The lawsuits over the Trump administration’s NIH grant cuts have produced a split outcome: federal courts permanently blocked the 15 percent cap on indirect cost reimbursements and voided the mass termination of research grants as arbitrary and unlawful, but the Supreme Court then narrowed where those payment disputes can be heard, and a December 2025 settlement forced the NIH to review more than 5,000 stalled applications. Key pieces remain unresolved, including the agency’s stated plan not to renew restored grants and a jurisdictional divide that will shape any future challenge.
What the Administration Did
Two separate actions drew the lawsuits. On February 7, 2025, the NIH issued a notice capping indirect cost rates — the reimbursements institutions receive for facilities, utilities, and administrative overhead — at 15 percent for all grants, effective the next business day. Negotiated rates at major research universities had averaged around 58 percent.1Brennan Center for Justice. The Cost of the Trump Administration’s Attacks on Research Funding
The second track was the wholesale termination of individual grants. Between late February and early April 2025, the NIH terminated roughly 694 grants worth $1.81 billion.2The American Journal of Managed Care. NIH Grants Terminated Amid Trump Administration, Raising Concerns for U.S. Research, Minority Health Disparities By mid-2025, a study in the Proceedings of the National Academy of Sciences counted 2,291 terminated and 1,534 frozen grants, representing $2.45 billion in rescinded funding.3Proceedings of the National Academy of Sciences. Impact of NIH Grant Terminations on Research The terminations initially halted 383 clinical trials involving about 74,000 patients.1Brennan Center for Justice. The Cost of the Trump Administration’s Attacks on Research Funding The targets were research the administration deemed misaligned with its priorities: diversity and equity, gender identity, climate and environmental health, COVID-19, and vaccine hesitancy.
The Indirect Cost Cap Case
On the day the cap was supposed to take effect, a coalition of 22 state attorneys general led by Minnesota, Massachusetts, Illinois, and Michigan sued in the U.S. District Court for the District of Massachusetts. They argued the cap violated the Administrative Procedure Act and a congressional appropriations rider that, since fiscal year 2018, has prohibited the NIH from unilaterally changing indirect cost reimbursement.4Minnesota Attorney General’s Office. Attorney General Ellison Sues Trump Administration Over NIH Indirect Cost Cuts The Association of American Medical Colleges and other higher education groups filed parallel challenges.
A federal judge granted temporary restraining orders the same afternoon. On March 5, 2025, Judge Angel Kelley issued a nationwide preliminary injunction, and on April 4, 2025, she converted it into a permanent one.5Proceedings of the National Academy of Sciences. NIH Indirect Cost Rate Cap Litigation
On January 5, 2026, a three-judge First Circuit panel affirmed the permanent injunction in full. It held that the flat 15 percent rate was a “modified approach” to the NIH’s regulations that the annual appropriations rider explicitly prohibits, that the guidance also violated HHS’s own regulations on deviating from negotiated rates, and that the case belonged in district court because it challenged agency-wide policy rather than seeking payment on any particular grant.6U.S. Court of Appeals for the First Circuit. Nos. 25-1343, 25-1344, 25-13457American Council on Education. Association Lawsuit on NIH F&A Rates
The Mass Termination Case
The lead challenge to the grant terminations was American Public Health Association v. NIH, filed in the same Massachusetts district court by the ACLU of Massachusetts, the ACLU’s Racial Justice Program, Protect Democracy, and the Center for Science in the Public Interest. Plaintiffs included the American Public Health Association, the United Automobile Workers, Ibis Reproductive Health, and individual researchers. The complaint alleged seven counts of APA violations, Fifth Amendment due process violations tied to vague gender-identity and DEI criteria, and violations of the NIH’s congressional mandate to fund research on diverse and underrepresented populations.8ACLU. APHA v. NIH9The Harvard Crimson. Brittany Charlton NIH Lawsuit
On June 16, 2025, U.S. District Judge William G. Young declared the terminations “void and illegal.” He found the agency had offered no scientific reasoning for targeting DEI and LGBTQ-related research and called the government’s explanation “wholly without reason and without reasoning.” “I’ve never seen a record where racial discrimination is so palpable,” he said.10GBH News. Judge Rebukes Trump Administration, Orders NIH to Resume Paying Canceled Grants He ordered the NIH to resume payments on roughly 800 terminated grants. By the end of June, the agency had restored more than 2,000.11STAT News. NIH Grants Director Jay Bhattacharya Says Restored DEI Funding Will Not Be Renewed
The Supreme Court’s Split Ruling
On August 21, 2025, the Supreme Court issued a fractured decision in National Institutes of Health v. American Public Health Association. By 5-4, the Court stayed Young’s order requiring the NIH to resume payments on terminated grants, holding that the district court lacked jurisdiction to order the government to pay money under research grants. Challenges seeking payment belonged in the Court of Federal Claims under the Tucker Act, following Department of Education v. California.12U.S. Supreme Court. National Institutes of Health v. American Public Health Association13SCOTUSblog. Supreme Court Allows Trump Administration to Terminate $783 Million in NIH Grants Linked to DEI Initiatives
By a different 5-4 alignment, the Court left in place Young’s vacatur of the NIH’s internal guidance documents — the directives prohibiting funding for DEI, gender identity, and COVID-19 research. Justice Barrett provided the swing vote, joining Chief Justice Roberts and Justices Sotomayor, Kagan, and Jackson. She wrote separately that the district court likely lacked jurisdiction over individual terminations but retained power to review the underlying policy guidance.14The New York Times. Supreme Court NIH Grants
The result was a two-track litigation structure. Plaintiffs can challenge NIH policy guidance in district court, but must file separately in the Court of Federal Claims to recover money on terminated grants. Justice Jackson dissented sharply, calling the decision “Calvinball jurisprudence” and warning of “incalculable losses in public health and human life.” Chief Justice Roberts, dissenting in part, argued that jurisdiction to vacate the policy guidance carried with it jurisdiction to vacate the terminations that flowed from it.13SCOTUSblog. Supreme Court Allows Trump Administration to Terminate $783 Million in NIH Grants Linked to DEI Initiatives
Despite the stay, the NIH did not reverse the more than 2,000 grant restorations it had already carried out.15Inside Higher Ed. NIH Approves Hundreds of Grant Applications It Shelved or Denied The First Circuit heard oral argument on the appeal of Young’s underlying ruling on January 6, 2026.16ACLU. Federal Appeals Court Hears Case Challenging NIH Grant Terminations
The December 2025 Settlement on Frozen Applications
A separate track produced concrete relief for applicants whose proposals had been frozen, denied, or withdrawn rather than formally terminated. On December 29, 2025, the ACLU-led plaintiffs and the state attorneys general reached parallel settlements with the NIH.
