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:

1. Climate United Fund v. Citibank, N.A., et al., Nos. 25-5122 & 25-5123 (D.C. Cir. Sept. 2, 2025)

This case concerns the Environmental Protection Agency’s (“EPA”) termination of $16 billion in grants awarded to five grantees in August 2024 under the Greenhouse Gas Reduction Fund. EPA transferred all the money to Citibank accounts in the names of the grantees, with EPA retaining oversight through account-control agreements. After a change in administration, EPA raised concerns about conflicts of interest, rush spending at the end of the Biden administration, and the adequacy of agency oversight.

Judge Rao of the D.C. Circuit, writing for the panel, held that the district court “abused its discretion” by enjoining EPA’s cancellation of the grants, stating: “The grantees cannot manufacture district court jurisdiction through artful pleading. Because the grantees’ regulatory claims are essentially contractual, they must be heard in the Court of Federal Claims.” (Slip op. at 14). She also ruled that “District courts have no jurisdiction to hear claims that the federal government terminated a grant agreement arbitrarily or with impunity. Claims of arbitrary grant termination are essentially contractual and fall outside the [Administrative Procedure Act’s (“APA”)] waiver of sovereign immunity.” (Slip op. at 17) With respect to the Supreme Court’s emergency ruling in NIH, she said that the ruling “requires respect and strongly supports our conclusion that the grantees’ arbitrary and capricious challenge to the grant terminations is a disguised contract claim that cannot be heard in district court.” (Slip op. at 18)

2. President and Fellows of Harvard College v. HHS, et al., (D. Mass. 2025) (Sept. 3, 2025)

In this case, plaintiffs challenged the federal government’s freeze and termination of $2.2 billion in federal grants, alleging those actions were retaliatory (violating the First Amendment), procedurally improper under Title VI, and arbitrary and capricious under the APA.

The government argued the district court lacked jurisdiction because the dispute was essentially contractual and belonged in the Court of Federal Claims under the Tucker Act. Citing NIH, the district court ruled that it has jurisdiction over First Amendment and Title VI claims, and over APA challenges to agency guidance and freeze orders, but that it lacks jurisdiction over APA arbitrary and capricious challenges to the actual grant terminations; those must be brought in the Court of Federal Claims.

Terminated Grantees May Need to Seek Relief in Separate Forums

These rulings beg the question of what happens if a district court ultimately vacates agency guidance as arbitrary and capricious, yet the Court of Federal Claims later upholds grant terminations that were predicated on said guidance. How can those results coexist?

1. Prospective vs. Retrospective Relief

District court relief under the APA is prospective only: vacatur bars the agency from using the unlawful guidance going forward. At the Court of Federal Claims, however, relief is retrospective and contractual: it decides whether the government must reinstate or pay damages for the cancelled grant.

2. No Automatic Reinstatement

A district court’s vacatur of improper agency guidance does not automatically invalidate past terminations based on that guidance. As Justice Barrett put it in NIH, “vacating the guidance does not necessarily void decisions made under it.” Thus, it is possible that in a particular case the Court of Federal Claims may conclude that, even stripped of the tainted guidance, an agency retained the discretion to terminate the grants.

3. Sequential, Not Simultaneous, Litigation

28 U.S.C. Section 1500 prevents plaintiffs from simultaneously pursuing substantially similar claims in the Court of Federal Claims and in another court. Thus, a grantee that prevails in district court (obtaining a ruling that agency guidance was arbitrary and capricious), could use that ruling as persuasive evidence when the grantee later returns to the Court of Federal Claims.

4. Practical Consequence

However, consistent outcomes are not guaranteed. It is possible a grantee could end up with a precedential APA victory that alters future agency practice while still losing its grant if it fails topersuade the Court of Federal Claims that the termination breached the terms of the grant or was itself arbitrary under contract standards. This is the exact result that Justice Roberts warned of in his concurrence in NIH. In his view, when a district court has jurisdiction to vacate agency guidance under the APA, it should also have jurisdiction to vacate the resulting grant terminations that flow directly from that guidance, in order to avoid a situation where a grantee is left without a meaningful remedy. Similarly, Justice Jackson argued that a “bifurcated, ultimately ineffectual approach” that forces grantees to pursue relief in two different courts makes it difficult or impossible to obtain a complete remedy. She warned that under this scheme, a grantee could win in district court on the guidance but still be unable to recover their terminated grant funds, because the Court of Federal Claims might not be able to reinstate the grants or award damages for a statutory (as opposed to contractual) violation. She described this as a “deeply inefficient and likely impotent scheme of judicial review,” and emphasized that the result could be that “no court can reinstate the plaintiffs’ grants,” leaving grantees “unable to obtain any effective relief at all.”

Takeaways for Grantees

• Although the Supreme Court’s ruling in NIH is not binding, lower courts are following Justice Barrett’s controlling concurrence and ruling that district courts lack jurisdiction to hear challenges to grant terminations. The relief available in district court under the APA is prospective only, e.g., a forward-looking vacatur of unlawful guidance. The Court of Federal Claims provides retrospective, contract-based relief, such as reinstatement or damages for terminated grants.
• A district court vacatur of guidance that drove a grant termination will not automatically reinstate grants. The Court of Federal Claims may still uphold the terminations if it finds the government acted within its contractual discretion.
• Until the jurisdictional issues are fully and finally settled in further litigation, it is now possible that terminated grantees may win a policy victory in district court while still losing their funding if the Court of Federal Claims rules that the terminations were lawful under contract law. This “two-track” system makes forum planning and record development critical for terminated grantees.