A new petition for certiorari filed by the United States urges the Supreme Court to stop lower courts from ordering “universal” preliminary relief under the Administrative Procedure Act (APA).¹ In recent years, the federal government frequently has asked courts to limit preliminary injunctions and stays under the APA to the parties before the court, rather than ordering relief that applies to all parties potentially affected by the agency action in question. If the petition is granted, and the Supreme Court reverses the decision below on this issue, it would have significant repercussions for parties seeking to preliminarily enjoin or stay federal agency action on a nationwide basis.

The petition seeks review of a 2022 rule issued by the Department of Education. The rule affects multiple federal student loan programs, establishing new federal standards and procedures governing borrowers’ defenses to repayment and the discharge of student loan obligations in the event of certain school closures.² A Texas-based trade association sued in the U.S. District Court for the Western District of Texas and sought a preliminary injunction to prevent the rule from going into effect nationwide.³ After the district court denied the association’s request for preliminary relief, the association appealed. The U.S. Court of Appeals for the Fifth Circuit reversed, concluding that the association had made the necessary showing for preliminary relief.⁴

In determining the proper scope of the remedy, the Fifth Circuit construed the association’s preliminary injunction motion as a request to postpone the rule’s effective date under Section 705 of the APA.⁵ As the Fifth Circuit explained, the appropriate remedy for unlawful agency action is a remedy that operates on the agency action itself—not just a remedy limited to parties before the court.⁶ That remains true whether the plaintiff is seeking a temporary stay under Section 705, which authorizes courts to “issue all necessary and appropriate process to postpone the effective date of an agency action” pending judicial review, or seeking vacatur under Section 706, which allows courts to “set aside” unlawful agency action.⁷ This text, the Fifth Circuit held, is also bolstered by the common practice of courts staying agency rules “without party limitation.”⁸

On October 10, 2024, the United States filed a petition seeking Supreme Court review of the Fifth Circuit’s decision on the merits of the rule and the scope of preliminary relief that district courts are authorized to issue under the APA. Acknowledging that there is no circuit split on the issue of universal relief under the APA, the government principally argues that the Court should grant the petition because the Fifth Circuit’s ruling was wrong on the merits and the practice of courts granting “overbroad relief blocking important federal regulations” presents an issue of exceptional importance.⁹ In contesting the scope of relief authorized under the APA, the government focuses on Supreme Court precedent analyzing the proper scope of equitable relief, echoing arguments that the government previously has made against nationwide vacatur of agency regulations.¹⁰ The government argues, for example, that equitable remedies must sweep no more broadly than necessary to afford relief to the parties before the court and that universal injunctions circumvent the limits on class-action litigation imposed by Federal Rule of Civil Procedure 23.¹¹ Turning to the text of the APA, the government argues that Section 705 should be read narrowly to authorize relief only “to the extent necessary to prevent irreparable injury” to the parties before the court.¹² In the government’s view, the text of Section 705 permitting courts to “issue all necessary and appropriate process to postpone the effective date of an agency action or to preserve status or rights pending completion of the review proceedings” does not authorize courts to order a nationwide stay of the effective date of an agency rule.¹³ Instead, it argues that “universal” stays of an agency action’s effective date may be appropriate only when a court is granting preliminary relief from agency “orders” that “affect only one or several parties,” which can be stayed “without extending relief to nonparties.”¹⁴

The United States’ petition in Career Colleges comes amid increasing litigation in recent years over the scope of preliminary and final relief in actions challenging federal regulations in APA cases. Writing earlier this year, Justice Kavanaugh argued that the APA’s provision permitting courts to “set aside” agency action establishes clear authority for vacatur of agency rules, as reflected by longstanding judicial practice.¹⁵ Moreover, vacatur may provide the only means for many unregulated but adversely affected parties (such as the competitor of a regulated entity) to obtain judicial review of agency action.¹⁶ Justice Jackson expressed similar views while serving on the U.S. District Court for the District of Columbia, citing the late Justice Blackmun for the principle that, “if an agency’s rule is deemed facially invalid, then the appropriate remedy under the APA is for the court to prohibit the rule’s applicability in any and all circumstances, a ruling that unavoidably redounds to the benefit of parties not before the court.”¹⁷ On the other hand, Justice Gorsuch, joined by Justices Thomas and Barrett, have expressed skepticism that the APA authorizes courts to vacate agency action.¹⁸ In the view of those Justices, “universal” relief through vacatur of agency action offends the separation of powers, departs from the foundational principle that relief must be party-specific, and lacks clear support in the APA’s text.¹⁹

If granted, this case could have significant implications for the scope of preliminary—and perhaps ultimate—relief in APA cases. Our team of experienced APA litigators and regulatory counsel will continue to monitor the case and legal developments in this area.