DAB2026-7 Appellate (Ruling)

REJECTION OF APPEAL

William Marsh Rice University (the University) seeks Departmental Appeals Board review of a decision by the National Institutes of Health (NIH) to terminate a research grant issued to the University.  In response to the Board’s request for an agency opinion on jurisdiction, NIH submitted a written opinion asserting that the Board lacks jurisdiction because the grant termination, and subsequent reconsidered decision, were based on “nonalignment with agency priorities” and do not fall within any of the categories of disputes reviewable by the Board under 45 C.F.R. Part 16, Appendix A, or 42 C.F.R. Part 50, Subpart D.  NIH explained that the appealed decision does not represent a disallowance, a termination for failure to comply with the terms of the award, a denial of a noncompeting continuation award for failure to comply with the terms of a previous award, or a voiding.  As discussed below, NIH’s jurisdictional opinion is not clearly erroneous and, therefore, this appeal must be rejected.

Legal Background

The Board’s jurisdiction to hear and decide appeals is limited.  Ca. Dep’t of Finance, DAB No. 1592, at 17 (1996) (“[T]here is no general right to review by the Board . . .”). Board review is available only as provided by statute, regulation, or valid delegation of authority from the Department of Health and Human Services (HHS) Secretary or the head of an HHS operating component.  Experts Are Us, Inc., DAB No. 2342, at 5 (2010); 45 C.F.R. Part 16, App. A, ¶ A.

Before the Board will accept an appeal, the Board’s regulations at 45 C.F.R. Part 16 require that the following conditions be met:  (1) the appellant must have received a “final written decision” by an HHS component (45 C.F.R. § 16.3(b)); (2) the appellant must have appealed that decision within 30 days after receiving it (id.); (3) the appellant must have “exhausted any preliminary review process required by regulation” (id. § 16.3(c)); and (4) the disputed decision “must arise under a program which uses the Board for dispute resolution” and be the type of decision that the Board is authorized to review, as specified in Part 16, Appendix A (id. § 16.3(a); 45 C.F.R. Part 16, App. A, ¶¶ A-E).  The fourth requirement for Board jurisdiction is at issue here.

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Title 45 C.F.R. Part 16, Appendix A, identifies HHS programs that use the Board for dispute resolution and the types of “final written decisions” reviewable by the Board.  45 C.F.R. Part 16, App. A, ¶ A; see also 46 Fed. Reg. 1644, 1645 (Jan. 6, 1981) (noting that Appendix A is the Board’s “jurisdiction statement” reflecting “disputes which agencies have chosen to submit to the Board”).  The Board is authorized to review certain agency decisions involving grants.  See 45 C.F.R. Part 16, App. A, ¶¶ B, C.  A grant is a type of federal financial assistance that provides support or stimulation to carry out a public purpose as authorized by a law of the United States.  See 2 C.F.R. § 200.1 (defining “federal award,” “federal financial assistance,” and “grant agreement or grant”); 31 U.S.C. § 6304 (grant agreements).  Research grant awards made by NIH are subject to general terms and conditions depending on the type of grant, as well as any special terms and conditions in the notice of award.  See Targazyme, Inc., DAB No. 2939, at 1-2 (2019).  NIH issues a Grants Policy Statement (NIH GPS) to “make available to NIH recipients, in a single document, the policy requirements that serve as the terms and conditions of NIH grant awards.”  NIH GPS at ii.1

As relevant here, Appendix A provides that the Board reviews “the following types of final written decisions in disputes arising in any HHS program authorizing the award of direct, discretionary project grants or cooperative agreements:” 

• (1)    A disallowance or other determination denying payment of an amount claimed under an award, or requiring return or set-off of funds already received.  . . .
• (2)    A termination for failure to comply with the terms of an award.
• (3)    A denial of a noncompeting continuation award under the project period system of funding where the denial is for failure to comply with the terms of a previous award.
• (4)    A voiding (a decision that an award is invalid because it was not authorized by statute or regulation or because it was fraudulently obtained). 

