SAMHSA Abruptly Ends, Then Restores, Nearly $2 Billion in Mental Health and Addiction Grants

The email landed in inboxes late on a Tuesday night in January, terse and final.

Grants that clinics, universities and nonprofits had relied on to run addiction treatment, suicide‑prevention and trauma‑care programs were “hereby terminated,” effective Jan. 13, the messages from the federal Substance Abuse and Mental Health Services Administration said. Costs “resulting from financial obligations incurred after termination are not allowable.”

Within hours, some organizations called emergency board meetings. Others drafted layoff notices or began calculating how many days they could continue seeing patients.

“It was like the floor dropped out,” said Elizabeth Woike, chief executive of BestSelf Behavioral Health in Buffalo, New York. “I just shook my head. It’s mass chaos.”

Roughly 24 hours later, the same inboxes pinged again. This time, SAMHSA said the terminations were rescinded. The grants — nearly $2 billion in all — would continue under their original terms.

The rapid reversal ended a brief but extraordinary crisis that rattled the country’s already fragile mental health and addiction‑treatment system, raised legal questions about the federal government’s power to pull back money Congress has approved and highlighted the growing use of grant cancellations as a tool of health policy.

A national scare in 24 hours

The turmoil began the night of Jan. 13, when SAMHSA, an agency within the Department of Health and Human Services, emailed termination letters to thousands of grant recipients nationwide.

The notices cited federal grant regulations that allow HHS to end awards that “no longer effectuate the program goals or agency priorities.” Some letters described the move as a “realignment” of SAMHSA’s discretionary portfolio to better match the Trump administration’s health agenda.

Industry groups and lawmakers later estimated that about 2,000 organizations and up to 2,800 active grants were affected, totaling nearly $2 billion. That represents roughly one‑quarter of SAMHSA’s overall budget and a much larger share of its competitive, or discretionary, awards.

Programs hit with termination notices included community‑based addiction treatment, overdose‑prevention projects, youth and college suicide‑prevention efforts, trauma‑focused services for children, reentry support for people leaving jail or prison, homelessness outreach and HIV and hepatitis C prevention for people who inject drugs.

Several large funding streams were not directly cut. Operations of the 988 Suicide & Crisis Lifeline, state opioid response grants and federal mental health and substance use block grants stayed intact, according to officials and trade groups. But some technical‑assistance and ancillary projects that support those programs were on the termination list.

Providers said the initial messages came without warning.

Centerstone, a large nonprofit behavioral health provider operating in multiple states, said 28 of its programs in seven states — worth about $14.3 million — were abruptly listed for termination. Utah Recovers, a nonprofit that uses federal dollars to place peer specialists in mental health, drug and veterans courts, said a three‑year, $1.5 million grant that supports that work was suddenly at risk.

In Laredo, Texas, leaders of two local nonprofits, SCAN and PILLAR, told local media they feared immediate layoffs and service disruptions in a city with few alternative resources.

“Providers were scrambling to understand whether they could make payroll, whether they had to shut down programs overnight,” said Chuck Ingoglia, president and CEO of the National Council for Mental Wellbeing, which represents behavioral health providers.

Political backlash and a fast retreat

News of the cuts circulated quickly among state officials, trade publications and national outlets on Jan. 14. Advocacy organizations issued emergency alerts, urging grantees to contact members of Congress. Some circulated spreadsheets where programs tried to track which grants had been terminated.

On Capitol Hill, Democrats led the initial pushback.

“These cuts will cost lives,” Rep. Rosa DeLauro of Connecticut, the top Democrat on the House Appropriations Committee, said in a statement that day. “We have an addiction and mental health crisis in this country … and yet this administration is decimating the programs that help children, their families, and adults that are in recovery.”

Sen. Tammy Baldwin, a Wisconsin Democrat who has worked on opioid legislation, accused the administration of “kneecapping and defunding the fight against the opioid and mental health epidemics,” saying the move would “put American lives on the line.”

Rep. Paul Tonko, a New York Democrat and co‑chair of the Congressional Addiction, Treatment and Recovery Caucus, said HHS had taken “a chain saw to our nation’s behavioral health resources.”

By that evening, a bipartisan group of 100 House members, including several Republicans, had signed a letter demanding an explanation from HHS and urging the department to reverse course.

Behind the scenes, officials at HHS, led by Secretary Robert F. Kennedy Jr., were under increasing pressure from lawmakers, providers and national advocacy groups to restore the grants. According to people familiar with the discussions, the department decided late Jan. 14 to reverse the terminations.

The way that reversal rolled out added to the confusion. In the early hours of Thursday, Jan. 15, some providers reported receiving a second termination email extending the cut, before a final message arrived later that morning rescinding the decision outright.

