Fourth Circuit clears way for Trump to slash billions in grants

(CN) — The Fourth Circuit lifted an injunction Wednesday on President Donald Trump’s order to freeze more than 30 environmental or agricultural grants awarded to several nonprofits and cities.

U.S. Circuit Judge Allison Jones Rushing, a Donald Trump appointee, writes in a 31-page opinion that the lower court did not have the authority to issue the injunction based on the plaintiffs’ claims.

Rushing writes that the grant recipients seek continued payment from the government according to the terms and conditions of their awards. Those were contractual claims, Rushing reasons, which are appropriately litigated in the U.S. Court of Federal Claims.

The three-judge panel dismissed arguments from the grant recipients that their claims were constitutional in nature, pointing out that the U.S. Supreme Court has rejected similar arguments in cases challenging the Trump administration’s grant cuts.

“The upshot is that the alleged statutory and constitutional violations do not alter the essentially contractual nature of plaintiffs’ APA claims before us on appeal,” Rushing writes.

U.S. Circuit Judges Toby Heytens, a Joe Biden appointee, and Paul Niemeyer, a George H.W. Bush appointee, joined the opinion.

The lawsuit arises from a flurry of executive orders Trump issued after taking office that froze billions of dollars in grant funding while the administration determined if the money was being used to advance the president’s priorities, including “energy exploration and production.”

The orders created havoc for organizations and municipalities that rely on federal funding for community projects ranging from adult literacy to environmental cleanup, leading to lawsuits across the country challenging the executive orders.

Thirteen community groups and six cities, including Baltimore, San Diego and Nashville, sued administrative officials in March 2025 in South Carolina’s federal court, arguing the administration’s decision to arbitrarily freeze funds earmarked by Congress violated the Constitution’s separation of powers.

U.S. District Judge Richard Gergel sided with the grantees in May 2025, finding the government agencies acted outside the scope of their legal authority by freezing or canceling the grants. The Barack Obama appointee ordered the agencies to immediately restore grant funding and denied a motion to stay the decision pending appeal.

The Supreme Court has twice vacated similar orders in grant disputes, however.

In Department of Education v. California, the high court vacated a lower court’s injunction that reinstated millions of dollars in federal education grants. The court rejected a similar order in National Institutes of Health v. American Public Health Association, which challenged the canceling of biomedical research grants.

“We see no meaningful distinction between the relief ordered here and the relief ordered in those cases, which the Supreme Court determined was sufficiently contractual to trigger the Tucker Act,” Rushing said, referring to the law that allows individuals to bring federal claims against the government.

During oral arguments last October, U.S. Appellate Attorney Sean Janda asked the Fourth Circuit to dismiss the claims for lack of jurisdiction.

The panel instead remanded the case to the lower court for further review.

Rushing writes in the opinion that the lower court should address a theory the grant recipients raised on appeal — that by canceling entire grant programs wholesale, the Trump administration thwarted Congress’ intent for those programs to remain funded.

“At bottom, the district court focused on the freeze and termination of plaintiffs’ particular grants — not the termination of entire programs,” Rushing writes. “We therefore decline to pass on the merits of plaintiffs’ ‘program cancellation’ theory or what the appropriate relief would be in the event that the government did indeed cancel statutorily mandated programs.”

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