Cases & Developments

Order Granting Plaintiffs’ Motion for Preliminary Injunction and Provisional Class Certification. Plaintiffs, six University of California (UC) researchers, filed suit against Donald J. Trump, in his official capacity as President of the United States, the Department of Government Efficiency, the National Science Foundation, the National Endowment for the Humanities, the Environmental Protection Agency, and numerous other individuals and federal agencies. Plaintiffs challenged defendants’ termination of multi-year research grants at UC, which allegedly stemmed from President Trump’s series of executive orders that effectively blacklisted research on diversity, equity, and inclusion (DEI) topics and cut off funding for current projects in those areas. Plaintiffs claimed that the grant terminations (1) violated the Constitution’s separation of powers by overriding congressional appropriations; (2) constituted viewpoint discrimination under the First Amendment; and (3) denied researchers fair notice in violation of due process under the Fifth Amendment. Additionally, plaintiffs brought two other claims under the Administrative Procedure Act (APA), alleging that defendants’ actions were unlawful as well as arbitrary and capricious. Plaintiffs sought a preliminary injunction to enjoin defendants from enforcing the challenged executive orders affecting UC grants, as well as class certification for all similarly situated UC researchers. The district court granted both requests, finding that plaintiffs were likely to succeed on their claims, noting that the termination of grants based on blacklisted DEI words amounted to unconstitutional viewpoint discrimination. The court further held that defendants may not terminate grants that serve the purpose for which Congress appropriated the funds. In agreeing with plaintiffs, the court concluded that the en masse termination of grants via form letters—citing only that grants no longer reflected the “agencies’ priorities”—was arbitrary and capricious in violation of the APA. Lastly, the court rejected defendants’ attempts to require plaintiffs to bring their claims in the Court of Federal Claims and clarified that the plaintiffs had standing to challenge the terminations, despite the grants having been awarded to the university rather than to the individual researchers.

Memorandum and Order Granting Plaintiffs’ Request for Summary Judgment, Denying Defendants’ Motion for Summary Judgment, and Denying Plaintiffs’ Motion for Preliminary Injunction. Plaintiffs, the Association of American Universities, the Association of Public and Land-Grant Universities, the American Council on Education, and 13 research universities, challenged the National Science Foundation’s (NSF) Policy Notice that capped indirect cost rates at 15% for institutions of higher education, alleging that NSF exceeded its statutory authority, violated implementing regulations by departing from negotiated rates, and acted arbitrarily and capriciously under the Administrative Procedure Act (APA). Plaintiffs filed a combined motion for a preliminary injunction and summary judgment, followed by the defendants’ filing for summary judgment. The court held that NSF’s indirect cost cap was reviewable under the APA and that NSF did not have the regulatory authority nor congressional authorization to deviate from the negotiated rates. Further, the court found that the indirect cost cap was arbitrary and capricious, as “[d]efendants have not sufficiently explained why they concluded capping indirect cost rates for IHEs at 15% will further the objectives stated in the Policy Notice.” Accordingly, the court vacated the 15% indirect cost rate and Policy Notice and issued a declaratory judgment finding them “invalid, arbitrary and capricious, and contrary to law.” The court declined to enter plaintiffs’ request for a permanent injunction on the basis that vacatur and declaratory judgment adequately addressed plaintiffs’ harms. This marks the first ruling to strike down the 15% indirect cost cap imposed by various federal agencies, reaffirming that agencies cannot override negotiated agreements without clear statutory authority or adherence to proper regulatory procedures.