A federal appeals court has ruled that the Trump administration cannot move forward with steep cuts to federal research funding provided by the National Institutes of Health (NIH) to universities.

The 1st U.S. Circuit Court of Appeals upheld an injunction won by 22 Democratic state attorneys general, medical groups, and universities, finding that NIH’s February 2025 policy to cap reimbursements for universities’ research “indirect costs” at 15% was unlawful.

Universities had warned the rule would force layoffs, laboratory closures, and stalled clinical trials. The court said Congress had already barred NIH from imposing such limits through past funding legislation.