This week’s Federal Update covers Congressional, Executive, and Judicial activities of interest in Washington, D.C.
Congressional Branch Activities of Interest
Floor Activity
The House is in recess and will return on June 23. The Senate is in session and will continue work on their reconciliation legislation before departing on June 19.
Reconciliation
On June 16, the Senate Finance Committee released its portion of the reconciliation bill, which focuses on tax policy. The Finance Committee title does not expand the endowment tax to public institutions. The bill expands the existing endowment tax on private institutions to a three-tiered system:
| Student-Adjusted Endowment | Excise Tax Rate |
| $500,000 - $749,999 | 1.4% (current rate) |
| $750,000 - $1,999,999 | 4% |
| $2,000,000+ | 8% |
Religious institutions are exempt from the endowment tax in the Senate Finance Committee proposal.
The Senate Finance title also indexes for inflation the $5,250 cap under Section 127 of the tax code, which excludes employer-provided tuition benefits and student loan payments from an employee’s taxable income. The Senate Finance approach makes this benefit permanent.
The bill text and a section-by-section summary may be found here.
House Science, Space, and Technology Committee Leadership Requests Government Accountability Office Review of Indirect Costs for Federal Research Awards
On June 17, House Science, Space, and Technology Committee Chairman Brian Babin (R-TX), Research and Technology Subcommittee Chairman Jay Obernolte (R-CA), and Investigations and Oversight Subcommittee Chairman Rich McCormick (R-GA) sent a letter to Government Accountability Office (GAO) requesting a comprehensive review of the indirect costs of conducting federally supported research. The Chairmen requested that GAO conduct a “thorough review of the indirect costs associated with federal grants to assess the financial implications and ensure transparency in the expenditure process.”
Bills Introduced
Respond, Innovate, Support, and Empower (RISE) Act (H.R. 3939). Rep. Erin Houchin (R-IN), alongside Reps. Suzanne Bonamici (D-OR) and Mike Lawler (R-NY), introduced the RISE Act, which would allow college students to use previous documentation as proof of disability when seeking accommodations in their university courses. Read the press release here.
Executive Branch Activities of Interest
Department of Defense Announces Implementation of 15% Facilities & Administrative Costs Cap
On June 13 the Department of Defense (DOD) began notifying universities that it would cut the rate for facilities and administrative (F&A) reimbursements to a maximum of 15% on new awards to universities and require existing grants to be renegotiated to a maximum of 15% by November 10, 2025. A copy of the memo announcing the 15% cap may be found here. An update on the lawsuit filed in opposition to the cap is below.
Judicial Branch Activities of Interest
Temporary Restraining Order Granted in Lawsuit Challenging Department of Defense’s 15% Cap on Facilities and Administrative Costs
Eleven universities and one university system joined the American Council on Education (ACE), the Association of American Universities (AAU), and the Association of Public and Land Grant Universities (APLU) to file a lawsuit to block the implementation of the Department of Defense’s (DOD) implementation of a 15% cap on facilities and administrative (F&A) costs on new awards to universities. On June 17, the U.S. District Court judge granted a temporary restraining order in the case. The order covers all institutions in all states nationwide and prohibits the DOD from implementing the rate cap policy while the case is ongoing.
Federal Judge Reinstates 800+ Terminated National Institutes of Health Grants
On June 16, a federal judge reinstated hundreds of grants that had been previously terminated by the National Institutes of Health (NIH) as a result of executive orders issued by President Trump targeting diversity, equity, inclusion, and “gender ideology.” The judge’s ruling only applies to the 800+ grants that were identified by the two lawsuits under review. A spokesperson from the Department of Health and Human Services said after the ruling that the Trump administration is “exploring all legal options” and that the department “stands by its decision to end funding for research that prioritized ideological agendas over scientific rigor and meaningful outcomes for the American people.”