Can the Trump Administration Unilaterally Cut Indirect Costs for NIH Grants?

As with some other recent executive branch actions, the Trump Administration appears to have overreached.

On Friday, the Trump Administration announced that it would cap the indirect cost rate for federal grants from the National Institutes of Health at fifteen percent. According to the Administration, this cap is justified because the federal government often pays far higher indirect cost rates than do private foundations that fund health research, and that the generous reimbursement of such costs subsidizes administrative bloat at universities and other grant recipients.

However justified the Trump Administration's move may be as a matter of policy, it has significant legal problems, not least because it purports to apply to existing grants and appears to contravene an appropriations rider that remains in force for the current fiscal year. These and other legal short-comings are detailed by former HHS General Counsel Sam Bagenstos in his Inside/Outside newsletter. Bagenstos disagrees with policy on the merits, to be sure, but his legal analysis is persuasive whether or not one agrees with his policy priors.

So, for instance, I do not equate the Trump Administration's efforts to "reduce federal taxpayer subsidization of leftist agendas" with an "attack" on "independent institutions," as I do not agree with Bagenstos that all of the institutions he has in mind should be considered "independent," or that they are deserving of federal support. I also think it's quite reasonable for the federal government to be more deliberate about the degree of indirect costs that should be included in research grants, particularly given the way administrative costs and staffing have exploded at many universities. But I agree that these propositions should be debated, and that any unilateral action taken by the executive branch on such matters should comply with the law.