Federal Update: Senate Proposal Would Temporarily Delay OMB Grant Overhaul 

Senate appropriators have included language in their proposed Continuing Resolution (CR) that would temporarily block the White House Office of Management and Budget (OMB) from finalizing sweeping regulations designed to overhaul federal grantmaking rules. The Senate’s stopgap funding measure would preserve the existing guidance governing federal financial assistance through December 11, 2026, while keeping federal departments funded past the September 30 deadline. The provision is not yet final, however, as both chambers would still need to pass the CR before it could take effect. 

OMB’s proposal would apply government-wide and could significantly change how counties compete for and administer federal grants. Among other provisions, the rule would require senior administration appointees to review discretionary awards before they are issued and determine whether they align with the president’s policy priorities. Additionally, it would give federal agencies broader authority to suspend or terminate existing awards based on shifting agency priorities or determinations regarding the “national interest,” rather than limiting termination to statutory or performance-related grounds. 

For counties, a primary concern is predictability. Local governments frequently make long-term capital investments, hire staff, and enter contracts based on the expectation that a federal award will remain available as long as a locality  complies with the award’s requirements. Expanding federal bureaucratic authority to reconsider or terminate awards based on changing policy priorities could create significant financial and operational uncertainty. 

The proposal would also impose additional pre-award reviews, monitoring requirements, and pass-through responsibilities that could increase administrative costs and delay funding. These requirements could disproportionately affect small and rural counties, which have fewer staff and less capacity to absorb new compliance obligations. 

For its part, CSAC led a broad coalition of California county organizations in submitting formal comments in response to the proposed rule. The comments urged OMB to withdraw or substantially revise the proposal, warning that it would undermine funding certainty, politicize grant decisions, and impose significant new fiscal and administrative burdens. The coalition also urged OMB to preserve objective, statute-based funding criteria; limit termination authority; establish notice, appeal and wind-down protections; provide clear standards and safe harbors; and, allow sufficient time for counties to implement any new requirements. 

The delay included in the Senate’s CR would provide counties and other federal grant recipients with a temporary reprieve and additional time for OMB to consider the concerns raised during the public comment process. However, it would not resolve the underlying dispute. Even if Congress approves the provision, the issue is likely to resurface when the stopgap budget measure expires in December.