November 11, 2026.
Proposed regulations would expand federal oversight, require applicable discretionary grants to advance presidential priorities and give agencies broader authority to terminate certain awards. Tribal governments, nonprofits, universities, healthcare providers, state and local governments, research institutions and other federal funding recipients could face significant changes.
The scale of federal grant-making.
The Office of Management and Budget (OMB) is proposing sweeping revisions to federal regulations governing grants, cooperative agreements and other forms of federal financial assistance. Published May 29, 2026, the proposed rule would revise Title 2 of the Code of Federal Regulations, particularly 2 C.F.R. Part 200, known as the Uniform Guidance.
The potential reach is substantial. According to the U.S. Department of the Treasury's Bureau of the Fiscal Service, the federal government obligated approximately $1.2 trillion in grants and cooperative agreements during fiscal year 2025.
That figure illustrates the annual scale of federal grant-making governed by the broader regulatory framework. It does not represent the amount of money OMB proposes to cut, terminate or subject to new presidential approval.
The proposed changes would affect how federal agencies award, administer, monitor and terminate financial assistance. The degree of impact would depend on the funding program, congressional authorization, award terms and whether the funding is discretionary or provided under a statutory entitlement.
The Congressional Research Service (CRS) identified at least 1,183 funded federal grant programs in FY2025, demonstrating the breadth of federal financial assistance provided to governments, nonprofit organizations, institutions and individuals.
How much federal funding could be affected?
The $1.2 trillion figure is the most recent annual aggregate identified in the Treasury report. However, it is important to distinguish the overall federal grant system from the smaller category of discretionary awards that would face the proposed presidential-priority review and expanded termination provisions.
- Approximately $1.2 trillion: FY2025 federal grant and cooperative agreement obligations.
- At least 1,183: Funded federal grant programs identified by CRS for FY2025.
- Not separately quantified: The total dollar amount of discretionary awards subject specifically to the proposed new presidential-priority review and expanded termination provisions.
Funding disclosures: The $1.2 trillion figure comes from federal spending data cited by Treasury. It represents obligations, not necessarily cash paid to recipients. It excludes other forms of federal assistance, including loans and direct appropriations. It includes different types of grants and cooperative agreements, not exclusively competitive or discretionary awards. Neither Treasury nor CRS provides a separate aggregate in the cited sources identifying the precise dollar amount of discretionary grant awards that would be subject to the proposed new review.
What is the administration's justification?
OMB identifies several objectives for the proposed revisions:
- Prevent waste and misuse: Strengthen financial oversight, accountability and monitoring of federal awards.
- Align grants with presidential priorities: Require applicable discretionary awards to demonstrably advance presidential policy priorities.
- Strengthen grant oversight: Expand senior-level review of applications and funding decisions.
- Establish binding regulations: Clarify that OMB's government-wide financial assistance requirements carry regulatory authority rather than being treated solely as guidance.
- Reduce administrative burdens: Simplify certain application and compliance requirements.
- Improve financial accountability: Strengthen payment documentation, reporting and monitoring requirements.
The proposal follows Executive Order 14332, Improving Oversight of Federal Grant-making, signed August 7, 2025. The administration argues that federal agencies need stronger tools to prevent waste, improve grant performance and ensure that federal assistance supports authorized public purposes and administration policies. OMB also argues that existing requirements have imposed unnecessary administrative costs on grant recipients and that greater consistency across federal agencies would improve financial management.
What would change?
Presidential policy priorities — proposed § 200.205. Federal agencies would be required to conduct additional pre-issuance reviews of discretionary grant proposals. Senior political appointees or their designated representatives would review awards. The proposal states that discretionary awards must, where applicable, demonstrably advance presidential policy priorities. It also clarifies that peer review remains advisory and does not replace agency discretion.
Program design — proposed § 200.202. Federal agencies would be directed to design programs with goals and objectives consistent with the public purpose authorized by law and aligned with administration policies and priorities.
Expanded grant termination authority — proposed § 200.340. Agencies and certain pass-through entities could terminate discretionary awards, in whole or in part, when they determine that continued funding is no longer in their interest, including when an award no longer advances program goals, agency priorities or the national interest.
Financial oversight and reporting. The proposal includes additional payment documentation, recipient monitoring and reporting requirements, including increased oversight of organizations distributing federal sub-awards.
Advertising and public relations — proposed § 200.421. OMB proposes making advertising and public relations costs generally unallowable, with limited exceptions. Advertising expenses would remain allowable in specified circumstances, including when required by statute, associated with procuring goods and services for a federal award, or necessary for certain program outreach. Public relations costs would generally be allowable only when required by statute.
Research and institutional funding. Additional senior-level review and policy alignment requirements could affect how certain research and institutional grant applications are evaluated.
These are proposed changes, not final requirements.
Understanding discretionary versus formula-based federal funding.
Discretionary grants.
Discretionary grants allow federal agencies to select recipients and determine award amounts within the limits established by Congress and applicable program statutes. They may involve competitive applications, merit reviews, agency evaluations or authorized noncompetitive selections.
Examples include:
- National Institutes of Health and National Science Foundation research grants.
- Environmental protection and conservation grants.
- Community development and economic development awards.
- Transportation safety and infrastructure grants.
- Education innovation and workforce development grants.
- Arts, humanities and cultural preservation grants.
- Certain Tribal government and Native-serving organization grants.
- Public health and community service initiatives.
These awards are particularly relevant to the proposed presidential-priority review and expanded termination authority.
Formula grants.
Formula grants distribute federal funding according to criteria established by Congress or federal regulations. Factors can include population, poverty levels, transportation needs and other statutory measures. Examples include certain federal highway, education and healthcare funding programs.