45 C.F.R. Part 16, App. A, ¶ C(a)(1)-(4).2

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When an HHS component, such as NIH, uses a preliminary appeal process, “the ‘final written decision’ for purposes of Board review is the decision issued as a result of that process.”  Id., App. A, ¶ C(b).  One such preliminary appeal process is found at 42 C.F.R. Part 50, Subpart D, which establishes a procedure for resolving certain “grant and cooperative agreement disputes” in programs administered by NIH.  42 C.F.R. §§ 50.401, 50.402.  The preliminary appeal process under Subpart D applies only to certain “adverse determinations under discretionary grants and cooperative agreements,” as specified in section 50.404(a).  Section 50.404(a) mirrors the list of reviewable final written decisions under Part 16, Appendix A, ¶ C(a).3  If a grantee contests an “adverse determination” to which the preliminary appeal process applies, the grantee must exhaust that process before the Board will accept the appeal under Part 16.  42 C.F.R. § 50.403.

The Board Chair determines whether the conditions for Board jurisdiction are satisfied.  See 45 C.F.R. § 16.7(b) (providing that the Board will notify the parties if the Board Chair determines that the appeal does not meet the conditions in section 16.3).  If the Board Chair finds there is “some question” about whether the Board has jurisdiction, the Chair “will request the written opinion of the HHS component which issued the decision.”  Id., App. A, ¶ G.  “Unless the Chair determines that the opinion is clearly erroneous, the Board will be bound by the opinion.”  Id.

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Procedural and Case Background

• A. Notice of Grant Termination

On April 10, 2024, NIH awarded the University a research grant authorized by 42 U.S.C. § 241 and 42 C.F.R. Part 52.  Ex. 1 (Notice of Funding Opp. PAR-21-258); Ex. 2 (Notice of Award No. 1R25AI179580-01).4  The Notice of Award set forth the award’s terms and conditions, including a statement that the award is “subject to the terms and conditions incorporated either directly or by reference” in the “National Policy Requirements and all other requirements described in the NIH Grants Policy Statement, including addenda in effect as of the beginning date of the budget period.”  Ex. 2, at 3 (emphasis added).

On May 19, 2025, NIH issued a revised Notice of Award terminating the grant project.  Ex. 4.  NIH stated that research programs based on “non-scientific categories, including amorphous equity objectives, are antithetical to the scientific inquiry,” and further stated “it is the policy of NIH not to prioritize such research programs.”  Id. at 6.  NIH cited 2 C.F.R. § 200.340(a)(4) as its authority for the termination.  Id.  NIH stated that its determination is “final,” though reconsideration may be sought from the Acting Director of NIH’s National Institute of Allergy and Infectious Diseases.  Id.

By letter dated June 18, 2025, the University filed an appeal with NIH, requesting reversal of the grant termination.  Ex. 5.  The University asserted that the termination should be reversed because the grant aligns with NIH’s statutory and stated priorities, NIH lacks authority to unilaterally terminate the grant, NIH failed to adequately explain its decision, and NIH’s reliance on 2 C.F.R. § 200.340 is impermissible.  Id. at 1-2.    

By email dated June 9, 2025, NIH denied the University’s appeal (described as a reconsideration request), stating that “[t]he program that supported this award was terminated because it is no longer aligned with NIH/HHS priorities” and, consequently, grants awarded under this program “can no longer be supported.”  Ex. 6.  NIH did not assert, either in the initial termination notice or reconsidered decision, that the University failed to comply with the terms of the award.  No appeal rights were offered in the reconsidered decision. 

• B. Notice of Appeal and Request for Agency Opinion on Jurisdiction

On June 30, 2025, the University filed a notice of appeal with the Board, requesting that the Board reverse the termination and take other remedial action.  The University asserted that it “brings this appeal pursuant to 45 C.F.R. Part 16 and Section 8.7 of the NIH Grants Policy Statement,” and that the Board “has jurisdiction . . . as it is an appeal from a final 

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written decision from a termination arising from an HHS program authorizing the award of direct, discretionary project grants.”  Notice of Appeal at 1.   

On July 17, 2025, the Board Chair requested, under Part 16, Appendix A, ¶ G, that NIH submit an opinion about whether the Board may review the challenged determination.  The Chair directed NIH to address among other issues:  (1) whether the reconsidered decision appealed by the University is reviewable by the Board under Appendix A, ¶ C; (2) whether the reconsidered decision is a type of “adverse determination,” as described in 42 C.F.R. § 50.404(a), to which NIH’s preliminary appeal process applies; and (3) whether any other HHS program regulation or memorandum of understanding authorizes Board review of the parties’ dispute.  In the same letter, the Board advised the University that it could file a response to NIH’s opinion within ten days of receiving it and invited both parties to submit evidence supporting their respective positions.  