“Your award will remain active under its original terms and conditions,” the rescission notices said. “Please disregard the prior termination notice and continue program activities as outlined in your award agreement.”

DeLauro issued a second statement later that day, declaring that “after national outrage, Secretary Kennedy has bowed to public pressure and reinstated $2 billion in SAMHSA grants that save lives,” and warning that “Congress holds the power of the purse, and the Secretary must follow the law.”

HHS and SAMHSA have not publicly provided a detailed explanation of how the initial decision was made or who ordered it. Spokespeople have said the grants were restored and operations would continue, and some officials have described the terminations to reporters as a “mistake,” without elaborating on whether the error was legal, administrative or political.

Legal authority and untested limits

The episode drew attention to a little‑known but powerful provision of federal grant rules.

Under government‑wide regulations known as 2 C.F.R. Part 200, agencies such as HHS can terminate or reduce grants if an award “no longer effectuates the program goals or agency priorities.” The standard language appears in SAMHSA’s notice of award terms and conditions.

Typically, terminations under that authority happen case by case, when a program fails to meet performance benchmarks or when Congress changes a program. Longtime observers of federal health policy said they could not recall another instance in which thousands of active grants were canceled at once mid‑year under a broad claim that they no longer met agency priorities, then reinstated in a matter of days.

DeLauro and other lawmakers have argued that canceling congressionally funded grants en masse for policy reasons risks encroaching on Congress’ constitutional authority over federal spending. Some legal scholars have suggested that a blanket realignment that treats diverse programs the same way could be vulnerable to challenges under the Administrative Procedure Act as “arbitrary and capricious,” because it offers little program‑specific justification.

No major lawsuits have been filed, in part because funding was restored so quickly. Several providers and national organizations have said they are consulting attorneys about the damages they incurred during the disruption and seeking assurances that it will not happen again.

A fragile safety net exposed

Even though the money ultimately flowed, providers say the 24‑ to 48‑hour scare did real damage.

Some organizations had already issued layoff notices or frozen hiring before the rescission came through. Trainings were canceled, grant‑funded group sessions were postponed and staff were told to halt work on projects whose federal backing suddenly looked uncertain.

“For our staff and the people we serve, the whiplash was incredible,” said a director at a community recovery organization that asked not to be named discussing internal finances. “You can’t tell someone in early recovery that their support group may end this week and expect there to be no impact.”

Many of the threatened grants fund services that are difficult to cover through Medicaid or private insurance, including prevention work, peer support, outreach in homeless encampments and specialized training for clinicians. Local governments often rely on SAMHSA’s discretionary portfolio to fill those gaps.

The near‑miss also came at a pivotal moment in the nation’s overdose crisis. Federal data show that drug overdose deaths, which peaked at around 110,000 annually in 2022 and 2023, dropped by roughly 27% in 2024 to about 80,000. Overdose remains the leading cause of death for Americans ages 18 to 44.

Public health experts have credited a mix of strategies for that decline, including wider access to medications for opioid use disorder, expanded naloxone distribution and community‑based prevention — many of them funded or supported by SAMHSA.

“Those programs are not wasteful,” Ingoglia said. “They’re vital.”

A warning for future fights

The grant crisis unfolded against the backdrop of a broader reorganization at HHS. The Trump administration has proposed folding SAMHSA into a new entity called the Administration for a Healthy America and has carried out significant workforce reductions at the agency, according to congressional reports, prompting concerns about capacity and politicization.

Some advocates and former officials say the attempted cancellations may reflect both policy intentions — to shift funding away from models such as harm reduction or programs that emphasize diversity, equity and inclusion — and administrative strain inside an agency that has lost experienced staff.

The incident has already sparked calls in Congress for hearings, document requests and possible legislation to tighten guardrails on how and when agencies can terminate active grants. Lawmakers and provider groups have floated ideas including mandatory notice periods, program‑specific explanations for large‑scale terminations, and clearer reporting to Congress when agencies invoke the “no longer effectuates priorities” standard.

For now, clinics and nonprofits say they are trying to rebuild trust — and contingency plans.

Several leaders said boards are pushing to diversify funding, build bigger reserves where possible and be more cautious about taking on long‑term leases or staff based solely on federal discretionary dollars.

“On paper, nothing changed — the grants are still there,” said the executive director of a small rural treatment center. “But the message we all heard is that it can be taken away overnight.”

For the people who rely on those programs, the confusion was less abstract. Some clients called to ask whether their therapy appointments or court‑ordered treatment would continue. Others asked if they would lose access to housing or medications.

Staff reassured them that services were still running, even as they refreshed their inboxes for confirmation from Washington.

“The grants were saved,” Woike said. “But the sense of stability? That’s going to take much longer to restore.”