ederal entity can rapidly replace the capabilities built over decades and emphasizing the need for consistent support for research.
Federal Judge Blocks DOE’s 15% Limit on Indirect Costs for University Research
A federal judge has granted a temporary restraining order preventing the U.S. Department of Energy (DOE) from enforcing a contentious policy that aims to impose a 15% limit on indirect cost rates for universities obtaining federal research grants. Delivered on April 16, 2024, this ruling represents a significant setback for the DOE’s initiative to drastically reduce funding allocated to U.S. universities for facilities and administrative (F&A) expenses related to research.
This legal intervention comes in response to immediate backlash and litigation from prominent academic bodies and leading research institutions, reflecting the latest event in an escalating national discussion regarding financing for government-funded scientific research.
Explaining Indirect Cost Rates
Indirect cost rates, commonly known as F&A costs, encompass essential yet non-project-specific research spending. These costs cover the upkeep of laboratories, handling of hazardous materials, utility expenses, and administrative assistance. At present, the average indirect cost rate for DOE-funded research at universities exceeds 30%.
DOE’s Intended 15% Limit
On April 11, the DOE proposed instituting a fixed 15% limit on indirect cost reimbursements for universities, a decision that would have drastically reduced the support generally provided for these critical expenditures. The department asserted that it could save over $405 million each year by cutting what it considers to be excessive overhead costs.
“The objective of Department of Energy funding for colleges and universities is to facilitate scientific research – not to cover administrative expenses and facility enhancements,” remarked DOE Secretary Chris Wright. Additionally, the DOE policy suggested ending current grants with institutions that failed to adhere to the new regulation.
Academic Institutions Respond
The suggested cap was met with immediate legal challenges and vocal resistance from academic entities and advocacy organizations. On April 14, a coalition comprised of the Association of Public and Land-grant Universities (APLU), the Association of American Universities (AAU), the American Council on Education (ACE), and nine prominent research universities initiated a lawsuit against the DOE and Secretary Wright.
The plaintiffs, which include prestigious institutions like MIT, Princeton, Cornell, and Caltech, contend that the new policy is “blatantly illegal” and would lead to “immediate and devastating” effects on vital scientific research nationwide. The universities cautioned that the policy could establish a worrying precedent that influences funding decisions at other federal entities.
Legal Similarities to NIH Policy Suspension
The DOE’s proposed cap closely followed a similar initiative from the National Institutes of Health (NIH), which was permanently blocked by a district court in early April. That court determined that the NIH had contravened federal laws, disregarded established rule-making protocols, and attempted to implement the policy retroactively.
The NIH ruling is currently being appealed, but the legal arguments supporting it provided substantial grounds for the temporary halt against the DOE. Many observers considered the DOE’s initiatives to be legally precarious given the recent courtroom precedent.
Consequences for the U.S. Research Landscape
The anticipated consequences of a 15% limit are extensive. The DOE currently allocates over $2.5 billion each year for research across more than 300 academic institutions nationwide. Cuts in indirect cost reimbursements would likely compel universities to use their own resources to support federal research—a scenario deemed unsustainable by numerous institutions.
Matt Owens, president of the Council on Governmental Relations (COGR)—a Washington D.C.-based organization representing research universities and medical centers—described the policy as “destructive” and a “self-inflicted policy injury.” Owens noted that several institutions had already received notifications for termination of active grants due to failure to comply with the cap.
A Larger Policy Agenda: Project 2025
The DOE and NIH cap policies are viewed by some scholars and analysts as components of a broader conservative agenda aimed at reassessing federal agency expenditures, especially related to research overhead. Capping indirect research costs is particularly emphasized in Project 2025—a strategic outline created by conservative think tanks for adoption under a possible second Trump administration.
Russell Vought, a principal figure behind Project 2025 and director of the Office of Management and Budget, is actively influencing current federal policies. The recommendations of Project 2025 extend beyond the DOE and NIH; experts fear that similar fiscal restrictions could soon be imposed on other significant research financiers like the National Science Foundation (NSF).
Experts Caution Against Long-Term Harm
Numerous leading figures in science and academia have expressed that these developments threaten the enduring “social contract” between the federal government and research entities—an arrangement that has sustained U.S. scientific excellence since World War II.
“The administration wrongly believes that abandoning that contract amidst fierce global competition for scientific advancement is a wise choice,” stated Holden Thorp, editor-in-chief of the Science journals and professor at George Washington University.
Former NSF Director and science adviser during the Clinton administration, Neal Lane, shared these concerns, asserting that no entity outside the federal government can quickly replicate the capabilities built over decades while emphasizing the importance of ongoing support for research.