Judge blocks Trump admin directive capping costs tied to federal research grants

A recent directive by the Trump administration that aimed to impose a cap on overhead costs for universities and research institutions hosting federally funded projects has been temporarily halted by a judge. The directive, which came into effect on Monday, was met with strong opposition from research institutions, prompting legal challenges from 22 Democratic state attorneys general and leading research universities.

U.S. District Court Judge Angel Kelley ruled in favor of the attorneys general, granting a temporary restraining order that prevents agencies from enforcing the new rule that limited facilities and administrative costs associated with federally funded research grants. The rule specifically capped overhead costs for National Institutes of Health (NIH) funded research grants at 15%.

Historically, the percentage of indirect costs allocated to research facilities has been around 27% to 28% for each grant, with some negotiated rates even higher. For example, the University of Michigan had negotiated a rate of 56% for indirect costs. In fiscal year 2023, the NIH allocated approximately $9 billion for indirect costs out of a total budget of $35 billion for research grants.

The lawsuit filed by the attorneys general argued that the new rule violated federal regulations governing agency procedures and undermined congressional legislation passed in 2018 that prohibited unilateral changes to negotiated rates for indirect costs. Judge Kelley’s restraining order requires impacted agencies to report their compliance with the order within 24 hours and sets a hearing date for February 21.

The White House defended the directive, stating that redirecting funds from administrative expenses to scientific research would ultimately benefit research initiatives. However, the judge’s ruling halting the directive signifies a temporary setback for the Trump administration’s efforts to limit overhead costs for federally funded research projects.

In a related development, U.S. District Judge John J. McConnell recently ordered the government to restore frozen funding for federal aid programs, citing violations of his previous order to lift a funding freeze. The legal battles surrounding federal funding for research projects highlight the complexities of government regulations and the importance of upholding congressional mandates in allocating resources for scientific research.