Cases & Developments

The American Council on Education (ACE) along with 60 higher education associations sent a letter to congressional leaders requesting that they include clear legislative language in the final fiscal year 2026 appropriations bills mandating that the administration allocate funds as directed by Congress. The letter notes the need for increased stability, certainty, and transparency for colleges and universities about the availability of federal funding, particularly after the significant disruptions and terminations of funding in recent months.

Order Granting Plaintiffs’ Motion for Preliminary Injunction. Plaintiffs, a group of researchers at the University of California, sought a preliminary injunction blocking the Department of Defense, Department of Transportation, and Department of Health and Human Services from the mass termination of multi-year research grants via form letter, following the court’s June decision to grant a preliminary injunction blocking the termination of grants at three other agencies, which the Ninth Circuit upheld. Rejecting the government’s argument that plaintiffs’ claims belonged in the Court of Federal Claims, the court distinguished the Supreme Court’s recent decision in NIH v. APHA, reasoning (1) plaintiffs, as individual researchers, were not parties to the grant agreement, and thus, could not obtain any relief from the Court of Federal Claims and (2) plaintiffs’ First Amendment claims were well established to be beyond the Court of Federal Claims’ jurisdiction. The court found that plaintiffs were likely to succeed on their claim that the three agencies’ termination of their grants was arbitrary and capricious in violation of the Administrative Procedure Act (APA). The court further found that, despite troubling evidence of viewpoint discrimination across all three agencies, plaintiffs had demonstrated a likelihood of success on the merits of their First Amendment claim with respect to the actions of the Department of Transportation. The court concluded plaintiffs had satisfied the other prongs necessary for a preliminary injunction on these claims and granted their request for relief.

The Department of Education (the Department) announced its withdrawal of the June 3, 2025 and July 14, 2025 Notice Inviting Applications (NIAs) for new awards for the Strengthening Alaska Native and Native Hawaiian-Serving Institutions Part A (ANNH Part A), Strengthening Asian American and Native American Pacific Islander-Serving Institutions Part A (AANAPISI Part A), Strengthening Native American-Serving Nontribal Institutions Part A (NASNTI Part A) and Developing Hispanic-Serving Institutions programs (DHSI). This withdrawal follows the Justice Department’s announcement that it will no longer defend from legal challenge programs providing funding for        HSIs, which they allege are unconstitutional.

The Department of Education announced its plan to redistribute existing discretionary funding totaling $495 million to Historically Black Colleges and Universities (HBCUs) and Tribally Controlled Colleges and Universities (TCCUs). This funding will be in addition to the anticipated fiscal year 2025 funding.

The Department of Education (the Department) is publishing a revised version of the common instructions for applicants seeking funds under a Department discretionary grant competition, which supersedes the version published on December 23, 2024. This effort is intended to help simplify and reduce the traditional length of notices inviting applications by moving common application elements into these instructions as well as to provide guidance on the usage of artificial intelligence when applying to grant competitions.

Application for Stay Granted in Part and Denied in Part. Petitioners filed for an emergency application for stay following an order from the District Court of Massachusetts that restored several hundred million dollars in research grant funding and determined that the termination directives issued by the National Institutes of Health (NIH) were unlawful. The U.S. Supreme Court in a 5-4 decision granted the stay application as to the portion of the district court’s judgment that vacated the government’s termination of grants but otherwise denied the application. The Court reasoned that the district court lacked jurisdiction to grant the restoration of funds, finding that the U.S. Court of Federal Claims is better suited to adjudicate “contract disputes” under the Tucker Act. However, the Court did not stay the district court’s order that vacated the NIH directives are illegal, as they are being properly litigated as APA challenges. As such, NIH cannot terminate any additional research studies based on the directives in the guidance.

Executive Order: “Improving Oversight of Federal Grantmaking.” This Order aims to strengthen oversight, coordination of, and streamline, agency grantmaking in an effort to ensure greater accountability for use of public funds. The Order requires each agency head to designate a senior appointee who will be responsible for creating a review process of new funding opportunities and review discretionary grants to ensure consistency with agency priorities and national interest. The Order directs agencies not to issue any new funding opportunity announcements without prior approval from the senior appointee that is to be designated. The appointed designees are instructed to use their independent judgment and rely on the following principles: (i) discretionary awards must demonstrably advance the President’s policy priorities; (ii) discretionary awards are not to be used to fund, promote, encourage, subsidize, or facilitate (a) racial preferences; (b) denial of the sex binary or that sex is a chosen or mutable characteristic; (c) illegal immigration; or (d) any other initiatives that compromise public safety or promote anti-American values. The Order states that research grants should be awarded to recipients who are likely to produce immediate and demonstrable results as well as a commitment to achieving Gold Standard Science. Additionally, the Order states that if institutional affiliation is considered when making discretionary awards, agencies should prioritize an institution’s commitment to scholarship over historical reputation or prestige. Finally, the Order requires that the Director revise the Uniform Guidance to allow for termination of existing awards when the award no longer advances agency priorities or the national interest. The White House also published a Fact Sheet on the Order.