[mlyle]

> Also, what would be illegal about the change? Are the overhead rates in a statute somewhere? The grants certainly aren’t individually appropriated by Congress.

2024 appropriations (and it showed in many years before then-- Public Law 118-47. Statutes at Large 138 (2024): 677.

SEC. 224. In making Federal financial assistance, the provisions relating to indirect costs in part 75 of title 45, Code of Federal Regulations, including with respect to the approval of deviations from negotiated rates, shall continue to apply to the National Institutes of Health to the same extent and in the same manner as such provisions were applied in the third quarter of fiscal year 2017. None of the funds appropriated in this or prior Acts or otherwise made available to the Department of Health and Human Services or to any department or agency may be used to develop or implement a modified approach to such provisions, or to intentionally or substantially expand the fiscal effect of the approval of such deviations from negotiated rates beyond the proportional effect of such approvals in such quarter.

[rayiner]

That says the indirects must be based on the existing regulations. The memo purports to rely on the existing regulations. It relies on 45 CFR §75.414(c)(1), which states:

> The negotiated rates must be accepted by all Federal awarding agencies. An HHS awarding agency may use a rate different from the negotiated rate for a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by a Federal awarding agency head or delegate based on documented justification as described in paragraph (c)(3) of this section.

Subsection (c)(3), in turn, says:

> (3) The HHS awarding agency must implement, and make publicly available, the policies, procedures and general decision making criteria that their programs will follow to seek and justify deviations from negotiated rates.

Just based on a quick perusal it seems like the administration has a decent argument that the agency head can approve the 15% indirect by fiat as long as he or she comes up with a documented justification.

[mlyle]

https://goodscience.substack.com/p/indirect-costs-at-nih This reads that argument in the exact opposite direction:

> So, an HHS division like NIH can use a different rate only for a “class” of grants or a “single” grant, and only with “documented justification.”

> There is nothing that says NIH could, in one fell swoop, overturn literally every negotiated rate agreement for 100% of all grants with all medical and academic institutions in the world, with the only justification being “foundations do it” rather than any costing principle whatsoever from the rest of Part 75 of 45 C.F.R.

Further, this doesn't allow a blanket adjustment to existing awards.

[rayiner]

That is an argument in the opposite direction, but it overlooks two things.

1) The “documented justification” must reflect the requirements of subsection (c)(3), but that provision imposes no real substantive requirements. It’s a litigable, but the linked article concludes there must be more justification than the statute seems to require.

Note also that, amusingly, Kisor is still the law of the land and under that decision agencies still get deference in interpreting their own regulations.

2) The article frames the Congressional rider as prohibiting changes to the indirects. But the statute only prohibits changing the regulation, which HHS hasn’t done.

[mlyle]

This is a pretty twisted reading; it basically is a reading of the statute that it has no effect or any kind of restraint at all.

We'll see what happens.

[rayiner]

The statute just says the agency must use the existing regulations. The regulations were promulgated by the agency to govern its own discretion. The executive reads the regulation to constrain the civil service to a particular process, but allow the negotiated indirects to be overridden by the head of the agency with a documented reason.

You’re assuming that the regulation would constrain the head of the agency but why would that be the case?

[jaybrendansmith]

Whether or not the head of agency is allowed to a drastic change like this doesn't change the fact that it is stupid. It's going to cost money in the long run.

[tlb]

The purpose of many laws is to require documentation without imposing any new limits on what the government can do.