US Supreme Court ruling may not bar blocking Defense Department research cuts, judge says

By Nate Raymond

July 2 (Reuters) - A federal judge raised the possibility on Wednesday that he could continue to block the U.S. Department of Defense from sharply cutting federal research funding provided to universities throughout the country even after the U.S. Supreme Court's decision curtailing lower courts' ability to issue nationwide injunctions.

U.S. District Judge Brian Murphy during a hearing in Boston told lawyers for President Donald Trump's administration and universities and academic groups challenging the Defense Department's policy that he was "struggling" to figure out how he should rule after the 6-3 conservative majority's Friday ruling.

The Republican president's administration has hailed that ruling, which narrowed the circumstances in which judges can block federal policies on a nationwide basis, saying it should allow him to avoid judicial interference with his agenda.

Bethany Theriot, a lawyer with the U.S. Department of Justice, told Murphy the Supreme Court's ruling in Trump v. CASA Inc meant “any injunctive relief needs to be narrowly tailored."

But the judge laid out two potential avenues he could pursue that would effectively grant universities the same nationwide relief they could have secured before the Supreme Court's ruling, which narrowed nationwide injunctions halting Trump's bid to end birthright citizenship.

"There’s a strong argument that CASA doesn’t apply at all," Murphy, an appointee of Democratic President Joe Biden, said.

He cited the potential for him to either preliminarily set aside the Defense Department's policy under federal administrative law or to issue a sweeping injunction covering the parties that would incidentally also benefit others in order to fully remedy the plaintiffs' individual harms.

Either type of ruling would essentially allow Murphy to achieve the same effect as a June 17 temporary restraining order he previously issued that blocked the Defense Department from capping how much schools could be reimbursed for administrative and facility costs that indirectly support grant-funded research.

Under that policy, the Defense Department would cap the rate at which universities can be reimbursed for their "indirect costs" at 15% of the funding for direct research costs, regardless of what the costs actually were at schools.

Three of Murphy's colleagues in Boston have blocked similar 15% caps the administration has imposed on grants awarded by the National Institutes of Health, National Science Foundation and U.S. Department of Energy.

Judges in those cases declared the policies arbitrary and unlawful, and Murphy said he saw only a few differences in the case of the Defense Department, whose policy he suggested may not be authorized by Congress.

Should he reach that conclusion, Murphy said one option would be for him to seize on a "carve out" in the Supreme Court's Friday ruling that allows judges to still set aside federal rules that violate the Administrative Procedure Act, a law central to the universities' challenge.

The other option, he said, would be for him to determine that blocking the policy from being enforced nationally is necessary to provide "complete relief" to the 12 universities and three academic trade groups pursuing the case if the plaintiffs could still be harmed themselves otherwise.

Justice Amy Coney Barrett's opinion preserved the ability of judges to issue sweeping injunctions that would provide "complete relief" to the parties while incidentally benefiting other non-parties.

According to Zachary Schauf, a lawyer for the plaintiffs at Jenner & Block, the Association of American Universities and the two other trade groups count 1,600 universities as their members, roughly 80% of the schools that would be eligible to apply for grants.

Murphy cited those figures to say that he could imagine a world where a broader injunction providing the parties "complete relief" was needed to avoid the Defense Department only awarding future grants to the 20% of universities who did not sue, which would be cheaper.

Murphy asked the parties to provide further briefing on the impact of the Supreme Court's ruling over the coming days so he could potentially rule by July 15, when his recently-extended restraining order is set to expire.

The case is Association of American Universities v. Department of Defense, U.S. District Court for the District of Massachusetts, No. 1:25-cv-11740.

For the plaintiffs: Zachary Schauf of Jenner & Block

For the defense: Bethany Theriot of the U.S. Department of Justice

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