A recent directive by the Trump administration that imposed a cap on overhead costs for universities and institutions hosting federally funded research projects has been temporarily halted by a U.S. District Court Judge. The directive, which came into effect on Monday, faced strong opposition from research institutions, leading to legal challenges.
The rule in question aimed to limit overhead costs associated with National Institutes of Health (NIH) funded research grants to 15%. Typically, a portion of the grant goes towards covering indirect costs at the facility where the research is conducted. The Trump administration argued that historically, this percentage has been around 27% to 28%, with some negotiated rates even higher.
In response to the directive, 22 Democratic state attorneys general filed a lawsuit, contending that the move violated federal regulations and undermined the authority of Congress. The judge ruled in favor of the attorneys general, issuing a temporary restraining order that prevents agencies from enforcing the new rule.
The lawsuit highlighted that the NIH allocated approximately $9 billion for indirect costs out of the $35 billion spent on research grants in fiscal year 2023. The court order requires impacted agencies to report their compliance within 24 hours and sets a hearing date for further deliberation.
While the White House did not respond to requests for comment on the restraining order, a spokesperson defended the directive, stating that redirecting funds from administrative expenses would enhance resources for scientific research.
Separately, another federal judge criticized the Trump administration for violating an order related to federal aid funding freeze, directing the government to restore frozen funding promptly.
