FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS FEB 24 2026

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

STATE OF WASHINGTON; STATE OF No. 26-510 CALIFORNIA; STATE OF COLORADO; D.C. No. STATE OF CONNECTICUT; STATE OF 2:25-cv-01228-KKE

DELAWARE; STATE OF ILLINOIS;

STATE OF MAINE; STATE OF

MARYLAND; STATE OF

MASSACHUSETTS; STATE OF ORDER

MICHIGAN; STATE OF NEW MEXICO;

STATE OF NEW YORK; STATE OF

NEVADA; STATE OF OREGON; STATE

OF RHODE ISLAND; STATE OF

WISCONSIN,

Plaintiffs - Appellees,

v.

UNITED STATES DEPARTMENT OF

EDUCATION; LINDA MCMAHON,

Defendants - Appellants.

Appeal from the United States District Court for the Western District of Washington Kymberly K. Evanson, District Judge, Presiding

Argued and Submitted February 23, 2026 San Francisco, California

Before: Richard C. Tallman, Jay S. Bybee, and Gabriel P. Sanchez, Circuit Judges. Per Curiam Plaintiff-Appellees are 16 states who sued for declaratory and injunctive

relief after the United States Department of Education sent notices discontinuing

multi-year grants for mental health related programs. Defendant-Appellants U.S.

Department of Education and Secretary of Education Linda McMahon (“the

Department”) previously moved for an emergency stay of the district court’s

preliminary injunction in this action, which this Court denied. On December 19,

2025, the district court granted summary judgment to Plaintiff States, finding the

grant discontinuations were arbitrary and capricious and contrary to law under the

Administrative Procedure Act (APA), 5 U.S.C. § 551 et seq. Before us is the

Department’s emergency motion to stay the district court’s permanent injunction

pending appeal.1 We deny the Department’s motion and remand to the district

court for further proceedings.

When deciding a motion for a stay pending appeal, we consider the Nken

factors: “(1) whether the stay applicant has made a strong showing that he is likely

to succeed on the merits; (2) whether the applicant will be irreparably injured

absent a stay; (3) whether issuance of the stay will substantially injure the other

parties interested in the proceeding; and (4) where the public interest lies.” Nken v.

Holder, 556 U.S. 418, 434 (2009) (citation modified) (quoting Hilton v. Braunskill,

1 On February 3, 2026, we granted a partial administrative stay for the limited purpose of considering this emergency motion, staying the deadlines set by the district court but otherwise leaving the district court’s injunction in place.

2 26-510 481 U.S. 770, 776 (1987)). “‘The first two factors . . . are the most critical,’ and

the court will address the last two factors only once the applicant has satisfied the

first two factors.” Cmty. Legal Servs. in E. Palo Alto v. U.S. Dep’t of Health &

Hum. Servs., 137 F.4th 932, 937 (9th Cir. 2025) (quoting Nken, 556 U.S. at 434–

35). “The party requesting a stay bears the burden of showing that the

circumstances justify” issuance of the stay. Nken, 556 U.S. at 433–34.

I.

The Department has not made a strong showing it is likely to succeed on the

merits of Plaintiff States’ claims that the Department’s discontinuation notices

were contrary to law and arbitrary and capricious under the APA. See 5 U.S.C.

§ 706(2)(A).

Subject to limited exceptions not at issue here, the General Education

Provisions Act (GEPA) requires notice-and-comment rulemaking for “any

generally applicable rule, regulation, guideline, interpretation, or other requirement

that (1) is prescribed by the Secretary or the Department; and (2) has legally

binding effect in connection with, or affecting, the provision of financial assistance

under any applicable program.” 20 U.S.C. § 1232(a); see also id. §§ 1232(d),

1221e-4. As the district court found, the Department issued identical grant

discontinuation notices to 138 grantees in Plaintiff States that were based upon

unpublished priorities set out in an internal agency directive dated February 5,

3 26-510 2025. These generic mass discontinuation decisions, guided by generally

applicable policy criteria, seem to implicate GEPA’s rulemaking requirement. Id.

Although the Department disputes that the directive had binding legal effect upon

grant programs, the text of the directive indicates otherwise. The directive

mandated an across-the-board review of all new grant awards and the re-review of

all issued grants in accordance with the Department’s new policy objectives,

resulting in the discontinuation of grants in Plaintiff States.

