A federal appeals court ruled on Monday that the Trump administration could not make drastic cuts to the federal funding supporting much of the country’s medical and scientific research, reaffirming a lower court’s ruling from early last year.
In a unanimous decision, a three-judge panel of the U.S. Court of Appeals for the First Circuit found that one of the Trump administration’s earliest attempts to kneecap universities, through proposed reductions to grants from the National Institutes of Health, was unlawful. The proposal brought an outpouring of opposition from hundreds of universities and hospitals, which warned that the cuts could cost them billions and make it impossible to continue studies in areas like cancer, genetics and infectious disease.
The sharp cuts took aim at the pre-negotiated rates in thousands of federal grants that set aside money for overhead costs in medical research, such as facility upkeep, laboratory technology and support staff. Scores of universities and hospitals affected by the cuts said the funding for those indirect costs was often shared, with a single grant helping cover the costs of multiple laboratories and experiments simultaneously. That meant that a loss of funds could threaten not just research directly covered by the grants but a broad range of other work.
In an announcement in February, the Trump administration proposed capping the money that could be allocated for overhead costs to 15 percent of any given grant, while the rates previously agreed upon often surpassed 30 or 40 percent.
In an opinion explaining Monday’s decision, Judge Kermit V. Lipez, a Clinton appointee, wrote that lawmakers had laid out a “carefully circumscribed procedure that controls any deviation” from agreed-upon funding rates in federal grants.
“Congress went to great lengths to ensure that N.I.H. could not displace negotiated indirect cost reimbursement rates with a uniform rate,” he wrote.
Judge Lipez noted President Trump’s attempt in his first term to similarly cap reimbursement of overhead costs at 10 percent in a budget proposal in 2017. Congress rejected the proposal.
The possibility of such a sudden funding cut raised deep concern in the medical research community that a considerable number of facilities across the country might shutter, causing permanent losses in advanced research.
Three separate coalitions of universities, medical organizations and Democratic-led states filed suit in February, arguing that the possible setbacks to research institutions in their states could be insurmountable, and that many institutions lacked the financial reserves to cover the shortfall. A New York Times analysis of N.I.H. grant data estimated that $9 billion of $32 billion, or more than 25 percent of grant dollars distributed in fiscal year 2024, had been set aside to cover overhead costs.
In court and in dozens of sworn declarations, the groups suing documented a hefty list of possible consequences on both individual experiments and public health more generally. Those included paused clinical trials on new drugs and the loss of veterinary technicians who oversee animal research.
In April, Judge Angel Kelley of the Federal District Court in Massachusetts permanently barred the Trump administration from capping the funding, and the proposal remained stalled throughout last year.
Zach Montague is a Times reporter covering the federal courts, including the legal disputes over the Trump administration’s agenda.
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