On Thursday, a Massachusetts federal court handed the Trump administration a complex victory in the legal battle concerning the cancellation of $600 million in educational grants intended for elementary schools.

In a detailed 36-page memorandum and order, U.S. District Judge Angel Kelley, appointed by Joe Biden, found that the plaintiffs did not overcome a significant legal hurdle, primarily because the court did not have the jurisdiction to hear the case. However, Judge Kelley suggested that the plaintiffs might succeed if they pursue their claims in a different judicial setting.

Additionally, the court hinted that further relief for the plaintiffs could be on the horizon due to ongoing legal motions and proceedings.

Reflecting on the situation, a related minute order summarized the complex scenario: “Despite the termination of grants meant to support certain educational initiatives, this Court is powerless to reinstate them. Nonetheless, the Plaintiffs still have potential avenues for recourse.”

Earlier this year, in February, the Department of Education announced significant funding cuts to grants supporting two well-established programs aimed at mitigating teacher shortages and enhancing teacher quality.

In February of this year, the Department of Education (DOE) issued a number of cuts to grants for two long-standing programs intended to address teacher shortages and increase teacher quality.

The plaintiffs sued in March by way of a 54-page complaint alleging a number of violations of the Administrative Procedure Act (APA), the federal statute that governs the behavior of administrative agencies.

“The termination of these previously-awarded grants was effectuated through form letters claiming the grants were no longer consistent with Department priorities,” the lawsuit reads. “Although the termination letters themselves make reference to multiple vague Department ‘priorities,’ they contain no facts explaining how or why any particular grant fails to conform to these priorities.”

The plaintiffs, led by California, carefully calibrated their complaint to allege such vagueness and lack of facts — in hopes of vindicating the “arbitrary and capricious standard” in the APA.

The APA’s “arbitrary and capricious” standard is a term of art — and a phrase that has leaped from the statute into popular culture. In context, the term describes government actions that go too far while simultaneously eschewing formal, mandatory processes.

From the filing’s section on the standard, at length:

Defendants’ actions are arbitrary and capricious because the Department did not provide a transparent and reasonable explanation for the termination of the grants. The Termination Letter lists a number of nonspecific reasons the Department argues it could use to form the basis for terminating the grants, but the Termination Letter does not actually specify which, if any, of these reasons apply to the grants at issue. Indeed, the Termination Letter fails to provide any explanations specific to any terminated grant.

The Termination Letter and Termination [Grant Award Notifications] offer no connection between the facts relating to the individual grants being terminated and the termination decision.

But, in the end, all the APA analysis was for naught.

The problem for the defendants was more basic.

“First, the Court considers the source of Plaintiff States’ rights for retrospective claims, namely, the already terminated grant agreements,” the opinion reads. “Defendants contend that the source of rights stems from the grant agreements which, according to them, bear all the essential characteristics of a contract…Regarding the terminated grant agreements, the Court agrees with Defendants.”

The government argues the contract nature of the dispute means the litigation is governed by the obscure Tucker Act of 1887. Under this law, the U.S. Court of Federal Claims has jurisdiction to rule on “any claim” against the federal government that relies “upon any express or implied contract with the United States.”

And, on that point, Kelley agreed with the Trump administration.

“It is not just a reopening of the grant agreements that must occur,” the court observes. “It is also the enforcement of rights—monetary damages—asserted in the grant agreements. Accordingly, even though Plaintiff States point to statutes, regulations, and the Constitution, their ultimate request is one that requires a court to look at the underlying grant agreements to enforce their rights. Under this source of rights inquiry, the terminated grant agreements are akin to contracts.”

For such relief, the court simply does not have jurisdiction, the judge found.

The victory for the government is conditional, the court insists, because the plaintiffs later filed an amended complaint. And that complaint, Kelley said, drastically changed the course of the litigation.

“In addition to APA claims, Plaintiffs also allege in their Amended Complaint that Defendants’ actions violated the Spending Clause, the separation of powers, and are ultra vires,” the court notes. “While the first complaint generally requested the Court vacate and set aside Defendants’ grant termination, the Amended Complaint specifically requests declaratory judgment and a vacatur of Defendant’s actions.”

Where such non-contractual relief is concerned, the judge said district courts absolutely have jurisdiction to hear the claims.

“[S]ince the Amended Complaint does not solely request the reinstatement of funds for terminated grants but also explicitly requests equitable relief to preserve prospective grants and the process to award grants,” Kelley goes on. “Moreover, the Amended Complaint includes constitutional claims that were absent in the original complaint.”

In the end, the court granted the government’s motion to dismiss in part – in relation to the axed funding – and denied it in part – in relation to the later-in-time alleged constitutional allegations.

The minute order offers a tidy summary of where things stand now:

If this Court finds Defendants’ actions were unlawful under the APA and the Constitution, the grantees in Plaintiff States can file suit in the Court of Federal Claims to request their money damages under the contract. This two-track litigation framework preserves binding authority and upholds the systemic stability intended by the doctrine of stare decisis. Whether or not Plaintiffs are successful on the merits of their claims will be taken up later in this litigation.