• C. NIH’s Opinion on Jurisdiction

On July 30, 2025, NIH filed an opinion asserting that the Board lacks jurisdiction over this matter because the grant termination was for “nonalignment with agency priorities” and does not fall within any of the categories of disputes reviewable by the Board.  NIH Op. at 6 (citing 2 C.F.R. § 200.340(a)(4)).  NIH explained that the appealed decision does not represent a disallowance, a termination for failure to comply with the terms of the award, a denial of a noncompeting continuation award for failure to comply with the terms of a previous award, or a voiding.  Id. at 3 (citing 45 C.F.R. Part 16, App. A, ¶ C).

Similarly, NIH opined that the grant termination was not subject to the preliminary appeal process under Part 50, Subpart D, because it does not fall within any of the four categories of “adverse determinations” specified in 42 C.F.R. § 50.404(a).  Id. at 4. (“The appealed decision does not represent a termination for failure to comply with the terms of the award, a disallowance of an expenditure charged to the grant or failure to account for grant funds, a determination that a grant is void, or a denial of a non-competing continuation award for failure to comply with the terms of a previous award.”).  NIH acknowledged that it “did reconsider the grant termination at Appellant’s request, but this review was not subject to . . . 42 C.F.R. Part 50, subpart D because it involved a termination for nonalignment with NIH/HHS priorities, which is not covered by the . . . Part 50, subpart D regulations.”  Id. at 5. 

Finally, in response to the Chair’s question about disputes reviewable under programs not specified in Appendix A (see 45 C.F.R. Part 16, App. A, ¶ A) NIH states that it is “not aware of any program regulation or memorandum of understanding authorizing the Board to review the disputes at issue here.”  Id. at 6. 

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• D. The University’s Response

On August 8, 2025, the University filed a response to NIH’s opinion.  The University argues that the Board has jurisdiction because NIH’s termination of its grant falls within the regulatory framework governing “remedies for noncompliance.”  Specifically, the University contends that NIH can terminate grants only for noncompliance with award terms and conditions.  According to the University, since NIH purported to terminate the award based on changes in “agency priorities”—a ground not set out in the award’s terms—such a termination must be treated as a termination for noncompliance, thereby triggering appeal rights.  Resp. to Op. at 3, 5-6 (“The [Board] should conclude that NIH terminated the Grant Project for noncompliance with the grant’s terms and conditions for jurisdictional purposes.”).  The University emphasizes that section 200.340 appears under the “remedies for noncompliance” subheading of the Uniform Guidance and cannot provide authority for termination outside the terms and conditions of the award.  Id. at 6 (“Section 200.340’s placement and immediate context supports the plain language reading that it provides for grant terminations only for noncompliance.”).  The University further contends that NIH is improperly relying on what it calls “post hoc attorney-crafted rationalizations to deny jurisdiction.”  Id. at 6, 10.  According to the University, NIH’s attempt to deny review is “clearly erroneous,” and the Board must exercise jurisdiction and allow the appeal to proceed on the merits.  Id. at 16.

Analysis

I. The appeal does not concern a final written decision reviewable by the Board under 45 C.F.R. Part 16, Appendix A.

NIH’s opinion that the Board does not have jurisdiction because the grant termination, and subsequent reconsidered decision, do not fall within any of the categories of disputes reviewable by the Board under Part 16, Appendix A, is not clearly erroneous.  As NIH explained, the grant termination and reconsidered decision were based on NIH’s determination that the grant “no longer aligned with NIH/HHS priorities.”  Ex. 6; see also Ex. 4, at 6 (citing 2 C.F.R. § 200.340(a)(4)); NIH Op. at 3-4.  NIH denies that the challenged decision represented a “termination for failure to comply with the terms of the award.”  NIH Op. at 3-4.  For its part, the University provided no evidence that this appeal concerns a disallowance, a termination for failure to comply with the terms of the award, a denial of a noncompeting continuation award for failure to comply with the terms of a previous award, or a voiding (i.e., a decision that an award is unauthorized by statute or regulation or was fraudulently obtained).  See 45 C.F.R. Part 16, App. A ¶ C(a)(1)-(4).  Indeed, the University acknowledged that NIH “only terminated the Grant Project because it was funded through a program that NIH has determined ‘is no longer aligned with NIH/HHS priorities.’”  Notice of Appeal at 2.

