{"id":26859,"date":"2025-09-02T11:20:42","date_gmt":"2025-09-02T16:20:42","guid":{"rendered":"https:\/\/blogs.law.columbia.edu\/climatechange\/?p=26859"},"modified":"2025-12-18T11:07:25","modified_gmt":"2025-12-18T16:07:25","slug":"supreme-court-signals-challenges-to-federal-grant-terminations-are-contract-disputes","status":"publish","type":"post","link":"https:\/\/blogs.law.columbia.edu\/climatechange\/2025\/09\/02\/supreme-court-signals-challenges-to-federal-grant-terminations-are-contract-disputes\/","title":{"rendered":"Supreme Court Signals Challenges to Federal Grant Terminations are Contract Disputes"},"content":{"rendered":"

*This is the first post in a blog series that examines the impact of federal grant termination litigation on the Inflation Reduction Act\u2019s Greenhouse Gas Reduction Fund (GGRF). At the time of this post, the U.S. Court of Appeals for the D.C. Circuit had issued a decision in <\/b>Climate United Fund v. Citibank<\/i><\/b>, vacating the district court\u2019s preliminary injunction. On December 17th, the D.C. Circuit granted<\/a> a motion for rehearing en banc<\/em>, and vacated the Court’s judgment filed September 2, 2025. <\/b>The next post in this blog series will unpack and analyze that opinion.\u00a0<\/b><\/p>\n

On August 21, 2025, the Supreme Court handed down an <\/span>emergency order<\/span><\/a> concerning the proper forum for challenging the Trump administration\u2019s termination of National Institutes of Health (NIH) grants, and the lawfulness of agency directives ordering those terminations. In <\/span>American Public Health Association et al. v. National Institutes of Health et al.<\/span><\/i><\/a> (<\/span>APHA v. NIH<\/span><\/i>), several research groups challenged the NIH\u2019s decision to terminate about $2 billion in research-related grants. These terminations were based on a series of Executive Orders issued by President Trump, which demanded that federal agencies align federal grantmaking with the policy priorities of the Trump administration. In response, the NIH issued <\/span>internal guidance<\/span><\/a> stating that, moving forward, the agency will not fund research \u201crelated to DEI objectives, gender identity, or COVID-19.\u201d A federal District Court in Massachusetts declared that guidance and the resulting termination of grants were unlawful. On appeal, the Court of Appeals for the First Circuit <\/span>denied the government\u2019s request for a stay<\/span><\/a> of the District Court\u2019s judgment pending appeal, and thereafter the government appealed to the Supreme Court.\u00a0<\/span><\/p>\n

The Trump administration has been cancelling billions in dollars in grant funding across a number of sectors, including energy, education, science, and biomedical research, among others. Plaintiffs challenging these grant terminations have brought their claims in federal district courts because, as they argue, the heart of their claims is against federal agency action. That\u2019s not how the federal government has approached the cases, however. Instead, they\u2019ve argued that the grant terminations are purely contractual disputes, and therefore belong in the court that has jurisdiction over contract claims against the United States: the Court of Federal Claims (CFC). The venue matters a great deal. With jurisdiction only over contract disputes, the CFC can only provide relief to plaintiffs in the form of monetary damages for breaches of contract. It cannot provide equitable relief, like ordering the terminated grants reinstated, which is ultimately the most desirable outcome for plaintiffs.\u00a0<\/span><\/p>\n

While the Supreme Court\u2019s emergency order is an interim judicial intervention, not a final decision on the merits of the plaintiffs\u2019 claims, the court\u2019s ruling is still highly significant. It matters not just for biomedical research, but also for future disputes over various other government funding programs \u2014 including the $27 billion Greenhouse Gas Reduction Fund (GGRF) established via the Inflation Reduction Act (IRA).<\/span><\/p>\n

The Supreme Court\u2019s Reasoning in APHA v. NIH<\/em><\/b><\/p>\n

In an odd posture, the Supreme Court had two majorities. The first majority, made up of the five conservative-appointed justices, stayed the District Court\u2019s ruling that the NIH must continue making grant payments during the litigation. This group of Justices concluded that the case should not have been heard in the District Court, but instead belonged in the CFC.\u00a0<\/span><\/p>\n

Specifically, Justice Kavanaugh reasoned that \u201c[t]he core of plaintiffs\u2019 suit alleges that the Government unlawfully terminated their grants. That is a breach of contract claim. And under the Tucker Act, such claims must be brought in the Court of Federal Claims [CFC], not federal district court. 28 U. S. C. \u00a71491(a)(1).\u201d To reach this conclusion, Kavanaugh and the other conservative justices relied on the Supreme Court\u2019s <\/span>decision<\/span><\/a> in another recent federal funding case, <\/span>Department of Education v. California<\/span><\/i>, that permitted the Department of Education to pause millions of dollars in grants. In that earlier case, a majority of the Supreme Court held that the plaintiffs\u2019 action challenging the pause involved a request to enforce a contractual obligation to pay money. As such, and since the Tucker Act grants the CFC jurisdiction to hear lawsuits based on \u201cany express or implied contract with the United States,\u201d the majority held that the case should have been brought there.\u00a0<\/span><\/p>\n

