OMB Proposes Major Overhaul of Federal Grant Rules
The proposal would expand agencies’ ability to terminate awards after being issued.
WASHINGTON, June 1, 2026 – An overhaul of federal grant regulations was proposed Friday, with changes that could affect every entity receiving federal funding across the country.
The Office of Management and Budget published a proposed rule in the Federal Register rewriting 2 Code of Federal Regulations Part 200, commonly known as the Uniform Guidance. The regulation governs how federal funds are applied for, awarded, administered, monitored and audited across all federal agencies.
The measure is government-wide and would apply to every federal grant, cooperative agreement and pass-through award, affecting entities that receive federal funding either directly or as pass-through entities.
That impact includes recipients of broadband funding from the National Telecommunications and Information Administration's Broadband Equity Access and Deployment Program, Tribal Broadband Connectivity program, Digital Equity Act programs, the U.S. Department of Agriculture's ReConnect, the U.S. Department of the Treasury's Capital Projects Fund, and the Federal Communications Commission's Universal Service Fund programs, including Lifeline and E-Rate.
Key changes include new national policy requirements implementing executive orders issued in 2025 related to diversity, equity and inclusion, new viewpoint-neutrality requirements for event services held on county property, and new limits on the use of federal funds related to disparate-impact theories and certain foreign collaborations.
The overhaul expands federal agency authority to terminate awards, introduces new pre-award review and risk-evaluation requirements, and strengthens subaward reporting requirements. Block grants, formula grants and disaster recovery grants are categorically exempt from the expanded termination authority.
2 CFR Subtitle A would be reclassified from guidance to regulation, allowing future OMB amendments to take effect government-wide without requiring separate agency rulemaking.
The National Association of Counties is urging county officials to review the proposed rule and submit comments by July 13, reflecting any impacts or concerns, as it develops its own formal response to the rulemaking. OMB proposes a final rule take effect October 1, 2026.