The proposed rule could change administrative requirements applicable to formula awards. However, formula-based awards and other programs in which legislation establishes an entitlement to funding are generally excluded from the proposed discretionary termination provision.
Block grants and statutory entitlements.
Block grants provide funding to eligible governments or organizations for broader program purposes established by Congress. Statutory entitlement programs provide funding based on legal eligibility and payment requirements. These programs generally have different protections from competitive discretionary awards.
OMB identifies block grants, awards based on statutory formulas and disaster recovery grants as examples of programs where legislation establishes an entitlement to funding that is generally excluded from the proposed discretionary termination provision. This does not mean every administrative provision of the proposed rule is inapplicable to those programs.
Organizations and sectors potentially affected.
The proposed revisions could reach organizations receiving or administering covered federal awards across numerous sectors:
- Tribal governments and Tribal organizations: health, education, housing, infrastructure, self-governance and cultural preservation.
- State and territorial governments: transportation, public health, education and infrastructure.
- County and municipal governments: community development, public safety, housing and transportation.
- Nonprofit organizations: social services, education, environmental programs and community outreach.
- Universities and colleges: research, student services, workforce training and educational programs.
- Hospitals and healthcare organizations: public health, medical research and community healthcare.
- Scientific research institutions: NIH, NSF, energy, environmental and technology research.
- Faith-based organizations: community services, education and social assistance.
- Small businesses and private companies: research and development, technology, rural development and economic assistance.
- Agricultural organizations: conservation, food security, agricultural development and rural infrastructure.
- Housing organizations: affordable housing, homelessness and community development.
- Arts and cultural organizations: cultural preservation, museums, humanities and historic preservation.
- Workforce development organizations: job training, employment assistance and apprenticeship programs.
- Broadband and telecommunications recipients: rural broadband, Tribal connectivity and digital access.
- Individual recipients: certain federal education, research, training and other assistance programs.
Organizations administering federal funding through sub-awards may also face changes to reporting, monitoring and financial oversight. The regulations do not affect every organization in these categories in the same way. Coverage depends on the specific federal award, the applicable program statute and the administrative requirements governing the funding.
Potential legal challenges.
The proposed regulations raise several legal questions that could become the basis for litigation if OMB finalizes provisions that conflict with existing law.
Congressional authority over federal spending. Congress establishes federal grant programs, determines their purposes and appropriates funding. Opponents could argue that presidential priorities cannot replace congressional requirements or redirect appropriated funds to unauthorized purposes.
Administrative Procedure Act. Organizations could challenge provisions that exceed OMB's statutory authority, fail to follow required procedures or are arbitrary and capricious.
Political oversight of discretionary funding. The proposed requirement for senior political review, combined with the advisory status of peer review, raises questions about the role of political priorities in research, education and other competitive grant decisions.
Tribal sovereignty and self-governance. Tribal governments could challenge provisions that conflict with the Indian Self-Determination and Education Assistance Act, existing self-governance agreements or specific treaty-related obligations. The proposal recognizes that federal statutes, including ISDEAA, govern when they conflict with the Uniform Guidance. That statutory protection does not automatically exempt every grant received by a Tribal government from the proposed regulations.
Constitutional and statutory limitations. Legal challenges could examine whether particular restrictions on federally funded activities exceed the authority Congress delegated to OMB or federal agencies.
These are potential legal arguments, not established findings that the proposed rule is unconstitutional or unlawful. As of November 11, 2026, no lawsuit specifically challenging this proposed rule has been verified. The existence of legal concerns and opposition should not be confused with a filed court action.
Tribal Nations demand meaningful consultation.
The National Congress of American Indians (NCAI) has strongly criticized OMB's consultation process. OMB held two consultation meetings on November 9 and 10, 2026, following only five calendar days' notice.
NCAI argues that the meetings did not constitute meaningful government-to-government consultation and that Tribal Nations need additional time to evaluate the proposed changes, consult with their governing bodies and prepare informed responses.
The organization is urging Tribal governments to request an extension, submit written comments and contact their congressional delegations. NCAI identified November 18, 2026, as the deadline for written comments following the consultation meetings.
NCAI's concerns extend beyond administrative requirements to the federal government's trust responsibilities, treaty obligations and statutory commitments to Tribal self-determination.
Congress temporarily blocks finalization of the proposal.
Congress included a specific provision in the Continuing Appropriations and Extensions Act, 2027, Public Law 119-103. Section 157 prohibits OMB from issuing or finalizing the May 29 proposed rule, or a substantially similar rule, through December 11, 2026.
The provision creates a temporary legislative restriction. It does not permanently reject the proposal or prevent Congress from considering future legislation on federal grant administration.
The original public comment period closed July 13, 2026. The November Tribal consultation represents a separate opportunity for Tribal governments to submit additional comments. As of November 11, 2026, the proposed rule has not been enacted.
What happens next?
The outcome could affect how federal agencies evaluate applications, administer awards, monitor recipients and make decisions about continued funding.
For organizations dependent on discretionary grants, the most significant concerns involve changing administration priorities, expanded termination authority and uncertainty surrounding future funding.
For Tribal Nations, the central question is whether the proposed requirements adequately protect statutory self-governance arrangements, treaty obligations and the government-to-government relationship.
For universities and research institutions, the concerns include political oversight of grant decisions and the role of independent merit review. For nonprofits, state and local governments, hospitals and community organizations, changes to allowable expenses, reporting requirements and award conditions could affect operations and long-term planning.
The central question is whether the U.S. Office of Management and Budget can substantially change the administration of a federal grant system involving approximately $1.2 trillion in annual obligations without exceeding the authority Congress has established through individual funding statutes.
