Judge Blocks Trump’s Cuts to NIH Indirect Research Funds (3)

A federal judge temporarily blocked the Trump administration on Monday from enforcing a reduced rate for indirect costs used for NIH grants in more than 20 states.

The order issued by Judge Angel Kelley for the US District Court for the District of Massachusetts granted a temporary restraining order against a Feb. 7 guidance from the National Institutes of Health that reduced indirect cost rates to 15%, which was set to be effective Monday. The order comes the same day the states filed the complaint.

Indirect costs, also known as facilities and administrative costs, include the expenses of building construction and maintenance, utilities, and laboratory equipment. Research administration and project support staff are also considered under indirect costs.

“The Rate Change Notice is arbitrary and capricious in, among other ways, its failure to articulate the bases for the categorical rate cap of 15%, its failure to consider the grant recipients’ reliance on their negotiated rates, and its disregard for the factual findings that formed the bases for the currently operative negotiated indirect cost rates,” the states wrote in the complaint.

The NIH guidance comes as the Trump administration works to overhaul federal health initiatives and drastically reduce federal spending. Trump is also reportedly planning an executive order slashing staff at the Food and Drug Administration, Department of Health and Human Services, Centers for Disease Control and Prevention, and elsewhere.

Research institutions negotiate indirect cost rates through a process governed by regulations through the Office of Management and Budget and the HHS. The Feb. 7 guidance applies not only to new grants but to existing grants, according to the lawsuit.

“The Rate Change Notice will have immediate, severe destructive effects on research universities, medical schools, and scientific institutes and programs throughout the country,” the states said. “These institutions not only contribute significantly to protecting the health of the plaintiff states’ citizens through their research, but are also important economic drivers for the plaintiff states—employing thousands of their citizens and leveraging additional investment in the states.”

“Whether the president believes it or not, funding that covers lab costs, faculty, even graduate students is a critical part of the research process,” Massachusetts Attorney General Andrea Joy Campbell said in a press call Monday. “They are the wheels that keep the trains on tracks.” Campbell said she expects private institutions to file separate lawsuits.

A group of academic membership organizations led by the Association of American Medical Colleges also sued the administration in the same court on Monday.

The average indirect cost rate averaged between 27% and 28% over time, and many organizations charge higher indirect rates of 50%, according to the NIH’s notice.

The White House this weekend said the new indirect costs policy “is in line with what research institutions receive from private foundations. The indirect cost rate is intended to cover overhead and the federal government has been paying an exorbitantly high rate.”

The states in the complaint include Massachusetts, Michigan, Illinois, Arizona, California, Connecticut, Colorado, Delaware, Hawaii, Maine, Maryland, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, and Wisconsin.

The court ordered the NIH to file a status report within 24 hours of the granted temporary injunction and to file an opposition motion by Feb. 14.

The NIH forwarded media inquires to the HHS. The agency didn’t respond to a request for comment.

The cases are Commonwealth of Massachusetts v. NIH, D. Mass., No. 1:25-cv-10338, complaint filed 2/10/25 and Association of American Medical Colleges v. NIH, D. Mass., No. 1:25-cv-10340, complaint filed 2/10/25.