Dive Brief:
- A group of higher education associations and research universities sued the U.S. Department of Energy on Monday over its newly announced policy to limit grant funding for indirect costs to 15%, arguing the move would “devastate scientific research.”
- The plaintiffs include the American Council on Education, Brown University and the Massachusetts Institute of Technology, among others. They assert that the Energy Department’s 15% cap is a “virtual carbon copy” of a similar policy adopted by the National Institutes of Health in February and permanently blocked by a federal judge earlier this month.
- Their lawsuit — filed in Massachusetts district court — alleges that the Energy Department is overstepping its authority and violating the Administrative Procedure Act. The associations and universities are asking the judge to vacate the policy and permanently block the agency from implementing the cap.
Dive Insight:
The Energy Department said Friday that the action will save more than $405 million a year — a significant share of the roughly $2.5 billion it provides annually to support research at over 300 colleges and universities. The agency’s future grant awards to colleges will default to the 15% rate, it said.
Reimbursement for indirect costs provides funds for expenses like facilities and administration, including building maintenance and information technology systems. For Energy Department research grants, colleges show an average indirect costs rate of over 30%, the agency said. That is “significantly higher” than the average rate for other for-profit, nonprofit, and state and local government recipients, DOE said.
“The purpose of Department of Energy funding to colleges and universities is to support scientific research — not foot the bill for administrative costs and facility upgrades,” U.S. Energy Secretary Chris Wright said in a statement on Friday.
The Energy Department said it would terminate grant awards to colleges that don’t align with the new policy, though it didn’t share how many it would end. The agency did not immediately answer questions Monday about what this meant for existing awards with negotiated rates above the new 15% cap and how many grants would be affected.
However, the lawsuit said this language means current grant recipients must either accept reductions in their indirect cost rates or else have their awards terminated.
“Because universities cannot sustain DOE-funded programs at the 15% indirect cost rate that DOE will now inflict, myriad critical projects — often the product of years or decades of effort — are in jeopardy of being stopped in their tracks,” the lawsuit says.
The cuts threaten key research undertaken by colleges, including projects aiming to reduce the risk of nuclear war, treat cancer and upgrade infrastructure in rural communities, according to the lawsuit.
In February, the National Institutes of Health became the first federal agency to announce a 15% cap on reimbursement for indirect costs, a move the Trump administration said would save the agency more than $4 billion annually. The policy sparked several lawsuits and widespread outcry from research universities, many of which stood to lose tens of millions in funding each year.
However, the federal judge who permanently blocked the policy ruled that the agency didn’t follow the proper rulemaking process and said the 15% cap violated constitutional prohibitions on implementing new rules retroactively. The Trump administration has appealed the ruling.
Matt Owens — president of COGR, an association representing research universities — described the Energy Departmetn policy as “ruinous” and said it would “slow the pace of American research and innovation.”
“First it was NIH,” Owens said. “Now it is DOE. Bad policy is bad policy, and doubling down on it doesn’t make it better.”
Owens added that COGR is prepared to work with the Trump administration to improve the reimbursement policy for indirect costs and “reduce the red tape encumbering federally sponsored research.”
The Energy Department’s updated reimbursement policy marks the Trump administration’s latest move to cut research funding to colleges and universities.
The federal government has threatened hundreds of millions of research grants to several Ivy League and other high-profile institutions, alleging they haven’t done enough to protect their students from antisemitism.
The U.S. Department of Commerce also recently announced it was ending almost $4 million in climate research funding to Princeton University, saying the university’s work promoted “exaggerated and implausible climate threats.” Climate scientists criticized the move, noting that Princeton is known for housing leading climate researchers.
The Trump administration’s broader actions have sparked mass outcry from scientists. Over 1,900 researchers recently signed a letter calling on the federal government to “cease its wholesale assault on U.S. science,” arguing the recent cuts threaten to damage the nation’s scientific edge.
