A judge temporarily halted a directive by the Trump administration that imposed a cap on overhead costs that go to universities and other institutions that host federally funded research projects.

The directive, which went into effect Monday, sparked an outcry of criticism from research institutions that argued the new rule would have devastating consequences. It was immediately challenged in court by 22 Democratic state attorneys general, as well as by several leading research universities and related groups in a second lawsuit. 

U.S. District Court Judge Angel Kelley subsequently ruled in favor of the 22 state attorneys general, granting their request for a temporary restraining order that prohibits agencies from taking any steps to implement, apply or enforce the new rule that imposed a cap on facilities and administrative costs that are part of federally funded research grants.

The rule capped overhead costs associated with National Institutes of Health (NIH) funded research grants at 15%. 

When a grant is awarded to a scientist by the NIH, an additional percentage, on top of the allocated research funding, goes to the facility housing their work to cover these ‘indirect costs.’ According to an announcement about the new funding cap from the Trump administration, that percentage has historically been around 27% to 28% for each grant. But in some cases, negotiated rates can be even higher, such as at the University of Michigan where the negotiated rate for indirect costs is 56%.

The lawsuit from the attorneys general argued the move violated federal law governing the procedures federal agencies must follow when implementing new regulations. They also argued that the move usurped the will of Congress, which, in 2018, passed legislation prohibiting the NIH or the Health and Human Services Department from unilaterally making changes to current negotiated rates, or implementing a modified approach to the reimbursement of indirect costs.

Kelley’s temporary restraining order requires the Trump administration agencies that are impacted by the new rule to file reports within 24 hours to confirm the steps they are taking to comply with her order. Meanwhile, Kelley set an in-person hearing date on the matter for Feb. 21.

Fox News Digital reached out to the White House for comment on the restraining order, but did not hear back at press time. However, after the directive went into effect on Monday, White House spokesperson Kush Desai told Fox News Digital, ‘Contrary to the hysteria, redirecting billions of allocated NIH spending away from administrative bloat means there will be more money and resources available for legitimate scientific research, not less.’ 

Earlier on Monday, U.S. District Judge John J. McConnell said the Trump administration had violated his order halting a federal aid funding freeze that sought to pause ‘all activities related to obligation or disbursement of all Federal financial assistance,’ to ensure federal disbursements aligned with the president’s executive actions.

McConnell ordered the government to ‘immediately restore frozen funding,’ noting that plaintiffs had provided adequate evidence to show the Trump administration ‘in some cases [has] continued to improperly freeze federal funds and refused to resume disbursement of appropriated federal funds,’ despite his ‘clear and unambiguous’ order lifting the freeze.