We learned this morning that many of our clients received a “Notification Letter” from the Substance Abuse and Mental Health Services Administration (SAMHSA) terminating grant funding. The notice states that the specific grant identified in the email does not align with “agency priorities.” The email and the attached Notification do not explain why the particular grant award fails to meet those priorities — just that the specified grant is terminated on January 13, 2026. 

Based on public reports, hundreds and possibly thousands of awards supporting substance abuse and mental health services have been terminated as part of a sweeping SAMHSA action. 

How the Trump Administration Justifies the Terminations

The Administration has telegraphed its intentions for months, and it’s unlikely that it will be limited to SAMHSA funding.  In September 2025, the U.S. Department of Health and Human Services (HHS) posted new “Strategic Priorities” for SAMHSA, the Health Resources and Services Administration (HRSA) , the Centers for Disease Control (CDC) and other operating divisions. 

The statements closely track the language taken from Executive Orders rather than reflecting the specific missions of the individual agencies. 

This matters because the Uniform Guidance allows a federal agency to terminate a grant if it determines the award “effectuates the program goals or agency priorities.”  The specific provision of Part 200 states that a grant may be terminated:

By the Federal agency or pass-through entity pursuant to the terms and conditions of the Federal award, including, to the extent authorized by law, if an award no longer effectuates the program goals or agency priorities.  2 CFR § 200.340(a)(4).

Although it is too early to evaluate the legality of SAMHSA’s actions, the combination of broad termination authority under § 200.340(a)(4) and the Supreme Court of the United States’ apparent position that challenges to grant terminations must be litigated before the U.S. Court of Federal Claims (COFC) raises significant concerns about grantee rights – the same concerns we and others have anticipated for many months. 

No Administrative Appeal — And Nowhere Good To Go

The position of HHS is that, because these grants are terminated for being inconsistent with agency priorities, there is no administrative appeal.  This policy position creates the first of many problematic options for grantees.  For example, do you want to fight over jurisdiction in front of the HHS Departmental Appeals Board?  The answer here is probably not.

The next decision point is even more complex – which federal court do you go to if you want to challenge the termination as unlawful?  Several days ago, the Court of Appeals for the First Circuit in Commonwealth of Mass. v. National Institutes of Health, App. No. 25-1343, attempted to clarify this question based on the decision of the Supreme Court on the so-called shadow docket.  The First Circuit’s decision drew a distinction between actions to challenge the policies of a federal agency and grant terminations:

• Challenges to policy, such as if the federal policy underlying the grant termination is unlawful, are properly brought under, with some exceptions, the Administrative Procedure Act in Federal District Court.  
• Challenges to actions that are specific to a grant award, such as a termination or withholding of funds associated with an existing grant award, properly belong in the COFC.  

The difficulty with bringing cases in the COFC is that the COFC is a court of limited jurisdiction and limited authority.  The COFC does not generally have the power to issue injunctions and restore grant awards or direct future payments.  It can only award money damages for past wrongs.

The Unanswered Constitutional Question

What these cases do not address is what relief is available for the affected grantees if a federal agency terminates hundreds of grants based on, for example, the failure of grantees to use words favored by the current Administration? In other words, could the Executive Branch violate the First Amendment, terminate hundreds of grants, and essentially get away with it?  These are issues that will be tested in court in the coming months and years.

A Call to Action 

In the meantime, here is our call to action!  The grantee community needs to get Congress to fix this mess.  There are some easy fixes, such as appropriate language in appropriation riders, and more complicated ones, such as clarifying jurisdiction in comprehensive legislation, clarifying grantee rights.  Regardless of direction, important legislative protections will only come about if the entire grantee community works together to protect the viability of the federal grant system.

Finally—for those who say what is the big deal?— I would only say this: grants are nothing like contracts, as this SAMHSA action shows.  A termination of a grant does not mean, as it would for a termination of a federal contract, that something like a new weapon system will not be built.  It means that real people, mostly low-income, will lose access to critically needed services like addiction counseling and other support services with virtually no notice.  

There is a very real human cost to what SAMHSA has done here.  And it needs to stop.  Time to get to work!