Staff Report / April 16, 2025
Cornell and peer institutions sue the Department of Energy over abrupt cuts to indirect research funding, citing national security risks.
Cornell University, alongside prominent institutions such as MIT, Princeton, Caltech, and the University of Illinois, has initiated legal action against the U.S. Department of Energy (DOE) in response to significant reductions in federal research funding. The lawsuit, filed in a Massachusetts federal court, contests the DOE’s decision to cap reimbursements for indirect research costs at 15%, a move projected to slash over $400 million annually from university budgets.
Indirect costs encompass essential expenditures that support research infrastructure, including facility maintenance, utilities, and administrative services. These funds are vital for sustaining the operations that underpin scientific research across various disciplines. Universities argue that the abrupt funding cuts threaten the viability of ongoing research projects and could impede the development of future scientific innovations.
Cornell’s Interim President, Michael Kotlikoff, emphasized the potential ramifications of the DOE’s policy change, stating that reductions in indirect cost funding could cause “irreparable damage to national security, American economic competitiveness, and progress towards energy independence.” He further noted that this is the second instance within the semester where Cornell has resorted to legal action against a federal agency over funding disputes.
The DOE has justified the funding cap as a measure to enhance transparency and efficiency in federal spending. However, universities contend that the policy disregards the established framework of negotiated indirect cost rates, which account for the diverse operational needs of research institutions. For example, the University of Michigan previously negotiated a 56% indirect cost rate for its advanced technology research programs.
This legal challenge follows a similar lawsuit filed against the National Institutes of Health (NIH) earlier this year, where a federal judge temporarily blocked the NIH’s attempt to impose a 15% cap on indirect costs, pending further litigation . The outcome of these cases could have significant implications for the future of federally funded research in the United States.
As the legal proceedings unfold, universities are urging the federal government to reconsider the funding cuts and engage in discussions to develop a sustainable approach that supports the nation’s research infrastructure without compromising financial accountability.
