US judge blocks slashing of universities' federal funding from National Science Foundation

By Nate Raymond and Blake Brittain

(Reuters) -A federal judge on Friday prevented the National Science Foundation from sharply cutting research funding provided to universities in the latest legal setback to efforts by U.S. President Donald Trump's administration to slash government support of research at major academic institutions.

U.S. District Judge Indira Talwani in Boston invalidated a policy NSF adopted in May that limited the ability of universities to be reimbursed for administrative and facility costs that indirectly support grant-funded research, ruling that it was "arbitrary and capricious."

Spokespeople for NSF and the White House did not immediately respond to requests for comment on the ruling.

NSF, a $9 billion agency that funds scientific research, adopted the policy after having already canceled hundreds of grants out of step with the Republican president's priorities. His administration has also been freezing billions of dollars in government funding for numerous universities, including Harvard.

NSF's policy, which was announced on May 2, set a cap on how much grant funding could go to cover indirect costs. NSF said funding for such costs could equal no more than 15% of the funding for direct research costs, regardless of what the costs actually were at universities. Historically, universities had negotiated with NSF and other agencies over the rate at which indirect costs could be reimbursed.

The cap meant that for every $100 in funding going directly to a research grant award, universities would receive just $15 to cover overhead, such as the costs of maintaining lab space and paying for electricity and staff.

The Trump administration said it sought through the policy to rein in spending on administrative overhead, which had grown to consume $1.07 billion of NSF’s annual $4.22 billion grant-making budget for higher education institutions.

That rate, though, is significantly lower than the indirect cost that many of the 69 research universities belonging to Association of American Universities had negotiated, which was often in the 50% to 65% range, the group's lawyers said.

Talwani, an appointee of Democratic President Barack Obama, said in her Friday decision that the administration's 15% rate was unlawful.

The association along with two other academic trade groups and 13 schools sued in May to block the policy, after earlier convincing judges in Boston to block similar funding cuts at the National Institutes of Health and U.S. Department of Energy.

The association did not immediately respond to a request for comment on the Friday decision.

Among the schools that challenged NSF's funding cuts were the Massachusetts Institute of Technology, Princeton University, Brown University, the University of California, Carnegie Mellon University, Cornell University, the University of Michigan and the University of Pennsylvania.

They argued that NSF's action, if allowed to stand, "will badly undermine scientific research at America's universities and erode our nation’s enviable status as a global leader in scientific research and innovation."

The U.S. Department of Defense has since also adopted a 15% cap, which a judge on Tuesday temporarily blocked pending a hearing on July 2.

He did so a day after a different judge in Boston ordered NIH to reinstate hundreds of grants for research on diversity-related topics nixed as part of the administration's purge of initiatives viewed as supporting "diversity, equity and inclusion."

(Reporting by Nate Raymond in Boston, additional reporting by Blake Brittain and Kanishka Singh in Washington, editing by Chris Reese and Diane Craft)