First Circuit Blocks Trump Administration NIH Funding Caps

The U.S. Court of Appeals for the First Circuit affirmed a lower court injunction on January 5, 2026, permanently blocking the Trump administration from capping indirect cost reimbursements for National Institutes of Health (NIH) research grants. The administration had attempted to impose a uniform 15% cap on overhead expenses—such as lab maintenance and utilities—which significantly undercut the recent average rate of 28%. The court ruled that the NIH violated federal statutes, regulations, and a congressionally enacted appropriations rider by attempting to replace negotiated rates with a flat cap.

A coalition of 22 state attorneys general, medical groups, and research universities challenged the policy, arguing it was an unlawful overreach. Attorneys general from Massachusetts, California, Michigan, and Washington stated the cuts would have cost universities billions of dollars and threatened lifesaving research into Alzheimer’s, pediatric cancer, and diabetes. In Washington state alone, the cap would have resulted in a $120 million funding loss, affecting institutions like UW Medicine and Washington State University.

While the government lost the challenge regarding indirect costs, it is currently appealing a separate ruling that found the NIH acted unlawfully by terminating hundreds of grants focused on racial disparities and transgender issues. Massachusetts Governor Maura Healey challenged Health Secretary Robert F. Kennedy Jr. on these cuts, citing data that 74,000 clinical study participants nationwide were affected, contradicting claims that no patients were impacted.