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In 2020, the Office of Management and Budget (OMB) issued revised guidance regarding federal award terminations under 2 C.F.R. § 200.340.5  In section 200.340(a)(2), the predecessor to the provision cited in NIH’s opinion,6 OMB replaced the “for cause” basis for termination with a provision authorizing federal awarding agencies to terminate an award “to the greatest extent authorized by law, if an award no longer effectuates the program goals or agency priorities.”  Compare 2 C.F.R. § 200.339(a)(2) (eff. to Aug. 12, 2020) with 2 C.F.R. § 200.340(a)(2) (eff. Aug. 13, 2020).  OMB stated that it revised section 200.340 “to strengthen the ability of the Federal awarding agency to terminate Federal awards, to the greatest extent authorized by law, when the Federal award no longer effectuates the program goals or Federal awarding agency priorities.”  See 85 Fed. Reg. 49,506, 49,507 (Aug. 13, 2020).  OMB further stated that it was “eliminating the termination for cause provision because this term is not substantially different than the provision allowing Federal awarding agencies to terminate Federal awards when the recipient fails to comply with the terms and conditions.”  Id. at 49,508.  OMB retained, as a separate basis for termination, the awarding agency’s authority to terminate an award if a grantee “fails to comply with the terms and conditions” of the award.  Compare 2 C.F.R. § 200.339(a)(1) (eff. to Aug. 12, 2020) with 2 C.F.R. § 200.340(a)(1) (eff. Aug. 13, 2020).  NIH states that it incorporated revised section 200.340 into the NIH GPS and, therefore, made it applicable to all NIH grants.  NIH Op. at 3 (citing NIH GPS § 8.5.2).7  HHS, however, has not amended Part 16, Appendix A, or issued other regulations authorizing the Board to review a grant termination based on an awarding agency’s determination that an award no longer effectuates program goals or agency priorities. 

In its jurisdictional opinion, NIH further states that it “does not concede” that the dispute is one “arising under an ‘HHS program authorizing the award of direct, discretionary project grants or cooperative agreements,’” apparently suggesting that the dispute may fall outside of Appendix A for that reason as well.  NIH Op. at 3.  I need not decide whether the award at issue is a “direct, discretionary project grant” because, assuming 

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that it is, the termination is not reviewable under Appendix A, ¶ C.  Moreover, neither party contends that the grant is “mandatory” or that the appealed decision would fall under any other reviewable category in Appendix A.

Finally, Appendix A states that “[d]isputes under programs not specified in this appendix” may be reviewed by the Board if such review is authorized by a “program regulation” or “memorandum of understanding between the Board and the head of the appropriate HHS operating component or other agency responsible for administering the program.”  45 C.F.R. Part 16, App. A, ¶ A.  This provision is inapplicable here.  I am aware of no program regulation or memorandum of understanding authorizing the Board to review disputes concerning NIH grant terminations based on the agency’s determination that an award no longer effectuates or aligns with “agency priorities.”

II. The University’s arguments do not demonstrate that NIH’s jurisdictional opinion is clearly erroneous.

The University contends that NIH has authority to terminate a grant only for failure to comply with the terms of an award and, therefore, must have terminated the grant for noncompliance.  Resp. to Op. at 4-5; see also id. at 7 (“[N]either HHS regulations nor the Grant Project’s terms and conditions permit NIH to terminate the Grant Project for any reason except noncompliance with the terms and conditions of the award.”); 11 (“NIH had only one basis under which it could terminate the Grant Project:  failure to comply with the grant terms and conditions.”); 16 (“NIH has and had no authority to unilaterally terminate the Grant Project but for noncompliance with the grant’s terms and conditions.”).  The University’s arguments are unpersuasive for several reasons. 

First, the assertion that NIH must have terminated the grant for noncompliance with the terms of the award directly contradicts the plain language of both the initial termination notice and reconsidered decision, neither of which alleged that the University failed to comply with the terms of the award.  Indeed, NIH stated that it terminated the grant because “it is the policy of NIH not to prioritize such research programs” (Ex. 4) and because the grant program “is no longer aligned with NIH/HHS priorities” (Ex. 6).        

Second, the assertion that NIH could only terminate an award for failure to comply with the terms of the award is belied by the plain language of the NIH GPS, which is part of the standard terms and conditions of the award.  Ex. 2, at 3.  NIH GPS § 8.5.2 provides: 

• If a recipient has failed to comply with the terms and conditions of award, NIH may take one or more enforcement actions which include disallowing costs, withholding of further awards, or wholly or partly suspending the grant, pending corrective action.  NIH may also terminate the grant in whole or in part as outlined in 2 CFR Part 200.340.    