The conservative majority reached the same conclusion in<\/span> APHA v. NIH. <\/span><\/i>The majority also reasoned that, if the District Court\u2019s judgment was not stayed while the litigation played out and the government ultimately prevailed, it faced the prospect of paying out grant money now and then not being able to get it back later. This, in the majority’s view, would result in \u201cirreparable harm\u201d to the government.\u00a0<\/span><\/p>\n

The conservative majority\u2019s ruling in APHA v. NIH<\/em> hands another short-term win to the Trump administration. In several recent cases involving cancellation of federal funding, the administration has argued that federal district courts do not have jurisdiction over what they characterize as contract disputes that belong in the CFC. It seems the Supreme Court agrees with them, at least with respect to the termination of the grants. But there are signs that the court, or at least some members of it, might take a different view of the underlying directives.\u00a0<\/span><\/p>\n

In <\/span>APHA v. NIH<\/span><\/i>, a majority of the Justices signaled that they may support\u00a0 plaintiffs\u2019 claim that the NIH directives preventing grants for DEIA and other work that does not align with Trump administration priorities violates the APA. Justices Roberts and Barrett joined the three Democratic appointees to deny the stay application as to the underlying NIH directives. Justice Roberts wrote that the District Court\u2019s vacatur of the directives \u201cfalls well within the scope of [that court\u2019s] jurisdiction under the [APA].\u201d By denying the stay application as to the District Court\u2019s decision that the NIH directives violated the APA, plaintiffs may be on firmer footing to get a favorable ruling on the NIH\u2019s action that gave rise to the terminations. Although this may have the immediate impact of protecting grants that have not yet been terminated, grantees who have already lost their funding may still be in a difficult spot. Justice Barrett\u2019s opinion emphasized that a decision vacating the underlying NIH directives does not necessarily mean that grants terminated under that guidance must be reinstated.<\/span><\/p>\n

Impacts of Litigation on Grantees<\/b><\/p>\n

Doctrinal questions notwithstanding, the federal funding litigation reveals a deeper structural issue: the litigation dynamics strongly favor the federal government. Though plaintiffs may have more success in the CFC, the cost, delay, and limited remedies make that path prohibitive. As Justice Jackson warned in her dissent in <\/span>APHA v. NIH<\/span><\/i>, this ruling sends plaintiffs \u201con a likely futile, multivenue quest for complete relief.\u201d Litigation is expensive, and the longer it goes on, the more likely grantees\u2019 resources will run out. This pattern holds across federal funding disputes. In <\/span>Climate United Fund v. Citibank<\/span><\/i><\/a>, for instance, many GGRF awardees challenging the termination of their grants are new organizations that may not survive if funding is cut off or litigation drags on for years. After the <\/span>NIH<\/span><\/i> ruling, a federal court also determined that plaintiffs who received IRA money to address environmental issues in historically disadvantaged communities <\/span>must bring their claims in the CFC<\/span><\/a>.\u00a0<\/span><\/p>\n

Even when grantees secure preliminary injunctions, and <\/span>many have been issued against the Trump administration<\/span><\/a>, those victories are often short-lived. Injunctions are meant to preserve the status quo and prevent irreparable harm, such as keeping funding flowing while cases are resolved. Yet federal appeals courts have increasingly stayed district court orders that protect access to funding, effectively watering down relief and forcing organizations into extended, resource-draining battles.<\/span><\/p>\n

Grantees may be able to get some of their money \u2013 eventually \u2013 but many of these grants cannot be stopped and started on a whim by the organizations and people who are relying on them. The consequences are immediate and severe: life-saving clinical trials shutter, contracts collapse, projects stall, employees are laid off, and public trust in government erodes. The NIH dispute exposes a troubling asymmetry. The federal government can litigate indefinitely, while grantees dependent on funding cannot. Even if an administration ultimately loses on the merits, it can still succeed in crippling its opponents in these federal funding cases by running out the clock.<\/span><\/p>\n

<\/div>","protected":false},"excerpt":{"rendered":"

*This is the first post in a blog series that examines the impact of federal grant termination litigation on the Inflation Reduction Act\u2019s Greenhouse Gas Reduction Fund (GGRF). At the time of this post, the U.S. Court of Appeals for the D.C. Circuit had issued a decision in Climate United Fund v. Citibank, vacating the […]<\/p>\n","protected":false},"author":3422,"featured_media":26868,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[5673,69380],"tags":[69873,9435,68674,9430,9423,65726],"class_list":{"0":"post-26859","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-litigation","8":"category-us-climate-law-policy","9":"tag-blog-series-federal-grant-terminations","10":"tag-epa","11":"tag-inflation-reduction-act","12":"tag-litigation","13":"tag-supreme-court","14":"tag-u-s-climate-policy","15":"czr-hentry"},"yoast_head":"\nSupreme Court Signals Challenges to Federal Grant Terminations are Contract Disputes - Climate Law Blog<\/title>\n<meta name=\"description\" content=\"This is Part One of a two-part blog series that examines the impact of federal grant termination litigation on the Inflation Reduction Act\u2019s Greenhouse Gas Reduction Fund (GGRF).\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.law.columbia.edu\/climatechange\/2025\/09\/02\/supreme-court-signals-challenges-to-federal-grant-terminations-are-contract-disputes\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Supreme Court Signals Challenges to Federal Grant Terminations are Contract Disputes - 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