The “Kennedy Jurisdiction Doctrine”: First Circuit Confirms APA Authority to Vacate NIH Grant Terminations Despite Tucker Act Concerns

Introduction

In Commonwealth of Massachusetts v. Kennedy, Nos. 25-1611/1612 (1st Cir. July 18, 2025), the United States Court of Appeals for the First Circuit denied the Department of Health and Human Services’ (HHS) motion to stay sweeping district-court orders that vacated (1) internal “Directives” forbidding the National Institutes of Health (NIH) to fund grants touching on diversity, equity, inclusion (DEI) and certain gender topics, and (2) hundreds of resulting grant terminations.

The decision—handed down by Judge Rikelman for a unanimous panel—does far more than adjudicate a stay. It crystallises a new jurisdictional and remedial principle: district courts may, under the Administrative Procedure Act (APA), provide solely declaratory relief that sets aside agency policies and grant cancellations, even when that relief has inevitable fiscal consequences, and the Tucker Act does not force such disputes into the Court of Federal Claims. The ruling stitches together (and limits) Supreme Court dicta in Department of Education v. California, 145 S. Ct. 966 (2025) (“California”), reconciles it with Bowen v. Massachusetts and Great-West Life, and imposes a demanding evidentiary burden on agencies that attempt large-scale ideological defunding without a reasoned record.

Summary of the Judgment

• Stay Denied. The Court refused to stay the district-court declaratory judgments that vacated the NIH/HHS Directives and the resulting grant terminations.
• Jurisdiction Affirmed. The APA’s waiver of sovereign immunity covers declaratory “set-aside” relief here; the Tucker Act does not impliedly forbid such relief because the suit is not an action for money damages or to enforce a contract.
• Reviewability. NIH’s mass termination decisions were not “committed to agency discretion”; statutes and regulations impose discernible standards and reliance-interest obligations.
• Merits Preview. On the existing record, the Directives and terminations are “breathtakingly arbitrary and capricious”: undefined categories, no scientific analysis, decisions “force-fed” by non-NIH officials, and no consideration of reliance interests.
• Equities & Public Interest. Government’s purported fiscal harm is speculative, mitigable, and outweighed by concrete harms to ongoing research, patients, and the public health mission.

Analysis

Precedents Cited and Their Influence

1. Bowen v. Massachusetts, 487 U.S. 879 (1988)
   • Held that a state could seek APA review in district court of the HHS’s refusal to reimburse Medicaid funds.
   • Key language: declaratory relief that results in payment is only a “by-product” of statutory review, not “money damages.”
   • Influence: The First Circuit treats Bowen as binding merits authority that district courts may vacate agency decisions affecting funding streams.
2. Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002)
   • Deemed an ERISA claim for reimbursement “quintessentially an action at law” for past-due money, thus beyond equitable jurisdiction.
   • Influence: The Government invoked Great-West to analogise grant cancellations to contract enforcement; the Court distinguished it because plaintiffs seek policy vacatur, not back-pay under individual contracts.
3. Department of Education v. California (2025 stay order)
   • Supreme Court stayed a district-court order directing payment of nearly $65 million in withheld grants.
   • Influence: Kennedy panel parsed the Supreme Court’s short opinion, emphasising that California concerned an order to pay money; by contrast, the orders here only vacate agency action.
4. Lincoln v. Vigil, 508 U.S. 182 (1993)
   • Agency reallocations of lump-sum appropriations may be unreviewable absent statutory constraints.
   • Panel found multiple statutory and regulatory constraints on NIH funding priorities, defeating the discretion argument.

