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Where Grant Litigation Stands After the Supreme Court’s Jurisdictional Ruling in NIH

The Supreme Court issued a fractured, 4-1-4 ruling on its emergency docket in National Institutes of Health v. American Public Health Association, No. 25A103, 606 U.S. ____ (2025) (per curiam) (“NIH”) on August 21, 2025.

The Court’s ruling left behind a complex legal landscape, because four justices wrote that a district court has jurisdiction to hear both a challenge to agency guidance alleged to be arbitrary and capricious, and challenges to grant terminations based on that guidance. Four other justices wrote that the entire case (i.e., both the challenge to the agency guidance and the challenge to grant terminations based on that guidance) belongs in the Court of Federal Claims. In the end, the outcome was controlled by a single justice (Justice Barrett), who decided the jurisdictional issue in a manner inconsistent with the views of eight justices. In her controlling concurrence, Justice Barrett ruled that a district court has jurisdiction to hear a challenge to agency guidance, but lacks jurisdiction to hear challenges to grant terminations based on that guidance because grant termination challenges are subject to the Tucker Act and therefore belong in the Court of Federal Claims.

Two lower opinions handed down since NIH show lower courts falling in line with Justice Barrett’s ruling in NIH:

Supreme Court Weighs in for a Second Time on Jurisdiction over Grant Termination Cases

Dominique L. Casimir and Sara N. Gerber ●

The Supreme Court recently ruled for the second time that federal district courts likely lack jurisdiction under the Administrative Procedure Act (“APA”) to hear challenges to terminations of federal grants. The first such ruling came in April of this year, when the Court granted an emergency stay in California v. Department of Education. On August 21, 2025, the Supreme Court issued another emergency stay, in NIH v. American Public Health Association, reaffirming the view that challenges to grant terminations are, in substance, breach of contract actions for money damages that belong in the Court of Federal Claims under the Tucker Act.

Since California, several lower courts have nevertheless asserted jurisdiction over grantee lawsuits seeking reinstatement of terminated grants, often distinguishing California on procedural or factual grounds. We have previously written about some of those cases (including Massachusetts v. Kennedy, which was later consolidated with NIH). Although the Supreme Court’s decision in NIH is an interim order, the jurisdictional question may now be functionally settled, particularly given Justice Gorsuch’s admonishment to lower courts that even if they “sometimes disagree with this Court’s decisions…they are never free to defy them. When this court issues a decision, it constitutes a precedent that commands respect in lower courts.” Following NIH, we expect terminated grantees will largely be forced into the Court of Federal Claims, which generally does not have authority under the Tucker Act to grant the equitable relief—reinstatement of grants—that many of them are seeking.

Trump Administration Increases Oversight of Federal Grants

Dominique L. Casimir and Shane M. Hannon ●

President Trump issued an Executive Order (“EO”) on August 7 that overhauls the federal grantmaking process. Titled “Improving Oversight of Federal Grantmaking,” the EO identifies deficiencies in the federal government’s current approach to issuing discretionary grants. The EO criticizes some existing federal grants as an “offensive waste of tax dollars” and promoting “anti-American ideologies,” and contends grants have been issued to “organizations that actively work against American interests abroad.” It also identifies defects in the grant approval process, noting that drafting grant applications is “notoriously complex” and therefore too costly for smaller institutions. The EO seeks to align federal grants with the Administration’s policy preferences and give the Administration greater control to select grant recipients. Here are the relevant highlights and takeaways:

The EO expands the federal government’s ability to terminate grants.

A core feature of the EO is requiring all discretionary grants, current and future, to include termination for convenience clauses. Discretionary grants are those where an agency exercises its own judgment to select both the funding amount and the grantee, such as by basing award on the merits of grant applications via a competitive process. Historically, discretionary grants have not included termination for convenience clauses. For example, the Uniform Guidance, 2 C.F.R. § 200, does not include a provision that permits the federal government to terminate a discretionary grant at its leisure. This is in contrast to typical federal contracts, which invariably include termination for convenience provisions, such as FAR 52.249-2.

Disagreeing with the Supreme Court, the Ninth Circuit and Two District Courts Find APA Jurisdiction in Challenges to Federal Contract and Grant Terminations

Dominique L. Casimir and Sara N. Gerber ●

One of the immediate priorities of the second Trump administration has been the termination of a slew of federal contracts and grants. This, predictably, has led to litigation, mostly filed in the U.S. District Courts, which as we have previously written, have authority to grant equitable relief. The government has been arguing that these cases belong in the U.S. Court of Federal Claims, where only monetary damages are available (and only upon meeting the high burden of establishing that the government acted in bad faith). On April 4, 2025, the Supreme Court issued an emergency stay of a District Court’s preliminary injunction in a case challenging grant terminations, with the five-justice majority suggesting that the termination case belonged in the Court of Federal Claims. But since then, two U.S. District Courts and the Ninth Circuit Court of Appeals have ruled—contrary to the Supreme Court’s emergency stay order—that there is indeed district court jurisdiction in cases challenging contract and grant terminations. As Judge Young of the District Court of Massachusetts stated, “…this Court, after careful reflection, finds itself in the somewhat awkward position of agreeing with the Supreme Court dissenters and considering itself bound by the still authoritative decision of the Court of Appeals of the First Circuit…” which ruled that the Tucker Act did not apply, and that the government’s actions were reviewable under the Administrative Procedures Act (“APA”).

Supreme Court Lifts Restraining Order on Grant Terminations

Dominique L. Casimir and Sara N. Gerber ●

The Supreme Court recently issued a ruling with significant impacts for federal contractors and grantees looking to challenge terminations of their contracts and grants in U.S. district courts. Terminated contractors and grantees may strongly prefer to challenge terminations in the district courts rather than in the Court of Federal Claims, because the Court of Federal Claims does not have authority to grant equitable relief to do things like restore funding or enjoin terminations, and the available grounds for challenging contract and grant terminations in the Court of Federal Claims are significantly limited.

In February 2025, the Department of Education (“DOE”) terminated $600 million in grants for teacher training on the grounds that the training included diversity, equity, and inclusion (“DEI”) concepts and thus no longer effectuated DOE priorities. The grantees challenged these terminations in a lawsuit filed in the U.S. District Court for the District of Massachusetts. The District Court issued a Temporary Restraining Order (“TRO”) directing DOE to restore the terminated grant funding. DOE asked the First Circuit to stay the TRO pending appeal, which the First Circuit denied. DOE then filed an emergency appeal to the U.S. Supreme Court, where a majority of the justices sided with DOE.

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