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Judge Sides With Universities, Blocks NSF's 15% Indirect Cost Cap

Judge Sides With Universities, Blocks NSF's 15% Indirect Cost Cap

Forbes4 hours ago

A federal judge has blocked the Trump administration from implementing a 15% cap on indirect ... More research costs funded by NSF.
A federal judge has granted summary judgment in favor of several universities and higher education organizations that had sued the National Science Foundation over its attempt to limit the reimbursement of indirect costs associated with research grants funded by the agency.
In her 52-page ruling on Friday, U.S. District Judge Indira Talwani vacated NSF's recently announced policy of capping its indirect cost payments at a standard rate of 15%, declaring it 'invalid, arbitrary and capricious, and contrary to law.' She also ordered NSF to provide written notice of her decision 'to all funding recipients affected by the 15% Indirect Cost Rate' within 72 hours.
The decision represents the latest legal setback for the Trump administration, which has tried — so far unsuccessfully — to impose the 15% cap on grants funded by other federal agencies.
U.S. judges have previously blocked similar funding caps at the National Institutes of Health and the Department of Energy, and last week a similar suit was brought against the Department of Defense over its move to impose a 15% cap. A judge issued a temporary restraining order against the DOD cap one day after that suit was filed.
The NSF lawsuit was filed on May 5th in the U.S. District Court for the District of Massachusetts by 13 research universities and three higher education organizations: the Association of American Universities, the American Council on Education, and the Association of Public and Land-grant Universities.
The 13 plaintiff schools were Arizona State University, Brown University, the University of California, California Institute of Technology, Carnegie Mellon University, the University of Chicago, Cornell University, the University of Illinois, MIT, the University of Michigan, the University of Minnesota, the University of Pennsylvania and Princeton University.
At issue was a May 2 'policy notice' in which NSF indicated it was capping its indirect cost reimbursement rate at 15% for all new grants and cooperative agreements awarded to university investigators rather than paying a negotiated rate for these support costs as had been its past practice. The negotiated rates typically have exceeded 50% for the plaintiff universities, according to the lawsuit.
Indirect costs — also known as facilities and administrative costs — refer to the costs of conducting research that are not attributable to any one investigation. They include items like large-scale computer systems, maintenance of equipment, facility upgrades, the operation of labs, depreciation, employment of support staff, accounting, research compliance, legal expenses, and the salaries of key administrators in charge of an institution's research enterprise.
The plaintiffs contended that NSF's policy was unlawful for several reasons, including violations of federal regulations and the Administrative Procedure Act. They argued that 'the Rate Cap Policy exceeds NSF's statutory authority by reimposing, in more severe form, a categorical cap on indirect costs that Congress specifically eliminated in 1965 and has declined to reenact ever since."
The government had argued that the policy was necessary to control costs, reduce administrative burdens on institutions and increase the amount of federal funds that could be used to support direct research costs. And it contended that it was legally permitted to set the flat 15% rate. In the end, the judge agreed with the plaintiffs' multiple claims about the illegality of the administration's actions.
The government had agreed to voluntarily stay implementation of the 15% cap until June 20, the same day on which Judge Talwani handed down her ruling.

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