Legal Reasoning

1. APA Waiver Applies. Section 702 allows suits “seeking relief other than money damages.” Declaratory vacatur of the Directives and terminations fits that mould.
2. No Tucker Act Preclusion.
   • Grants-in-aid are statutorily distinct from procurement contracts; neither pleadings nor relief depend on contractual clauses.
   • Because the Court of Federal Claims lacks equitable “set-aside” power, it is not an “adequate alternative remedy” under § 704.
3. Reviewability under APA § 701(a)(2).
   • Specific NIH enabling statutes (e.g., 42 U.S.C. §§ 282, 283, 285a-6) impose programmatic priorities that conflict with a blanket ban on DEI/gender topics.
   • 45 C.F.R. § 75.372(a) cabins reasons for unilateral grant termination. Together, these furnish standards for judicial review.
4. Arbitrary-and-Capricious Analysis.
   • No rational connection. NIH offered circular statements (“unscientific,” “low-value”) unsupported by any record analysis.
   • Reliance interests ignored. Abrupt cancellations jeopardised trials, animal subjects, and years of work—contrary to Regents and State Farm.
   • Procedural irregularities. Non-NIH “DOGE” staff dictated results; NIH leadership rubber-stamped terminations within minutes.
5. Stay Factors under Nken.
   • Likelihood of success: weak on jurisdiction, reviewability, and merits.
   • Irreparable harm: speculative recoupment issues versus immediate, concrete research losses.
   • Balance of harms/Public interest: Life-saving research outweighs potential fiscal leak; public interest favours lawful, reasoned agency conduct.

Impact of the Decision

• Jurisdictional Roadmap. Provides clear guidance that declaratory-only vacatur of grant cancellations remains in district-court APA territory, blunting government strategies to funnel such cases to the Court of Federal Claims post-California.
• Limitation on Ideological Defunding. Agencies must articulate non-ideological, evidence-based reasons—supported by scientist evaluation—for terminating or barring research grants.
• Reinforced Reliance Doctrine. Extends DHS v. Regents to scientific-grant context; agencies must weigh downstream consequences to research subjects, institutions, and public health.
• Stay Practice. Clarifies that speculative loss of funds is insufficient for a stay when balanced against concrete scientific and human harms.
• Template for Future Litigation. States, universities, and advocacy groups now have a powerful precedent to challenge mass grant or contract terminations disguised as “policy shifts.”

Complex Concepts Simplified

Administrative Procedure Act (APA)

Federal statute allowing courts to review and set aside unlawful or unreasonable agency actions. Key sections: § 702 (immunity waiver), § 704 (finality/adequate remedy), § 706 (scope of review).

Tucker Act

Statute giving the Court of Federal Claims jurisdiction over monetary claims against the U.S. based on contracts or statutes. It limits district-court power when the relief sought is essentially money damages.

Stay Pending Appeal

Temporary suspension of a lower-court order while an appeal is litigated. Governed by four factors: likelihood of success, irreparable harm, injury to other parties, and public interest.

Arbitrary and Capricious Standard

APA § 706(2)(A) standard requiring agencies to offer rational explanations, consider relevant data, and account for reliance interests. Failure renders actions unlawful.

Reliance Interests

Expectations and investments stakeholders make based on existing policy (e.g., multi-year research plans). Agencies must consider these when changing course.

Conclusion

Commonwealth of Massachusetts v. Kennedy inaugurates what may be dubbed the “Kennedy Jurisdiction Doctrine.” By harmonising Bowen, Great-West, and the Supreme Court’s terse California stay, the First Circuit squarely holds that district courts can vacate agency grant cancellations without treading on the Tucker Act’s domain, so long as plaintiffs seek declaratory relief rather than contract damages.

On the merits, the decision underscores that ideological or politically expedient defunding—especially of scientific research—faces a high bar: agencies must define categories, supply a scientific record, and grapple with massive reliance interests. The ruling thus fortifies judicial oversight over executive attempts to reshape federal research priorities and signals to agencies that procedural shortcuts and opaque reasoning will not survive APA review.

Practitioners should recognise the case as a robust template for challenging sudden, policy-driven funding reversals, and agencies should treat it as a cautionary tale: administrative law demands transparency, expertise, and reasoned decision-making, even—or especially—when billions in research dollars and the trajectory of public health are at stake.