. The Ninth Circuit remanded the matter to the district court to set deadlines for the Department to make new continuation decisions and issue any resulting awards, while retaining jurisdiction over the appeal.
Washington v. United States Dep’t of Educ. (9th Cir. Feb. 24, 2026, No. 26-510) 2026 LX 86895.