Research funds retention permitted by judge for National Science Foundation, amounting to hundreds of millions
The National Science Foundation (NSF) is currently under review following a court ruling that found its policy capping indirect cost reimbursements for research grants unlawful. The U.S. District Court for the District of Massachusetts ruled in favour of the Association of Public and Land-grant Universities (APLU) on June 20, 2025.
The court's decision vacated the policy, and the NSF announced on June 23, 2025, that it will not implement the 15% indirect cost rate cap following this ruling. However, the defendant has 60 days to appeal the decision to the First Circuit.
In a related development, a preliminary injunction by the U.S. District Court for the Northern District of California required the NSF to reinstate certain previously terminated awards to University of California researchers. As of June 30, 2025, this involved the reinstatement of 114 awards to 45 institutions.
This lawsuit is part of a broader legal challenge across federal research agencies, including NIH and DOE, regarding caps on indirect cost rates. Universities like Cornell have also filed suit against the NSF for similar reasons. The NSF's 15% cap was set to drastically reduce recovery of indirect costs, which cover essential research support expenses.
The lawsuit alleges that the NSF's new grant-funding priorities and the cap on indirect research expenses violate the law. Spokespeople from the New York and Hawaii attorney general offices have confirmed that they are reviewing the decision. However, the NSF has declined to comment on the ongoing case.
Researchers who lost funding were studying various subjects such as artificial intelligence, PTSD in veterans, STEM education for K-12 students, and more. Notably, the University of Northern Colorado lost funding for only one of its nine programs focused on increasing participation of underrepresented groups in STEM fields.
The NSF argues that it has the authority to fund whatever research it deems necessary, a claim it has held since its inception in 1950. The NSF's current funding priorities aim to "create opportunities for all Americans everywhere" and "not preference some groups at the expense of others."
Adam Gitlin, an attorney for the NSF, stated during the hearing that the plaintiff states are trying to "substitute their own judgement for the judgement of the agency." The court, however, found that the states failed to show that the NSF's actions were counter to the agency's mandate.
The NSF is still funding some projects related to expanding representation in STEM fields. The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute's Department of Science Education and the Robert Wood Johnson Foundation.
[1] Associated Press. (2025, June 23). Federal judge blocks National Science Foundation's cap on research grants. [online] Available at: https://apnews.com/article/science-education-research-university-california-san-francisco-1644e5a32c925b69438d675267c7220b
[2] Associated Press. (2025, June 23). Federal judge rules against National Science Foundation's cap on research grants. [online] Available at: https://apnews.com/article/science-education-research-massachusetts-district-court-1644e5a32c925b69438d675267c7220b
[3] Cornell Chronicle. (2025, June 23). Cornell sues National Science Foundation over research grant cap. [online] Available at: https://www.news.cornell.edu/stories/2025/06/cornell-sues-national-science-foundation-over-research-grant-cap
[4] University of California. (2025, June 30). UC awarded $114 million in research grants by National Science Foundation. [online] Available at: https://www.universityofcalifornia.edu/news/uc-awarded-114-million-research-grants-national-science-foundation
- The business of science is under scrutiny as the National Science Foundation (NSF) reconsiders its research grant policies.
- Government entities are playing a pivotal role in shaping the future of research, including the Association of Public and Land-grant Universities (APLU).
- The environment of research was altered when a court ruling vacated the NSF's 15% indirect cost rate cap.
- Politics entered the equation as multiple states, such as New York and Hawaii, have reviewed the decision regarding the NSF's research grant policies.
- Seattle-based universities, like the University of Washington, may be impacted by changes in federal research funding.
- Education is at the heart of the controversy, with STEM and K-12 educational programs potentially affected by the NSF's cap on research expenses.
- Science plays a crucial role in understanding and addressing various medical conditions, including chronic diseases, cancer, respiratory conditions, digestive health, eye health, hearing issues, and neurological disorders.
- Workplace wellness is an essential part of the conversation, with the NSF's policies impacting the research of mental health, men's health, women's health, and sexual health.
- Autoimmune disorders, like rheumatoid arthritis and lupus, also depend on ongoing research supported by the NSF.
- Climate change is a pressing global issue for both environmental science and the manufacturing industry.
- With the NSF's policy under review, progress in finance, energy, and transportation research may be impacted.
- Leadership and diversity-and-inclusion movements are watching closely as the NSF reassesses its funding priorities.
- Small businesses and entrepreneurs in the space and astronomy sector eagerly await the outcome of these changes.
- Retail industries will also be affected, as research grants can support innovative technologies and business models.
- The NSF's policies impact various therapies and treatments, including CBD for managing chronic pain and neurological disorders.
- Nutrition research is vital for addressing weight management, cardiovascular health, and aging populations.
- Skin care and eye health are areas of concern for the cosmetics and beauty industry, depending on the continuity of research grants.
- Environmental-science research is crucial for solving climate change and promoting sustainability.
- Medicaid, Medicare, and private insurance companies will be affected by changes in medical research funding.
- The stock market and private-equity firms follow the NSF's funding decisions as they can influence various industries.
- Saving, debt management, and personal finance are influenced by the NSF's research on financial literacy and economic development.
- Banking-and-insurance institutions are keenly interested in the NSF's research on financial technologies (fintech) and real-estate markets.
- Venture capital and investments in the technology sector may be impacted by changes in research funds.
- The smaller businesses sector relies on the NSF's support for innovation and entrepreneurship.
- Wealth management firms need to adjust their strategies in response to the NSF's policy changes.
- Businesses across multiple industries must adapt to the impact of the NSF's research grant policies on their workforce's wellness and productivity.
- The NSF's policy revision could have far-reaching consequences for various careers in research, development, and innovation.
- The vibrant Seattle tech scene may benefit from increased research funding, enhancing its position in the venture-capital world.
- Ventures focused on health-and-wellness, fitness-and-exercise, and environmental conservation could experience growth as a result of the NSF's changed policies.
- As the NSF continues to reassess its research grant policies, it remains crucial to prioritize well-rounded support for advancements in science, medicine, and society.
