NIH Committed Unlawful Impoundment—GAO Decision Finds NIH's Withholding of Grant Funds Violated Impoundment Control Act–Implications for Federal Grantees

The US Government Accountability Office (GAO) issued a decision on 5 August 2025 finding that the federal Department of Health and Human Services (HHS) National Institutes of Health (NIH) violated the Impoundment Control Act of 1974 (ICA) by withholding grant funds from obligation and expenditure (GAO Decision).¹ This decision reviews recent measures directing the pause and termination by the Trump administration of equity-related grants, contracts, and other assistance.

In accordance with certain executive orders and other directives, HHS and its agencies, including the NIH, began (i) canceling existing grants and (ii) ceasing publication of grant review meeting notices in the Federal Register, thereby pausing new awards. Collectively, these measures resulted in NIH reducing its obligation of funds, with the GAO finding that NIH obligated almost US$8 billion less between February and June of 2025 as it did during the same time period in fiscal year 2024. As recently as 7 August 2025, the White House signed an executive order titled “Improving Oversight of Federal Grantmaking,” requiring grant awards to undergo evaluation by President Trump’s appointees, indicating further political control on the grantmaking process and expenditure of NIH obligated funds.² 

Although the GAO Decision concluding that NIH violated the processes outlined in the ICA is nonbinding on the federal agency, it is nonetheless noteworthy for universities, academic medical centers, research institutes, and other NIH grant recipients and may be cited as persuasive authority in ongoing appeals of grant terminations for existing awards.³ The GAO director is required to report the GAO Decision to Congress and, if funding is not released, he is authorized to bring civil action in the US District Court for the District of Columbia to compel release of funding.⁴ 

Overview of NIH Grant Review

NIH is the largest public funder of biomedical research in the world.⁵ Historically, NIH has awarded “over 60,000 grants that directly support more than 300,000 researchers at more than 2,500 different institutions” annually.⁶ 

NIH engages in a two-level grant peer review process when evaluating a research protocol prior to a grant award being made:⁷ 

• First, a scientific review group assesses the overall impact that the proposed project will likely have on the research field(s) involved.
• Second, the National Advisory Council or Board will review the research grant application and offer advice and recommendations to the respective NIH Institutes or Centers that ultimately make the funding decision.

Grant Review Pause and Cancellation of Existing Grants

In order to engage in the peer review process required for grant review, the Federal Advisory Committee Act requires that NIH post relevant meeting plans in the Federal Register at least 15 calendar days prior to an advisory committee meeting.⁸ However, on 21 January 2025, the HHS acting secretary issued a memorandum titled “Immediate Pause on Issuing Documents and Public Communications.”⁹ Among other things, the memorandum directed that any document intended for publication in the Federal Register be held until it has been reviewed and approved by a presidential appointee.¹⁰ Further per the memorandum, any document, including grant announcements, should not be issued publicly until first reviewed and approved by a presidential appointee.¹¹ Similarly, President Trump issued various executive orders directing federal agencies to terminate certain grants or contracts, particularly those related to promoting gender ideology or equity-related advancement.¹² 

Consequently, HHS paused the submission of Federal Register notices, which subsequently halted NIH’s ability to review and award grants.¹³ In addition, according to the GAO Decision, NIH began terminating over 1,800 NIH grants between February 2025 and June 2025.¹⁴ 

GAO Finds that NIH’s Actions Violated the ICA

The GAO Decision determines that the NIH violated the ICA by improperly withholding appropriated funds from obligation and expenditure for the following reasons:

1. The Constitution requires that the president must “faithfully execute” the law as Congress enacts it and the president does not maintain unilateral authority to withhold funds from obligation.¹⁵ 
2. The ICA provides the president with two ways to withhold budget authority in limited circumstances. However, in either case, the ICA requires that the president provide specific information to Congress outlining the reasons to justify the withholding.¹⁶ The GAO Decision notes that the Trump administration has not provided such information to Congress related to NIH.
3. An ICA violation requires sufficient evidence of an intent to refrain from obligating or expending available budget authority. The GAO Decision finds evidence of such intent under these facts and circumstances. Specifically, NIH has actively delayed two of the mechanisms through which NIH obligates funds for research assistance: awarding new grants and carrying out existing grants. Further, HHS, responding on behalf of NIH, offered no evidence that it did not withhold amounts from obligation or expenditure, and it did not show that the delay was a permissible programmatic delay.¹⁷ 

Impact of the GAO Decision on NIH Grant Recipients

Although an important finding, the GAO Decision does not have an immediate impact on NIH grant recipients as it is nonbinding without a court order compelling the agency to release funds. Funds not spent by September 30th, the end of the government fiscal year, will be returned unspent to the Treasury. 

As noted above, the Trump administration continues to exert additional control over federal grantmaking. Under the 7 August 2025 executive order, each agency head must designate an appointee who will be “responsible for creating a process to review new funding opportunity announcements and to review discretionary grants to ensure that they are consistent with agency priorities and the national interest.”¹⁸ It may be unlikely for these processes to be established and operationalized in time for NIH to obligate funds prior to the fiscal year end on September 30th.  

Entities engaged in federally funded research activities should continue to monitor developments and remain aware of the evolving landscape resulting from the GAO Decision and the related actions of the Trump administration.