Cases & Developments

Opinion and Order Affirming Final Judgment and Permanent Injunction. Plaintiffs, a group of state attorneys general, medical associations, higher education associations and research universities, brought a lawsuit challenging the February 7, 2025 Supplemental Guidance issued by the National Institutes of Health (NIH), which imposed a 15% across the board cap on the indirect cost reimbursement rate for grant recipients. After a U.S. district court judge granted a permanent injunction blocking the imposition of a rate cap and vacated the Supplemental Guidance, NIH appealed. The First Circuit affirmed the district court’s ruling, concluding that (1) the district court properly exercised subject-matter jurisdiction over the plaintiffs’ claims and (2) NIH’s attempt to impose a 15% cap through the Supplemental Guidance violated both the congressionally enacted appropriations rider and the duly adopted agency regulations. On the jurisdictional question, the court rejected NIH’s argument that the plaintiffs’ claims were essentially contract disputes and thus the exclusive jurisdiction of the Court of Federal Claims.  Applying the reasoning of the Supreme Court’s recent decision in NIH v. APHA, the court concluded that because the plaintiffs had challenged “only the agency-wide guidance announcing that NIH will reimburse indirect costs at a 15% rate going forward,” and not the withholding of funds, the district court had subject matter jurisdiction over the claims. 

The Department of Education announced that it has awarded $169 million from the Fund for the Improvement of Postsecondary Education (FIPSE) in new grant awards for several projects. More than seventy colleges, universities, nonprofits and other organizations have received grant funding intended to (1) encourage responsible use of artificial intelligence (AI); (2) foster civil discourse; (3) drive accreditation reform; and (4) build capacity for high-quality short-term programs by way of a new Workforce Pell Grant-aligned program. A list of the awards broken down by specific dollar amounts and institutions can be found here.

Order Granting in Part Defendants’ Motion for Partial Stay. The plaintiffs, a group of researchers and faculty members at the University of California, sued the federal government challenging the termination of grants by several agencies. After the district court granted a preliminary injunction, the government appealed and requested a stay but only with respect to the grant terminations made by two agencies: the Environmental Protection Agency (EPA) and the National Endowment for the Humanities (NEH). The 9th Circuit held that the government was likely to succeed in showing that the district court lacked jurisdiction over plaintiffs’ APA claims for the grants terminated by form letter, because those claims were effectively contract claims. However, the court denied a stay as to the grants terminated due to DEI objections, concluding the government failed to show a likelihood of success on the merits where the record indicated grants were terminated based on viewpoint, in violation of the First Amendment. The court emphasized that while the government had discretion in funding decisions, it could not penalize existing grants to suppress disfavored viewpoints.

The American Council on Education (ACE) along with fifteen other associations, sent a letter to the Office of Science and Technology Policy (OSTP) in response to the request for information (RFI) on federal policy to accelerate the American scientific enterprise. The letter addresses the specific questions proposed in the RFI and urges the administration to strengthen American research efforts by (1) ensuring stable funding; (2) leaving the Bayh-Dole Act in place; (3) encouraging partnerships with non-R-1 institutions to extend the reach of taxpayer dollars; (4) protecting the peer-review system; (5) adopting the Financial Accountability in Research (FAIR) model; (6) encouraging AI pilot programs to monitor and experiment with AI deployment in different campus settings; (7) withdrawing the DHS proposed duration of status rule; and (8) continuing efforts to coordinate national security and scientific inquiry with trusted global partners through National Security Presidential Memorandum 33 (NSPM-33).

The Department of Education announced that it has issued a notice inviting applications for new awards for fiscal year 2025 for the Fund for the Improvement of Postsecondary Education Special Projects (FIPSE-SP). The Department wrote that the competition will award $160 million across four areas of national need: (1) advancing the understanding and use of artificial intelligence (AI), (2) promoting civil discourse on college and university campuses, (3) promoting accreditation reform, and (4) supporting capacity-building for high-quality short-term programs. This notice redirects funds that were originally intended for seven established student success programs. Applications must be submitted by December 3, 2025.