Over the past few months, the second Trump administration has taken quick actions to suspend and terminate federal awards predating the transition of power. Many of these actions have resulted in the termination of “federal financial assistance”—specifically, grants and cooperative agreements. Organizations that have seen their grants and cooperative agreements terminated have pushed back through the courts with varying success, contending that agencies have acted arbitrarily in violation of the Administrative Procedure Act (APA). While there are many cases, this post provides an overview of three recent decisions in this rapidly developing landscape:

  • AIDS Vaccine Advocacy Coalition v. Department of State
  • U.S. Conference of Catholic Bishops v. Department of State
  • American Association of Colleges for Teacher Education v. McMahon

AIDS Vaccine Advocacy Coalition. The plaintiffs in this case, organizations with contracts and grants to deliver foreign assistance, sought to restore appropriated funding that had been frozen soon after the start of the second Trump administration. While the court issued a temporary restraining order (TRO) on February 13 regarding the freeze, the government conducted a review of awards in the following weeks and ended up terminating thousands of them. So the plaintiffs added challenges to the terminations in seeking an injunction. On March 10, the court issued an injunction mostly, but not entirely, agreeing with the plaintiffs. In doing so, the court rejected the government’s primary defense argument that the controversy was a contract dispute: “Indeed, it would be quite extraordinary to consider Plaintiffs’ claims to sound in breach of contract when they do not at all depend on whether the terms of particular awards were breached—they instead challenge whether the agency action here was unlawful, irrespective of any breach.” The court looked to the APA and other statutes, including the Impoundment Control Act of 1974, the Anti-Deficiency Act, and the Further Consolidated Appropriations Act of 2024, and held that the plaintiffs were likely to succeed on their claims because it appeared that the government acted arbitrarily and capriciously in freezing broad swaths of foreign aid. Importantly, the court did not find that the plaintiffs would prevail in setting aside terminations that occurred in a subsequent review of awards after February 13. According to the court, these terminations were distinct from the freeze, were not subject to the original complaint challenging the freeze, and would require the court to get into the weeds of individual awards. See AIDS Vaccine Advocacy Coal. v. U.S. Dep’t of State, Nos. 1:25-cv-400, 1:25-cv-402, 2025 WL 752378 (D.D.C. Mar. 10, 2025).

U.S. Conference of Catholic Bishops. In this case, decided one day after AIDS Vaccine Advocacy Coalition, a different judge of the D.C. district court ruled that a nonprofit organization’s demand for the government to resume two cooperative agreements sounded in contract law, rather than equity under the APA, such that the district court lacked jurisdiction. In short, the organization had entered into two cooperative agreements with the State Department to help resettle refugees. Upon the transition to the new Trump administration, the State Department suspended the awards pending a review as to whether the agreements aligned with the new administration’s priorities. The organization sued seeking a TRO and an injunction to compel the government to continue the refugee program, as the organization had millions of dollars in reimbursement requests pending. In response, the State Department terminated the awards, stating that they no longer effectuated the agency’s priorities. The court first denied the recipient’s request for a TRO and then in its opinion denying the motion for an injunction ruled that the court lacked jurisdiction, observing that the case belonged in the US Court of Federal Claims, the proper court where private parties can seek redress for contract cases: “Stripped of its equitable flair, the requested relief seeks one thing: The Conference wants the Court to order the Government to stop withholding the money due under the Cooperative Agreements.” See United States Conf. of Catholic Bishops v. U.S. Dep’t of State, No. 1:25-cv-465, 2025 WL 763738 (D.D.C. Mar. 11, 2025).

American Association of Colleges for Teacher Education. In this case, associations representing numerous colleges, universities, and nonprofits challenged terminations of grants by the Department of Education (ED). The plaintiffs received ED grants awarded on a competitive basis to provide funding for three teacher education programs authorized by various statutes: the Teacher Quality Partnership Program (TQP), the Supporting Effective Educator Development Program (SEED), and the Teacher and School Leader Incentive Program (TSL). The plaintiffs filed for a TRO, which a judge in the District of Maryland granted. The court ruled that, under the General Education Provisions Act (GEPA) and the APA, there was no evidence to support ED’s justification to terminate the grants in accordance with required procedures, most likely rendering ED’s actions arbitrary and capricious. After granting the TRO on March 17, the court denied ED’s motion for reconsideration on March 19. See American Association of Colleges for Teacher Education v. McMahon, No. 1:25-cv-702, 2025 WL 833917 (D. Md. Mar. 17, 2025).

Notably, these cases are at the trial court level and further rulings will be forthcoming, highlighting the tension between the desire of the new administration to move quickly and the established legal frameworks of statutes, regulations, and agreement terms and conditions that apply to federal financial assistance. For recipients of grants and cooperative agreements, these cases demonstrate that when facing a termination, there are options available to protect an organization’s interests and mission. And while litigation against the federal government can appear daunting, it may be worse to witness a critical funding stream dry up overnight. While paths forward may be narrow, recipients should explore all options, particularly when agencies do not appear to be engaging in thorough analysis before leaping to decisions.