Background
In early 2025, the Environmental Protection Agency, the National Science Foundation, and the National Endowment for the Humanities terminated research grants held by University of California researchers en masse. The agencies sent form letters saying the grants no longer aligned with agency priorities. The terminations followed at least eight Executive Orders issued by President Trump, including orders directing agencies to eliminate diversity, equity, and inclusion (DEI) programs and to reduce federal spending through the Department of Government Efficiency (DOGE).
Six UC researchers filed a class action challenging the terminations on constitutional and statutory grounds. The district court provisionally certified two classes: a “Form Termination Class” (researchers whose grants were canceled by generic form letter with no grant-specific explanation) and a “DEI Termination Class” (researchers whose grants were canceled specifically because of the anti-DEI Executive Orders). The court issued a preliminary injunction ordering the agencies to reinstate all terminated grants. The government appealed.
While the appeal was pending, the Supreme Court decided National Institutes of Health v. American Public Health Association (NIH), which held that district courts lack jurisdiction under the Administrative Procedure Act (APA) to adjudicate claims “based on” research grants or to order relief enforcing an obligation to pay money under those grants, because such claims are essentially contractual and belong in the Court of Federal Claims under the Tucker Act.
The Court’s Holding
The Ninth Circuit affirmed in part and reversed in part. It reversed the preliminary injunction for the Form Termination Class, holding that the district court likely lacks jurisdiction over that class’s APA claim. Under the Supreme Court’s recent NIH decision, claims challenging the termination of research grants and seeking reinstatement of funding are “based on” those grants and amount to enforcing a contractual obligation to pay money. The Tucker Act channels such contract claims to the Court of Federal Claims, not the district courts, regardless of whether the plaintiffs themselves were parties to the grant agreements.
The court affirmed the preliminary injunction for the DEI Termination Class on First Amendment grounds. The evidence showed that agencies selected specific grants for termination not because of programmatic changes, but because of the individual recipients’ perceived viewpoints on DEI, diversity, equity, inclusion, and accessibility (DEIA), and environmental justice. The NEH targeted grants that “focused on or promoted” those topics. The EPA announced it had “cancelled grants related to DEI and environmental justice.” The NSF used keyword searches for terms like “equity,” “diversity,” and “inclusion” to identify grants for termination.
The court held that this conduct constitutes viewpoint discrimination. While the government may define the scope of its funding programs and choose which activities to subsidize, it may not reach into existing programs and terminate individual grants based on the recipients’ perceived ideological viewpoints. The First Amendment prohibits the government from leveraging its subsidy power “into a penalty on disfavored viewpoints,” even in competitive grant processes.
Key Takeaways
- Federal agencies cannot terminate existing research grants based solely on the recipients’ perceived viewpoints regarding DEI, DEIA, or environmental justice. Doing so constitutes viewpoint discrimination that likely violates the First Amendment.
- Following the Supreme Court’s NIH decision, district courts likely lack jurisdiction over APA challenges to research grant terminations, because those claims are essentially contractual and must be brought in the Court of Federal Claims under the Tucker Act — even when the plaintiffs are not parties to the grant agreements.
- There is a critical legal distinction between the government defining the limits of a funding program (permissible) and selectively terminating individual grants within a program based on disfavored viewpoints (impermissible).
- A likely First Amendment violation supports both irreparable harm and a favorable balance of equities, making a preliminary injunction appropriate even when the government claims it will suffer financial harm from continued grant disbursements.
Why It Matters
This decision draws a sharp line between two things the government can do with its spending power and one thing it cannot. The government can shut down an entire funding program. It can redesign grant criteria going forward. But it cannot comb through existing grants, flag the ones that mention disfavored concepts like “diversity” or “environmental justice,” and cancel them on that basis alone. That crosses from fiscal priority-setting into ideological enforcement — something the First Amendment does not permit.
For researchers, universities, and nonprofits that receive federal grants, the practical upshot is significant. Grant recipients whose funding was terminated because of anti-DEI Executive Orders can seek reinstatement through the courts. However, those whose grants were terminated by generic form letters without any viewpoint-based rationale face a jurisdictional dead end: the Supreme Court’s NIH ruling means district courts cannot order reinstatement of those grants, and the Court of Federal Claims may not be able to help researchers who are not direct parties to the grant agreements.
The decision also matters for the broader debate over government funding and free expression. It reaffirms that viewpoint neutrality is a constitutional requirement even in competitive grant programs. The government argued that because grants are awarded through a selective process, it should have wider latitude to terminate them. The Ninth Circuit rejected that position, holding that the key question is not whether the funding is competitive but whether the government is targeting specific viewpoints for suppression.