Recently the U.S. Court of Appeals for the Fourth Circuit issued a significant decision in Sustainability Institute v. Trump, vacating injunctions that had ordered the federal government to restore access to dozens of previously awarded federal grants. The decision offers important lessons about jurisdiction, remedies, and the increasingly sharp lines courts are drawing between district court review and the exclusive role of the U.S. Court of Federal Claims under the Tucker Act.
The Dispute in Plain Terms
The plaintiffs in Sustainability Institute were nonprofit organizations and local governments that had been awarded or were subrecipients of 38 federal grants. These grants were funded through major congressional enactments such as the Inflation Reduction Act, the Infrastructure Investment and Jobs Act, and the American Rescue Plan Act. Each grant followed a familiar structure: Congress appropriated funds for specified programs, agencies awarded grants for defined purposes, and grantees undertook to perform approved work in exchange for payment over time.
Then, in early 2025, a series of executive orders directed federal agencies to pause, review, and in many cases terminate grants tied to certain policy priorities, including environmental justice and equity initiatives. Agencies implemented these directives by freezing payments, blocking access to funding portals, and ultimately terminating some grants outright.
The affected grantees sued in federal district court. They alleged violations of the Administrative Procedure Act, separation-of-powers principles, and the Constitution’s Presentment Clauses. They sought declaratory relief and, critically, injunctions requiring the government to restore access to grant funds.
The district court agreed with the plaintiffs. It concluded that the government’s actions were unlawful and ordered immediate restoration of funding for 32 grants. The government appealed, and the Fourth Circuit stayed the injunctions pending review.
The Fourth Circuit Holds District Court Lacked Jurisdiction
Reversing the district court, the Fourth Circuit vacated both the permanent injunction entered on the plaintiffs’ APA claims and the preliminary injunction entered on their constitutional and ultra vires claims. Importantly, the court’s holding was not on the merits but, instead, it held that the case was in the wrong court.
Grants Are Contracts Within the CFC’s Tucker Act Jurisdiction
At the heart of the Fourth Circuit’s jurisdictional analysis was a simple but powerful premise: federal grants are contracts. As such, a well-established statutory framework comes into play. Under the Tucker Act, claims against the United States that are founded on express or implied contracts must be brought in the U.S. Court of Federal Claims. That jurisdiction is exclusive for all claims in which the plaintiff is seeking more than $10,000. Just as importantly, the Tucker Act reflects a deliberate Congressional choice about remedies. In contract cases, plaintiffs may seek money damages, but they generally may not obtain injunctive relief or specific performance against the government.
The plaintiffs had framed their case as an Administrative Procedure Act challenge to arbitrary and capricious government action—the freezing of their grants. The district court accepted that framing, emphasizing that the plaintiffs sought equitable relief rather than damages, and granted that relief.
Reversing, the Fourth Circuit rejected that approach. Relying heavily on recent Supreme Court decisions involving frozen or terminated grants, the court emphasized that labels do not control. What matters is the substance of the claim and the relief sought. An order requiring the government to restore grant funding, the court explained, is “in every meaningful sense” an order enforcing a contractual obligation to pay money. And the Tucker Act gives exclusive jurisdiction to the U.S. Court of Federal Claims over breach-of-contract claims against the government for money damages.
The injunction entered by the district court, the Fourth Circuit explained, was indistinguishable from classic specific performance—a remedy Congress has not authorized district courts to award against the United States in contract disputes. Because the plaintiffs’ claims were contractual in essence, jurisdiction lay exclusively in the Court of Federal Claims.
In an unsuccessful attempt to save their injunction, the plaintiffs argued that they were not seeking damages for past harm, but forward-looking relief to prevent ongoing unlawful conduct. The Fourth Circuit was unpersuaded. Courts, it noted, have long rejected attempts to evade the Tucker Act by recharacterizing contract claims as requests for injunctions or declarations. Even when government action causes continuing harm, if the right asserted ultimately flows from a contract with the United States and the relief sought would require payment under that contract, the claim remains contractual in nature.
Lessons for Plaintiffs
The Sustainability Institute decision is highly relevant for plaintiffs who challenge federal interference with property rights, contracts, or other vested interests.
First, the decision is a reminder that jurisdiction is not technical after-thought. Choosing the wrong forum can doom a case before the merits are ever reached. For claims that arise out of contracts or other money-mandating relationships with the government, the Court of Federal Claims is often the only available path—even when plaintiffs would prefer to seek equitable relief.
Second, the case underscores the limits of injunctive remedies against the United States. Plaintiffs may want courts to order the government to stop unlawful conduct and restore the status quo. But Congress has sharply constrained a court’s power to issue such orders in contract-based disputes. In many situations, money damages are the exclusive remedy.
Looking Ahead
The Fourth Circuit’s decision in Sustainability Institute v. Trump is a sobering illustration of how procedural doctrine can shape substantive outcomes. The plaintiffs may yet pursue relief in another forum, but the district court injunction that once promised immediate restoration of funding is gone.
For plaintiffs considering challenges to federal action—whether involving grants, contracts, or property rights—the message is clear: careful attention to jurisdiction and remedy is not optional. It is central to any successful strategy.
As counsel who regularly represent plaintiffs in takings and related constitutional cases, we view this decision as reinforcing a familiar truth. When the government disrupts settled expectations, the law generally provides a remedy—but only if claims are brought in the right court, under the right theory, and with a clear-eyed understanding of what relief the law allows.