The agency committed to reviewing more than 5,000 stalled applications using its standard scientific review process and in good faith, without applying the anti-DEI directives that had prompted the freezes.17Higher Ed Dive. NIH Settlement With Attorneys General Over Research Grants Deadlines were tiered: decisions on noncompeting renewals by December 29, 2025; on applications that had already undergone peer review by January 12, 2026; and on earlier-stage applications by mid-April or late July 2026.18Science. After Legal Deal, NIH to Review Grant Proposals Frozen, Denied, or Withdrawn Because of Trump The NIH agreed that the close of fiscal year 2025 would not block awards on applications intended for that year.19ACLU. NIH Agrees to Evaluate and Complete Review on Stalled Scientific Grant Applications
The administration did not admit liability. Plaintiffs preserved their right to seek final judgment on whether the NIH lacked authority to block funding for specific research categories. The settlement does not cover the roughly 850 terminated grants at issue in Judge Young’s ruling.17Higher Ed Dive. NIH Settlement With Attorneys General Over Research Grants
On the day the settlement was announced, the NIH issued 528 grant decisions and approved 499. In the ACLU-led case, it awarded at least 135 of 146 applications.15Inside Higher Ed. NIH Approves Hundreds of Grant Applications It Shelved or Denied
The Harvard Case
Harvard filed its own suit on April 21, 2025, after the government froze its federal grants and contracts, arguing the freeze violated the APA, the First Amendment, and exceeded executive authority.20Georgetown Law Litigation Tracker. President and Fellows of Harvard College v. U.S. Department of Health and Human Services On September 3, 2025, U.S. District Judge Allison D. Burroughs declared the freeze unconstitutional and blocked the government from reimposing similar conditions.21The Harvard Crimson. White House Appeal of Harvard Ruling The administration appealed in December 2025.
The GAO Impoundment Finding
On August 5, 2025, the Government Accountability Office issued decision B-337203 finding that the NIH had violated the Impoundment Control Act of 1974. The GAO concluded that terminating more than 1,800 grants and slowing new and continuing awards amounted to illegal withholding of obligated funds and rejected the government’s characterization of the delays as routine programmatic decisions. It identified an $8 billion shortfall in new and continuing awards between February and July 2025.22Government Accountability Office. NIH Grant Terminations and the Impoundment Control Act23STAT News. GAO Says NIH Cuts Violated Impoundment Control Act
The GAO noted that HHS never transmitted the “special message” to Congress that the statute requires before withholding funds. Although the GAO has authority to sue to compel release of impounded funds, it did not do so, consistent with its practice of reporting violations to Congress. The finding is nonbinding but provides leverage for plaintiffs in pending litigation.24Healthcare Dive. NIH Cuts Illegal, GAO Says
What’s Still Unresolved
Two developments define the open questions heading into the second half of 2026.
First, the NIH has said it will not renew the restored grants. In a December 2025 interview, NIH Director Jay Bhattacharya said the more than 2,000 court-restored grants “no longer meet NIH priorities” and will not be renewed as they come up throughout 2026. “We can’t cut them,” he said. “But when it comes to renewal… we won’t renew them.”11STAT News. NIH Grants Director Jay Bhattacharya Says Restored DEI Funding Will Not Be Renewed Whether that policy itself can be challenged, and on what theory, has not been tested.
Second, in April 2026 the Department of Justice failed to meet its deadline to petition the Supreme Court to review the First Circuit’s rulings, effectively ending the appeal of the lower courts’ decisions on the terminations. Judge Young’s ruling stands as the final word that the mass terminations were void and unlawful.25American Council on Education. Groups Call on NIH to Reinstate Research Funding
The jurisdictional divide the Supreme Court created remains the structural question. Future disputes over research funding will require plaintiffs to sort claims between district courts, where policy guidance can be challenged, and the Court of Federal Claims, where recovery of terminated grant money must be pursued. How that split reshapes the next round of litigation has yet to be seen.