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NIH GPS at IIA-155 (emphasis added).  Section 200.340, in turn, authorizes federal awarding agencies to unilaterally terminate a federal award (1) “if the recipient or subrecipient fails to comply with the terms and conditions of the Federal award”; or (2) “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 C.F.R. § 200.340(a)(1), (4).8  Thus, the notion that NIH could only terminate an award if the grantee fails to comply with the terms and conditions of the award is unsupported by the NIH GPS, 2 C.F.R. § 200.340, and the terms of this award. 

Third, the University is conflating the jurisdictional question with a different one:  whether NIH had the legal authority to terminate the grant based on a change in agency priorities.  The question of Board jurisdiction, however, does not turn on whether NIH lawfully terminated the grant due to a change in agency priorities.  That question goes to the merits of the dispute.  The question for purposes of determining jurisdiction, and the only issue decided here, is whether the challenged decision is the type of final written agency decision reviewable by the Board under 45 C.F.R. Part 16, Appendix A.  As discussed above, with respect to discretionary grants, the Board is authorized to review a final agency decision terminating an award “for failure to comply with the terms of [the] award.”  45 C.F.R. Part 16, App. A, ¶ C(a)(2).  The Board is not authorized under Part 16, Appendix A to review other types of terminations arising under direct, discretionary project grants.  Cf. Dignity, LLC, DAB No. 3121, at 22-23 (2023) (holding that the Board has no authority under Appendix A to review an agency decision denying a non-competing continuation award, except to the extent that the denial is based on the grantee’s failure to comply with the terms and conditions of the prior award).  Again, to obtain Board review of a final agency decision, all regulatory conditions for review must be satisfied, including the requirement that the appealed decision be reviewable under Part 16, Appendix A.  See 45 C.F.R. § 16.3; see also Dignity at 22-23.    

Finally, the University argues that NIH’s jurisdictional opinion should be rejected because it reflects attorney-crafted “post hoc rationalizations” to deny Board review.  Resp. to Op. at 6, 10.  In making this point, the University relies on the principle of administrative law that judicial review of agency action be “‘based on the official explanations of the agency decisionmakers and not based on after-the-fact explanations advanced by agency lawyers during litigation (or by judges).’”  Id. at 10-11 (quoting Dep’t of Homeland Sec. v. Regents of the Univ. of Cal., 591 U.S. 1, 67 (2020) (Kavanaugh, J., concurring in part)).  Whether that principle applies in this administrative (non-judicial) forum is unclear; but, even if it does, the University has not shown that the “agency decisionmakers” terminated the grant for a reason other than nonalignment with agency priorities.  See Exs. 4, 6.

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III. NIH’s preliminary appeal process under 42 C.F.R. Part 50, Subpart D is inapplicable.

NIH’s preliminary appeal process under 42 C.F.R. Part 50, Subpart D applies to certain “adverse determinations” under discretionary project grants, none of which apply here.  See 42 C.F.R. § 50.404(a)(1)-(4).  As NIH explained, the appealed decision is not a termination for failure to comply with the terms of the award, a disallowance of an expenditure charged to the grant or failure to account for grant funds, a determination that a grant is void, or a denial of a noncompeting continuation award for failure to comply with the terms of a previous award.  NIH Op. at 4.  The University offered no evidence that this matter involves an “adverse determination” as specified in section 50.404(a).   

The University asserts that the preliminary appeal process applies because the NIH GPS states that grant terminations may be appealed under 42 C.F.R. Part 50, Subpart D “without qualification.”  Resp. to Op. at 13.  The scope of the preliminary appeal process, however, is governed by the regulations in 42 C.F.R. Part 50, Subpart D – specifically section 50.404(a) – not by the NIH GPS.  Furthermore, contrary to the University’s suggestion, the NIH GPS does not indicate that the preliminary appeal process applies to all grant terminations.  Section 8.7, titled “Grant Appeals Procedures,” merely provides that “NIH will assume jurisdiction” under its preliminary appeal process for “adverse determinations” specified in 42 C.F.R. § 50.404, which, as discussed, does not include a termination for “nonalignment with agency priorities.”  See NIH GPS § 8.7; see also id. § 8.5.2 (providing that a termination may be appealed “under NIH . . . grant appeals procedures” and citing NIH GPS § 8.7).

Conclusion

NIH’s opinion that the Board lacks jurisdiction over this matter is not clearly erroneous. The Board’s jurisdiction is limited, and no statute, regulation, or delegation of authority, confers the Board with jurisdiction to review this matter.  I therefore reject the University’s appeal for lack of jurisdiction.