The Department’s argument that it need not engage in rulemaking because it

discontinued the grants based on a determination that they were no longer “in the

best interest of the Federal Government” under 34 C.F.R. § 75.253(a)(5) is

unpersuasive. As noted above, the Department made that “best interest”

determination based on generally applicable policy criteria that appear to implicate

GEPA’s rulemaking requirement. “[I]f a statute requires rulemaking, the affected

agency must comply.” FDA v. Wages & White Lion Invs., L.L.C., 604 U.S. 542,

565 (2025). That holds true even if the Department was correct in its broad

interpretation of the “best interests” § 75.253(a)(5) provision, a matter we need not

decide here. Accordingly, the Department has not demonstrated a strong

likelihood of success on the merits of Plaintiffs’ APA challenge to the

Department’s actions as contrary to law.

4 26-510 The Department has also not made a strong showing it is likely to succeed in

demonstrating that its actions were not arbitrary and capricious under the APA.

See 5 U.S.C. § 706(2)(A). An agency “must examine the relevant data and

articulate a satisfactory explanation for its action including a ‘rational connection

between the facts found and the choice made.’” Motor Vehicle Mfrs. Ass’n of the

U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting

Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)). The reasoned-

explanation requirement exists to “ensure that agencies offer genuine justifications

for important decisions, reasons that can be scrutinized by courts and the interested

public.” Dep’t of Com. v. New York, 588 U.S. 752, 785 (2019). When the basis

for an administrative action is unclear or not understandable, the agency’s action is

arbitrary and capricious under the APA. See SEC v. Chenery Corp., 332 U.S. 194,

196–97 (1947) (finding agency action arbitrary and capricious where a party is

“compelled to guess at the theory underlying the agency’s action”).

Here, the Department sent boilerplate discontinuation notices with a

disjunctive list of four possible grounds for discontinuation of a specific grant,

without ever identifying or explaining which specific ground applied to the grantee

in question. The Department’s discontinuation notices were not tailored to the

specific grants and failed to explain what was wrong with each grantee’s project,

which is not a sufficiently reasoned explanation for the agency’s decision to cancel

5 26-510 the individual grants. See Nw. Env’t Def. Ctr. v. Bonneville Power Admin., 477

F.3d 668, 689 (9th Cir. 2007) (finding that “similar letter[s]” “baldly asserting”

conclusory statements did not provide a reasoned explanation); Dickson v. Sec’y of

Def., 68 F.3d 1396, 1405 (D.C. Cir. 1995) (finding that boilerplate letters “omitted

the critical step—connecting the facts to the conclusion”). Nor did the Department

give the grantees an opportunity to learn about or address the Department’s

unpublished change in policy affecting its grant continuation process. See F.C.C.

v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009) (“An agency may not,

for example, depart from a prior policy sub silentio or simply disregard rules that

are still on the books.”); Encino Motorcars, LLC v. Navarro, 579 U.S. 211, 222

(2016) (“[A] reasoned explanation is needed for disregarding facts and

circumstances that underlay or were engendered by the prior policy.”).

Accordingly, the Department has failed to make a strong showing that it

engaged in the reasoned decision-making required under the APA to provide

grantees proper notice about the grounds for their individual discontinuation

decisions.

II.

Nor has the Department demonstrated it will be irreparably injured absent a

stay. The district court’s permanent injunction does not require disbursement of

any funds to Plaintiff States. The injunction merely requires that the Department

6 26-510 make new continuation or discontinuation determinations in accordance with

existing statutory and regulatory requirements. That the Department has been

ordered to comply with their legal obligations is not irreparable harm.

We remand to the district court for the limited purpose of setting new

deadlines for the Department to make new continuation decisions and any

continuation awards resulting from those decisions but retain jurisdiction over the

appeal. The district court’s order suspending “the lapse [in grant funding] while

this lawsuit plays out” remains in effect. See Washington v. U. S. Dep’t of Educ.,

2025 WL 3690779, at *18 (W.D. Wash. Dec. 19, 2025). The appellate briefing

schedule previously set by this Court remains in effect. See Dkt. No. 2.

EMERGENCY MOTION FOR STAY PENDING APPEAL DENIED.

7 26-510