As two Virginia school districts late last month fought the U.S. Department of Education’s threat to terminate federal funding, they were dealt a swift legal blow: A judge dismissed their lawsuits within a week and directed them to a different federal court.
The school systems’ funding had been imperiled because of the Trump administration’s objections to their transgender student policies. In response to their legal challenge, the judge said their case belonged in the U.S. Court of Federal Claims, which requires a higher burden of proof and would offer more limited relief, even if a decision went in their favor.
The districts in Arlington and Fairfax counties aren’t the first in recent months to be told to take their case to the federal claims court, which hears monetary cases brought against the U.S. government, particularly involving contracts.
It’s becoming more commonplace as the U.S. Supreme Court has agreed with the Trump administration that cases challenging the termination of scores of canceled grants and contracts belong in the claims court instead of the nation’s main trial courts.
School districts, universities, professional organizations, states, and other entities that sued over the sudden termination of federal grants and contracts in the first months of the Trump administration—often as the administration claimed the projects advanced diversity, equity, and inclusion policies it sought to eradicate—in some cases achieved immediate, if limited victories. District court judges in multiple cases ordered the administration to reinstate contracts, finding the lawsuits would likely succeed in the long run.
But the administration consistently argued as it defended the cuts that the proper venue for those challenges was the federal claims court. And the Supreme Court has agreed in at least two key instances, reversing orders from lower courts to reinstate awards and leaving lower courts to follow suit in other cases.
It means that the main recourse available to those hoping to have lost grants restored is increasingly closed off. In federal claims court, legal experts say, districts and others trying to save their funding have a more difficult time proving they’re entitled to relief, they won’t be granted sweeping injunctions that pause Trump administration actions, and they will only be able to recoup monetary damages rather than have contracts and grants fully reinstated.
The Trump administration has argued that it will be left with no recourse if district judges force them to keep paying out canceled contracts but later find the administration to be acting within the law.
“So what the Supreme Court has done here is, once again, go out of its way to empower the Trump administration to pursue whichever autocratic measures it desires,” said Kevin Welner, a professor in the education and law schools at the University of Colorado Boulder.
In response, those bringing lawsuits and judges are now figuring out what the cases are fundamentally about, said Robert Wagman, a partner at the global energy law firm Bracewell, who represents clients with government contracts, grants, and federally funded projects.
“Are you seeking money damages under an award, versus are you trying to get the government to comply with the law?” Wagman said. “It’s not exactly a clear bright line, and that’s why you’re seeing some of the back-and-forth.”
Following SCOTUS orders, district judges shuffle cases to other courts
The Arlington and Fairfax districts sued the Education Department in late August after they refused to change policies allowing students to use bathrooms and locker rooms aligned with their gender identity. The department said the policies violated Title IX.
In addition to finding the districts in violation of the sex discrimination law, the department took the rare step of putting Arlington, Fairfax, and three other Virginia districts in “high-risk status”—allowing them to receive their federal funds only on a reimbursement basis. They would be required to first cover expenses with local funds before requesting reimbursement that the federal agency could ultimately deny.
The districts asked a judge to find the Education Department’s actions violated the law and that their policies didn’t violate Title IX. But the Trump administration responded in legal filings that what the districts requested “is reserved for the most extraordinary cases” and that the case didn’t belong in federal district court.
The districts are “entitled to nothing,” the administration argued, adding that “this case can begin and end with one word: jurisdiction.”
In dismissing the Arlington and Fairfax cases on Sept. 5, U.S.District Court Judge Rossie D. Alston Jr., a 2019 appointee of President Donald Trump, agreed that his court lacked jurisdiction to settle the matter because the school systems were ultimately asking the court to order a monetary payment.
Fairfax County, which enrolls about 183,000 students, and the 28,000-student Arlington County both appealed Alston’s ruling this week.
An Arlington spokesperson said the district “has a duty to defend the policies designed to protect our students, families, and educators” and noted in a statement that Alston “explicitly upheld the legality of our transgender student policy and its adherence to Title IX.”
Fairfax County Superintendent Michele Reid wrote on the district’s website that the Education Department’s demands force the school system “into an unacceptable position of breaking the law and discriminating against our students.”
In New Mexico, after the Silver Consolidated district sued the Education Department for canceling its mental health services grant—part of the administration’s April cancellation of $1 billion in school mental health grants—a federal court in July dismissed the case. Despite the 2,500-student district’s efforts to argue the cancellation violated federal law and the U.S. Constitution, “ultimately the controversy is over a contract,” District Judge William Johnson wrote in his opinion.
Since the Supreme Court in April agreed with the Trump administration that a lawsuit from eight states challenging the cancellation of teacher-training grants should go to the Court of Federal Claims instead, several appeals courts had followed the high court’s lead, Johnson, a President George W. Bush appointee, noted.
Supreme Court has sided with the Trump admin., but hasn’t provided much explanation
The Supreme Court hasn’t gotten into the merits of the cases that have reached it, but instead has said the lower-court actions to pause Trump administration grant terminations have been inappropriate and overturned them—generally without extensive explanation.
So, “lower court judges are flying a bit blind,” Welner said.
But the high court rulings—in the teacher-training grants case and another in August that challenged the cancellation of National Institutes of Health research grants—indicate to some lower-court judges that the U.S. Court of Federal Claims has jurisdiction over lawsuits challenging the Trump administration’s funding terminations.
But that result hasn’t been uniform, perhaps because every case is unique, said Wagman, the lawyer who represents clients with federal contracts.
“You will get some differences,” he said. “I don’t know if that’s solely just the way the Supreme Court is handling these cases so much as it is, you’ve seen one grant, you’ve seen one grant.”
The process would look a bit different for relief
The claims court can only award monetary damages for money lost—rather than issue injunctions that compel the Trump administration to resume payments and resurrect entire grant programs, Welner said.
Those alleging contract violations would have prove the Trump administration acted in bad faith, he said.
The decisions directing those filing lawsuit to the claims court are not “narrowing the type of lawsuit they could bring, but reducing the likelihood of success,” Welner said. “They certainly could bring the lawsuit … but it’s much harder to prove, and it depends on the finder of fact.”
In the teacher-training grants case that led to the Supreme Court’s first decision on funding terminations, Wagman said, the states’ assertion that the federal government owed the grantees money—specifically, money that hadn’t been paid yet but was due under the grant terms—tipped the scales for the high court to find that the case belonged in the realm of federal claims.
Meanwhile, cases solely focused on constitutional issues, like Harvard University arguing that the Trump administration violated its First Amendment rights, fall under district court jurisdiction, Wagman said.
It’s a complicated calculation for a district or state with terminated contracts or grants to decide whether to bring a case to federal claims court, Welner said.
“It’s not cheap going to court, and particularly when you’re up against the government, which has all the resources they want to put behind it,” he said. “You usually don’t end up with everything you want. Even if you win, you end up with appeals. … It’s a really tough road.”
2025-09-10 20:28:45
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