Association of American Universities Wins $450K in Fees From U.S. Government Over Defense Dept. Cap

6th Aug 2026
A federal judge in Boston has ordered the United States government to pay more than $450,000 in legal fees to the Association of American Universities, after the higher education group defeated the Department of Defense's attempt to cap reimbursement rates on federally funded research. US District Judge Brian Murphy's ruling this week relied on the Equal Access to Justice Act, a 1980 statute that lets litigants recover costs from federal agencies when the government's position in the underlying case was not "substantially justified." Twelve universities and three academic trade groups, including the AAU, sued the Defense Department in May 2025 after it moved to cap reimbursement for "indirect costs" — facilities, equipment and shared research staff — at 15%. Murphy issued a temporary restraining order blocking the policy that June and entered judgment for the plaintiffs in December. The department appealed, then abandoned the appeal. Practitioners advising institutional and nonprofit clients on federal fee-shifting claims will read Murphy's reasoning closely. He found the Defense Department's justification wanting because the agency cited comparable rate caps announced by the National Institutes of Health and the Department of Energy without acknowledging that those caps, too, had been blocked by other judges. Murphy called that omission unreasonable, likening it to an ostrich burying its head in the sand. He also rejected a Justice Department argument that the AAU should be disqualified from recovering fees because its membership includes well-endowed institutions such as Harvard and Yale, finding instead that the AAU had independently funded the litigation, spending more than $2 million of its own money. Murphy did trim the AAU's original request of $530,000 as slightly excessive. The AAU was represented by Paul Clement of Clement & Murphy and Lindsay Harrison of Jenner & Block, neither of whom responded to requests for comment, alongside the Justice Department and spokespeople for both the AAU and the Defense Department. The decision extends a run of EAJA fee awards secured against the current administration by parties that have prevailed in funding disputes, and it gives litigators a fresh data point on how courts assess both that standard and the reasonableness of fee requests. University general counsel tracking the parallel NIH and Department of Energy caps now have a ruling to point to. Firms litigating those caps are expected to cite Murphy's reasoning once their own cases reach the fee-recovery stage.