What the Proposed Rule Would Change
The Office of Management and Budget (OMB) and more than 40 federal agencies published a proposed rule on May 29, 2026, that would fundamentally restructure the terms under which federal awards are managed. If enacted, the proposed rule would shift the current OMB guidance on grants from a framework into more formal regulations that would apply to all recipients of federal funding. Under the current Uniform Guidance, agencies have discretion to interpret federal grant-making policies to meet agency-specific needs. By transforming the guidance into regulations, which are legally binding, the OMB rules would remove this discretion from agencies and apply a fixed set of criteria to all government agencies and federal grants, cooperative assistance and other forms of federal assistance. In addition, future regulatory changes would be required to adhere to time-consuming federal rulemaking procedures, thus making it more difficult for future administrations to update these rules.
If promulgated, the proposed regulations will have sweeping implications. Titled the Regulation for Federal Financial Assistance, the 400+ page proposal aims to convert standard grant guidelines into federal rules, thereby drastically increasing executive-branch oversight over billions of dollars in federal research, healthcare, culture, and infrastructure grants. If finalized as written, the regulations would take effect on October 1, 2026. Public comments on the plan are currently being accepted via Regulations.gov through July 13, 2026.
Why Researchers, Universities, and Nonprofits Are Concerned
OMB has stated the proposed revisions are intended to improve transparency, accountability, and oversight for awards across the federal government, while also reducing the burden on recipients. However, the proposal has received strong condemnation from the scientific and research communities, with stated concerns that the rule would relegate traditional scientific peer review to a purely advisory role, giving senior political appointees final approval on grants. The proposed rule would also provide agency leaders with the authority to suspend or terminate grants with no path for recipient appeals, destroying the financial predictability that research relies on. The rule would also ban the use of grant funds to cover scientific publication costs unless explicitly required by statute, effectively blocking researchers from utilizing grants for open access publishing.
Key Provisions of the Proposed Rule
Political Pre-Issuance Review
Federal agency heads must designate senior political appointees to review all discretionary grant proposals before funding is finalized. The rule explicitly mandates that traditional scientific peer-review panels will remain “advisory” and cannot override political agency discretion.
Alignment with Presidential Priorities
Awards must demonstrably advance the President’s policy priorities. Political reviewers must evaluate applications to ensure compliance with administrative benchmarks, such as the executive definition of “Gold Standard Science.”
Expanded Discretionary Termination
Federal agencies will gain the explicit authority to temporarily suspend or permanently cancel any active grant at any time. Grants can be terminated “for convenience” if the agency determines the award no longer aligns with shifting agency priorities or the “national interest.”
Social Policy Prohibitions
The rule implements cross-cutting bans that prohibit federal grant funds from being used to promote, encourage, or subsidize Diversity, Equity, and Inclusion (DEI) policies.
Foreign Collaboration Restrictions
Grantees will face a near-total ban on using federal funds to support bilateral or multilateral research, agreements, or travel involving “covered foreign countries” (designated foreign adversaries) or affiliated foreign entities.
Narrowed Cost Allowances
Broad limitations are introduced for what counts as an “allowable cost.” Most notably, the rule makes research publication costs unallowable unless mandated by statute, and requires express, advance agency approval for conference attendance and travel costs.
Justification for All Payment Requests
Grant recipients and subrecipients will be required to provide a written, detailed justification for every single payment request, whether it is for an advance payment or a reimbursement, linking the funds to specific project milestones.
What Happens Next
Major organizations, including ASCE, are currently petitioning the OMB to extend the 45-day public comment window to at least 90 days to fully assess the immense structural impact. Meanwhile, ASCE is analyzing the proposed rule and will be submitting comments.
How Stakeholders Can Submit Comments
For those interested in submitting their own comments, ASCE has developed a draft comment that can be customized and submitted on your behalf.