Caltech Joins Federal Lawsuit Over DOE Grant Funding Cuts

On April 14, Caltech joined eight other American research universities in filing a lawsuit against the Department of Energy (DOE). The lawsuit seeks a temporary restraining order to block DOE’s decision to cap the indirect cost rate on all academic grants at 15%. “If DOE’s policy is allowed to stand, it will devastate scientific research at America’s universities and badly undermine our Nation’s enviable status as a global leader in scientific research and innovation,” argued the complaint.

When a grant is awarded, direct costs fund the research itself, while indirect costs are an additional percentage added to cover overhead such as administration and facilities. According to the lawsuit, Caltech “receives substantial annual funding from DOE.” It states that a reduction in the indirect cost rate to 15% “would reduce Caltech’s annual indirect cost recovery by nearly $6 million.” Caltech currently has 83 active awards and sub-awards from DOE. In Fiscal Year 2024, the Institute spent over $25 million on DOE-supported research, including nearly $8 million in indirect costs.

In an email to the Caltech community on April 14, President Thomas Rosenbaum and Provost David Tirrell announced the Institute’s participation in the joint lawsuit. They emphasized that “Caltech’s DOE-supported research, along with that of our peers, enables important fundamental advances and the development of new technologies in energy, nuclear science, AI, and quantum information science, among other fields.”

Current DOE awards at Caltech support research in both theoretical and experimental high energy physics. Areas of focus include quantum field theory, scattering amplitudes, string theory, lepton flavor violation, and the direct detection of dark matter. Other subject areas of DOE-supported research at Caltech include catalysis science, environmental genomics, and photosynthetic systems.

DOE reports that it provides over $2.5 billion each year to more than 300 colleges and universities to support research, and that the average indirect cost rate at these institutions exceeds 30%. By capping indirect cost rates at 15%, the policy will reportedly save $405 million, halt “inefficient spending,” and “ensure proper stewardship of American taxpayer dollars.” In a press release dated April 11, U.S. Secretary of Energy Chris Wright stated that the purpose of DOE funding to academic institutions is “to support scientific research—not foot the bill for administrative costs and facility upgrades.”

The DOE-rate cap comes in the wake of a similar action by the National Institutes of Health (NIH) to implement a 15% cap on indirect cost rates for grants. NIH’s cap, announced in February, is currently blocked by a federal court after multiple legal challenges, including one jointly filed by Caltech.

In the lawsuit against DOE, the plaintiffs state that “DOE’s action is unlawful for most of the same reasons [as the NIH cap] and, indeed, it is especially egregious because DOE has not even attempted to address many of the flaws the district court found with NIH’s unlawful policy.” They also argue that the rate cap is “arbitrary and capricious” for several reasons—among them, that DOE applies the new 15% cap exclusively to universities and not other grant recipients, without offering any rationale. Additionally, DOE has not explained why its own audits of indirect costs would be insufficient to improve efficiency and reduce spending.

“The pace of scientific discoveries in the national interest will be slowed,” the lawsuit further states. “Progress on a safe and effective nuclear deterrent, novel energy sources, and cures for debilitating and life-threatening illness will be obstructed. America’s rivals will celebrate, even as science and industry in the United States suffer.”