For the past year, federal grantees have brought many cases contending that the federal government improperly terminated their grants. In August, the U.S. Supreme Court threw a curveball into the litigation of all those claims. Now, a new series of cases involving the Solar for All program has been fielding that curveball, exposing novel issues in the law.
This past August, in National Institutes of Health v. American Public Health Association, the Supreme Court issued a decision allowing the National Institutes of Health to proceed to cancel thousands of grants that were designed to support research on mental health, disease transmission, Alzheimer’s, and heart disease. Federal executive orders had instructed NIH to stop research into diversity, equity, and inclusion programs. NIH’s leadership issued directives effectuating the executive orders, and, pursuant to those directives, ordered termination in bulk of grants it believed violated that new guidance.
The NIH case began in April 2025, when plaintiffs sued in district court under the Administrative Procedure Act arguing that NIH’s decisionmaking and resulting grant terminations lacked statutory authority, violated the U.S. Constitution, and were unreasoned and arbitrary in violation of the Act. The district court vacated the terminations. The government then asked the Supreme Court to stay the lower court decision and allow the terminations to proceed.
The Supreme Court granted the government’s application in part, staying the lower court’s decision to vacate the terminations and allowing them to proceed (the government’s application was otherwise denied). Notably, the Court did not hear arguments or have full briefing. Rather, it decided the case on its “shadow” docket, which it uses in cases where parties are asking for immediate relief while the case winds its way through the courts. These decisions are often short. The NIH case was no different; the majority decision is only a few paragraphs long.
The 5-4 majority ruled that the plaintiffs brought their claims relating to the grant terminations in the wrong court. The Court held that the district court does not have jurisdiction to adjudicate claims that are “based on” the research-related grants. Rather, plaintiffs should have taken their claims relating to the grants to the Court of Federal Claims—a specialized court that hears monetary damages claims against the federal government.
In her concurrence, Justice Amy Coney Barrett provided some additional reasoning for the majority decision. She explained that the claims that were based on faulty decisionmaking related to the directives belong in the district court and must be adjudicated separately from the grant termination claims. The grant terminations should be viewed as contract claims that must be brought in the Court of Federal Claims.
Fast forward to Solar for All. The government awarded Solar for All grants in the first half of 2024, and all the funds had been “obligated” by that August. These grants were intended to make solar programs and projects more accessible all around the country. But this past summer, the federal government announced that it was terminating the program, “deobligated” the grants, and removed funding from accounts where it had already been placed.
Taking a cue from Justice Barrett’s concurrence in the NIH case, the Solar for All plaintiffs filed challenges in both the Court of Federal Claims and district court. Plaintiffs have argued in the district court that the decision to terminate the program and deobligate the funds is based on a faulty reading of the governing statutes, violates the APA, and is unconstitutional. In the Court of Federal Claims, they have brought contract claims, arguing that the grant agreements only allowed for termination in certain circumstances—none of which were present in these cases.
If those parallel challenges aren’t confusing enough, the government has taken positions in the two cases that seem difficult to square with each other. In the district court, the government argued that there is no jurisdiction for plaintiffs’ claims because, as in the NIH case, plaintiffs can only pursue claims having to do with contracts in the Court of Federal Claims. Meanwhile, in the Court of Federal Claims case, the government has argued that the case needs to be paused in order to await decision in the district court case; the judge recently granted that pause.
The jurisdictional limits of the two courts make this even more puzzling. The Court of Federal Claims does not have jurisdiction to decide if the reason underlying a termination is arbitrary and capricious and it cannot reinstate a contract.
Meanwhile, the district court can make those kinds of findings, and order relief that flows from them, which may include reinstating a contract, in which case funding could flow. But it is restricted in other ways from ordering monetary damages.
Fast forward again, to this past Tuesday, February 24. An en banc panel of the D.C. Circuit heard arguments in a similar case having to do with the Greenhouse Gas Reduction Fund, which was designed to provide financing for clean energy and climate projects that reduce pollution. Last September, a three-judge panel of the D.C. Circuit held that the claims belonged in the Court of Federal Claims. But in December, the court voted to hear the case en banc and revisit its decision.
In the NIH case, Justice Barrett acknowledged that the jurisdictional limits could give rise to concerns. She recommended plaintiffs go to the district court to get a decision on whether the underlying reasoning was faulty, and to also pursue a contract claim in the Court of Federal Claims.
But another problem is that sending plaintiffs to district court on just the policy, without allowing them to also challenge any resulting cancellation, could undermine their argument that the claim is ripe for review. Justice Barrett also alluded to that problem in her NIH concurrence but without a recommendation on what to do.
Perhaps the biggest concern was raised in Justice Ketanji Brown Jackson’s dissent in NIH, when she asked: how are “grantees who believe their grants were terminated pursuant to an unlawful policy . . . to get complete relief?” Courts may soon answer this question as they grapple with the morass of jurisdictional questions at play. The resulting decisions could clarify important administrative law issues that have been brewing since NIH and affect federal spending programs going forward.
Bethany A. Davis Noll is Executive Director at NYU Law’s State Energy & Environmental Impact Center.
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