Supreme Court Paves Way for Terminations of NIH Grants Based on DEI

Quick Hits

• The Supreme Court allowed the NIH to terminate more than $780 million in DEI-related grants, indicating future challenges may require different legal avenues.
• The ruling holds that district courts likely lack jurisdiction to provide relief in the form of restored funding to federal grants found to have been improperly terminated.
• The ruling could impact challenges to other federal agency funding decisions and actions that seek to implement the Trump administration’s orders aimed at ending “illegal” DEI practices and gender identity protections.

In a 5–4 ruling in National Institutes of Health v. American Public Health Association, No. 25A103, the Supreme Court held that a federal district court likely had lacked jurisdiction under the Administrative Procedure Act (APA) to vacate the NIH’s grant termination decisions and that the government would be irreparably harmed by spending funds on grants that could not be recouped.

However, Justice Amy Coney Barrett, who appeared to cast the deciding vote in favor lifting the stay, sided with four other justices, including Chief Justice John Roberts Jr., who voted to keep in place parts of the district court’s ruling that vacated the NIH’s guidance documents in which the NIH described changes to its priorities to align with the president’s anti-DEI policies.

The decision to lift the stay effectively means that, for now, the canceled NIH grants will not be reinstated, though challenges to grant termination decisions, guidance, and the policy underlying them can proceed in lower federal courts. However, the mixed ruling indicates that individual grant termination decisions must be challenged on contractual grounds under the Tucker Act in the U.S. Court of Federal Claims, as the Supreme Court had previously ruled in April 2025 in a similar case challenging the terminations of education grants.

Executive Orders and Legal Challenges

Since taking office in January 2025, President Donald Trump has issued several executive orders (EO) seeking to end “illegal” DEI policies and preferences and define sex as binary and immutable, purportedly to end what the administration refers to as “gender ideology.” Specifically, EO 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing,” directs federal government agencies to end all “illegal” DEI policies and preferences in the federal government. EO 14168, “Defending Women From Gender Ideology Extremism and Restoring Biological Trust to the Federal Government,” directs federal agencies to cease promoting or funding “gender ideology.” EO 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” seeks to encourage the private sector to end DEI preferences.

Following that trio of EOs, the NIH had issued guidance stating that it would no longer fund research related to DEI, gender identity, or COVID-19, and would stop awarding grants based on race. The NIH later terminated research grants en masse that the agency believed were inconsistent with the Trump administration’s anti-DEI policies.

A group of researchers, doctors, and unions that rely on NIH funding, joined by a coalition of sixteen states on behalf of their respective state universities, filed lawsuits alleging that the NIH had implemented the EOs in violation of the APA and the U.S. Constitution.

On July 2, 2025, the U.S. District Court for the District of Massachusetts vacated both the guidance documents and the grant termination decisions, ruling that the NIH’s termination of the grants had been “arbitrary and capricious” and a violation of the APA. On July 18, 2025, the U.S. Court of Appeals for the First Circuit denied the government’s request for a stay, finding that the challengers faced more potential harm from the grant terminations than the government would suffer in the absence of a stay.

Supreme Court Grants Partial Stay

While the NIH’s guidance documents will remain vacated, the Supreme Court’s ruling paves the way for the NIH to terminate the research grants that it determines are inconsistent with the Trump administration’s policies on DEI and gender identity. As Justice Barrett wrote in a partial concurrence, the district court “likely lacked jurisdiction to hear challenges to the grant terminations, which belong in the Court of Federal Claims (CFC).”

In practical terms, the ruling could make it more difficult for stakeholders and other entities to obtain restorations of research funding via challenges (filed in the Court of Federal Claims) to the NIH’s grant termination decisions.

Justice Ketanji Brown Jackson issued a separate opinion, concurring in part and dissenting in part, arguing that the Court’s ruling had “effectively extinguishe[d] district courts’ power to ‘set aside’ arbitrary grant terminations, as that remedial power necessarily involves the concomitant restoration of the unlawfully terminated grant funding.”

While the ruling focused on research grants issued by the NIH, it expanded on the reasoning the Supreme Court adopted in Department of Education v. California to stay a lower court’s ruling that had blocked the U.S. Department of Education’s termination of education-related grants that the government argued unlawfully promoted DEI initiatives.

In an opinion concurring in part and dissenting in part, Justice Neil Gorsuch stated that he would have stayed the ruling as to both the grant terminations and the guidance, reasoning that the district court had ignored the Supreme Court’s ruling in Department of Education v. California. “Lower court judges may sometimes disagree with this Court’s decisions, but they are never free to defy them,” Justice Gorsuch wrote.

Next Steps

The Supreme Court’s latest ruling could mean that employers relying on NIH research grants might have to start preparing to operate without that funding for the foreseeable future. While the challengers can continue their claims on the merits, they likely must do so through a more complicated procedure that might not even allow for the relief sought. Further, the ruling portends a Supreme Court unlikely to ultimately reinstate the grants, and it is not clear how and when the NIH will redistribute grant funding moving forward.

More broadly, the ruling may make it more difficult for those challenging federal agency funding or other decisions based on the Trump administration’s policies on DEI and gender identity and signal that the Supreme Court is unlikely to rule against the Trump administration’s policies.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group will continue to monitor developments and will provide updates on the Diversity, Equity, and Inclusion Compliance, Governmental Affairs, Healthcare, and Higher Education blogs as additional information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.

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