A federal appeals court has shut the door on an attempt by the Trump administration to sharply trim research funding distributed by the National Institutes of Health, ruling that the move crossed legal and regulatory lines.
The decision keeps in place an earlier order that blocked a policy aimed at capping the portion of NIH grants universities could use to cover so-called “indirect costs” — the infrastructure expenses that keep research ecosystems running. Laboratories, shared equipment, utilities, data systems and support staff all fall into this category, even though they cannot be tied neatly to a single experiment.
Under the contested policy, NIH sought to impose a flat ceiling: no more than 15% of a grant’s direct research costs could be used for these broader institutional expenses. The cap would have applied across the board, regardless of a university’s actual operating costs.
The court found that approach unlawful. Judges agreed that the policy clashed with NIH’s own rules and with funding language repeatedly approved by Congress over the past several years. Lawmakers, the court noted, had intentionally preserved negotiated reimbursement rates rather than allowing a one-size-fits-all formula.
The funding limits were part of a wider push by the administration to rein in federal spending at major universities, a campaign that led to research grants being frozen or canceled at multiple institutions. While the policy’s defenders pointed to elite universities with vast endowments and high indirect-cost rates, challengers argued the blunt cap would hit less wealthy institutions hardest.
According to those opposing the cuts, enforcing the limit would have meant layoffs, shuttered labs and stalled clinical trials — consequences that could ripple through medical and scientific research nationwide.
The challenge to the NIH policy was backed by a coalition of states, medical and public health organizations, university associations and individual campuses. A trial court judge had blocked the cuts last year, and the appeals court has now affirmed that ruling.
The judges also highlighted that Congress had deliberately barred NIH from replacing negotiated cost arrangements with a uniform rate, underscoring that the agency had overstepped its authority.
Similar attempts to impose the same 15% cap on research funding from other federal agencies had also run into legal roadblocks, with courts repeatedly siding with universities and research groups.
For now, the ruling preserves the existing funding structure — and with it, the financial scaffolding that supports much of the country’s biomedical research.
