An Overview of OMB Proposed Rule for Federal Financial Assistance
By Kelsi Putnam, CHF staff
On May 29, the Office of Management and Budget (OMB) released a proposed rule that makes sweeping changes to the federal grantmaking process. The rule shifts grantmaking powers and capabilities from expert peer reviewers and subject matter experts at individual agencies to the discretion of senior political appointees at federal departments and OMB. The implications of this rule will be far-reaching and affect universities, research institutions, hospitals, nonprofits, state and local governments and public health agencies, and other organizations that receive federal funding. The rule will give the administration priority in shaping what is being researched, published, and shared with the scientific community, as well as who is able to perform such research.
According to OMB, the goal of the proposed rule is to increase transparency, oversight, and accountability while helping to clarify the legal status and implementation of government-wide grants and alleviate administrative burden. However, the changes in this proposed rule would largely have the opposite effect, undermining decades of best practices that have ensured apolitical and merit-based funding decisions, with the addition of new layers of onerous and opaque review processes, and the creation of new burdensome requirements for existing and potential grantees.
If implemented, the rule would give political appointees at federal agencies more power to decide which notice of funding opportunities (NOFOs) are awarded so as to better align with the Trump administration’s policies and priorities. However, there is no defined process to transparently communicate what these priorities are, who is setting them, and what – if any – process will be in place for the public to help set priorities. This change also rejects the merit-based and peer review process that has been the standard of grant funding, meaning that research and grant making will be dictated by the administration that is in power, instead of by industry experts. It will also codify new layers of review and approval that will inevitably slow the process of grantmaking to a crawl.
Of further concern, the rule also grants the administration power to rescind grants at will if they are not deemed to advance program goals, agency priorities, or national interest. The rule will allow these cancelations to happen with little to no explanation of why the grant was canceled and removes existing requirements that agencies maintain an appeals process. Over the past 18 months, NIH-funded researchers, state and local health departments, and behavioral health providers, among others, have seen firsthand how much disruption immediate grant cancelations have caused. These actions came without warning, little explanation, and no chance to appeal, and resulted in important research and other projects halting midstream, departments forced to lay off expert scientists, and other dramatic consequences. If these types of cancelations are codified by this proposed rule, this will further destabilize public health and research projects, as grantees may fear their funding could be pulled or paused, making long-term budgeting, hiring, and investing in infrastructure nearly impossible.
Additionally, the rule includes a provision that bans the use of funds s for conference attendance and publishing fees. These proposals will make the dissemination of research findings challenging as many researchers rely on grant money for publication or conference costs and may opt out of these activities if they do not receive adequate funding. Further, the proposed rule states that publishing fees would include fees paid to ensure public access to scientific literature. Under existing practice, all NIH-funded research must be available to the public, including patients, families, and medical providers. Not allowing federal funding to support these activities would make following this policy much harder.
The proposed rule is currently open for public comment through July 13 before OMB considers final implementation starting October 1, 2026. CHF is planning to respond and submit comments to the proposed rule and will be shared with our members. However, organizations concerned with the impact of this proposed rule should consider submitting their own comments on the proposed rule outlining the impact the rule, if finalized, would have on patients, families, and communities.
CHF has provided an in-depth analysis of the rule and additional tools, resources, and tips for our members and will continue sharing new resources as we move forward, and we encourage our members to reach out to CHF staff with any questions, comments, or concerns.