Labor & Employment Law Daily Wrap Up, LITIGATION NEWS, TRENDS—NEH grantees file suit alleging mass grant termination spurred by DOGE was unlawful, (May 13, 2025)

By Patricia K. Ruiz, J.D.

The complaint alleges the mass termination violates the First Amendment, as evidence shows the Trump administration disfavors the grantees’ speech based on its assessment of the speech’s content and viewpoint.

The Authors Guild and seven individual plaintiffs filed a class action lawsuit against the National Endowment for the Humanities (NEH), its acting chairman, the U.S. DOGE Service and its administrator, and two DOGE employees (defendants, collectively), alleging the termination of their grants by NEH violated NEH’s governing statute, the Administrative Procedure Act (APA), the Impoundment Control Act, and the U.S. Constitution. The plaintiffs seek an order declaring the mass grant terminations unlawful and setting them aside, as well as injunctive relief.

Grant awarded. The grant period of one of those individual plaintiffs—a professor at Penn State University—was set to begin on May 1, 2025, and last through April 30, 2026. Because her grant was “full-time,” as a condition of receiving the grant money, she was required by NEH to take a year-long leave of absence from her employment to work on the project. Penn State permitted her to take a two-semester leave of absence—and paid her $35,000 while on leave—in light of the benefit the university would receive from employing an NEH grantee.

Termination notice. On April 3, 2025, the professor received a letter, purportedly drafted by NEH and signed by Michael McDonald, the newly appointed acting director of NEH. The letter, addressed “Dear NEH Grantee,” stated that the professor’s grant “no longer effectuates the agency’s needs and priorities and conditions of the Grant Agreement and is subject to termination due to several reasonable causes.” The letter cited Executive Order 14217, February 19, 2025, executive order mandating that NEH eliminate all non-statutorily required activities and functions; however, the EO makes no mention of NEH or its grants. The letter continued, “The termination of your grant represents an urgent priority for the administration, and due to exceptional circumstances, adherence to the traditional notification process is not possible. Therefore, the NEH hereby terminates your grant in its entirety effective April 3, 2025.” The letter provided a non-government email address the professor could contact “with only urgent questions.”

The defendants sent this letter (hereinafter, “termination notice”) to at least 1,400 grantees, including other named plaintiffs in this action, and cancelled more than 85 percent of NEH’s grants—approximately $175 million of congressionally appropriated, already awarded money.

Allegations. The complaint alleges NEH unlawfully cancelled these grants at the direction of the U.S. DOGE Service, whose employees obtained access to NEH’s grant database just days earlier and directed McDonald to implement the mass termination. The mass termination violated the APA because: (1) the defendants’ unreasoned, unexplained departure from prior agency policy to cancel all grants regardless of circumstances was arbitrary and capricious; and (2) the defendants are withholding and redirecting money Congress appropriated for grantees such as the plaintiffs, in violation of multiple statutes.

The complaint further alleges that the mass termination violated the separation of powers, as well as the Impoundment Control Act and multiple appropriations statutes, which require the president to spend money Congress has appropriated for a particular program on that program and not redirect that money to an unrelated program simply to better fit the president’s priorities. Finally, the complaint alleges the defendants’ actions violated the First Amendment, as the termination notice and other evidence show that the executive branch disfavors the grantees’ speech based on its assessment of the speech’s content and viewpoint.

Relief sought. The plaintiffs requested that the court declare unlawful and set aside the mass termination and accompanying termination notices and that it enjoin the defendants from further actions violating NEH’s governing statute, the APA, the Impoundment Control Act, and the U.S. Constitution.

The case is No. 1:25-cv-03923.

Companies: The Authors Guild

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