Unprecedented Times - Federal Grant Terminations

Summary of Recent Changes in Federal Grant Policies

When Donald Trump assumed his second term in January 2025, it was anticipated that there would be adjustments in federal funding focuses. The abrupt cancellations of existing grants, however, took many by surprise.

A significant amount of federal grant funding, amounting to hundreds of millions of dollars, has been revoked across various U.S. government departments and scientific fields. This includes research initiatives related to COVID-19, transgender health, diversity, equity, and inclusion. The Trump administration specifically terminated $400 million in grants intended for Columbia University, citing the university's failure to adequately address antisemitism. Additionally, it announced evaluations of federal funding for Harvard University and suspended financial support for Princeton University and the University of Pennsylvania.

Although federal authorities possess the latitude to rescind grants, grantees have various methods to contest these decisions and secure necessary reimbursements.

Key Considerations for Grant Termination

1. Involvement of Institutions
   Academic grants are awarded to institutions rather than individual investigators. This means the office of sponsored research must lead the charge in initiating appeals. While program officers possess expertise in scientific matters, they are not equipped to handle legal or federal budget inquiries.

2. Understanding Termination Rules
   It is crucial to grasp the multiple layers of regulations surrounding grant terminations, which can be vital in any appeals or legal proceedings. Specific grants often outline termination protocols in their terms and conditions, available in the award notice or funding opportunity documentation. Federal guidance provides foundational rules for terminations, but each agency can adopt its own policies. A notable rule introduced by the Office of Management and Budget allows for terminations if the award no longer aligns with program objectives or agency priorities. Although agencies may exercise broad authority to terminate grants, they must adhere to established protocols; deviations could lead to favorable outcomes in litigation for grantees.

3. Examination of Termination Notices
   Those affected should thoroughly examine the termination notice, focusing on the rationale behind the cancellation and its presentation. Appealing parties should review these reasons closely, as ambiguities in the notice could lead to claims of arbitrary or capricious decision-making under the Administrative Procedure Act. These notices also detail the appeal process, including the relevant agency contact and appeal deadlines, which are typically 30 days post-receipt.

   If the stated rationale for termination appears unrelated to the research being conducted, investigators should document this for their institution. Institutions often depend on investigators' familiarity with their own work to make informed decisions during an appeal. Furthermore, researchers must be prepared to express the societal benefits of their projects, strengthening the institution's appeal arguments.

4. Closeout Costs Considerations
   Grant terminations may incur expenses related to finalizing research projects, commonly referred to as "closeout costs." Certain costs can still be applied to the grant post-termination, including unavoidable financial obligations and expenses that arise specifically due to the abrupt termination. For instance, ongoing payments for contracted services may be eligible. Institutions define what constitutes a non-cancelable commitment, thus, it is advisable to consult the office of sponsored research for clarification.

5. Navigating Uncertainty
   Historically, grant terminations were primarily linked to financial misconduct or scientific fraud. The recent wave of mass suspensions and cancellations presents an unprecedented scenario for all involved. Given this new landscape, patience is key as stakeholders—including investigators, administrators, legal counsel, and federal representatives—navigate these uncharted waters.

In light of these significant changes to federal grant policies, a thorough understanding of the implications of grant terminations is crucial for researchers and their institutions. Staying informed and prepared can help mitigate potential disruptions and safeguard the funding necessary for ongoing research initiatives.