Regulation for Federal Financial Assistance

Federal RegisterMay 29, 2026

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OFFICE OF MANAGEMENT AND BUDGET

2 CFR Parts 1, 25, 170, 175, 176, 180, 182, 183, and 200

DEPARTMENT OF HEALTH AND HUMAN SERVICES

2 CFR Parts 300, 376, and 382

RIN 0991-AC35

DEPARTMENT OF AGRICULTURE

2 CFR Parts 400, 417, and 421

RIN 0505-AA20

DEPARTMENT OF STATE

2 CFR Parts 600 and 601

RIN 1400-AG22

AGENCY FOR INTERNATIONAL DEVELOPMENT

2 CFR Parts 700, 701, 780, and 782

RIN 0412-AB19

DEPARTMENT OF VETERANS AFFAIRS

2 CFR Parts 801 and 802

RIN 2900-AT02

DEPARTMENT OF ENERGY

2 CFR Parts 901, 902, and 910

RIN 1991-AC21

DEPARTMENT OF THE TREASURY

2 CFR Part 1000

RIN 1505-AC92

DEPARTMENT OF DEFENSE

2 CFR Parts 1104, 1120, 1122, 1125, and 1126

RIN 0790-AM03

DEPARTMENT OF TRANSPORTATION

2 CFR Parts 1200 and 1201

RIN 2105-AF44

DEPARTMENT OF COMMERCE

2 CFR Parts 1326, 1327, and 1329

RIN 0605-AA85

DEPARTMENT OF THE INTERIOR

2 CFR Parts 1400, 1401, and 1402

RIN 1090-AB34

ENVIRONMENTAL PROTECTION AGENCY

2 CFR Parts 1500, 1532, and 1536

RIN 2030-AB05

U.S. INTERNATIONAL DEVELOPMENT FINANCE CORPORATION

2 CFR Part 1600

RIN 3015-AA00

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

2 CFR Parts 1800, 1880, and 1882

RIN 2700-AE90

U.S. AGENCY FOR GLOBAL MEDIA

2 CFR Part 1900

RIN 3112-AA07

NUCLEAR REGULATORY COMMISSION

2 CFR Parts 2000 and 2001

RIN 3150-AL41

CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

2 CFR Parts 2200, 2205, and 2245

RIN 3045-AA94

SOCIAL SECURITY ADMINISTRATION

2 CFR Parts 2300, 2336, and 2339

RIN 0960-AJ11

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

2 CFR Parts 2400, 2424, and 2429

RIN 2501-AE01

NATIONAL SCIENCE FOUNDATION

2 CFR Parts 2500 and 2520

RIN 3145-AA75

NATIONAL ARCHIVES AND RECORDS ADMINISTRATION

2 CFR Part 2600

RIN 3095-AC31

SMALL BUSINESS ADMINISTRATION

2 CFR Parts 2700 and 2701

RIN 3245-AI70

DEPARTMENT OF JUSTICE

2 CFR Parts 2800 and 2867

RIN 1105-AB81

DEPARTMENT OF LABOR

2 CFR Parts 2900 and 2998

RIN 1291-AA53

DEPARTMENT OF HOMELAND SECURITY

2 CFR Parts 3000, 3001 and 3002

RIN 1601-AB23

NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES

Institute of Museum and Library Services

2 CFR Parts 3185, 3186, and 3187

RIN 3137-AA31

NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES

National Endowment for the Arts

2 CFR Parts 3254, 3255, and 3256

RIN 3135-AA36

NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES

National Endowment for the Humanities

2 CFR Parts 3369, 3373, and 3374

RIN 3136-AA47

DEPARTMENT OF EDUCATION

2 CFR Parts 3474 and 3485

RIN 1801-AA30

EXPORT IMPORT BANK

2 CFR Part 3513

RIN 3048-AA03

EXECUTIVE OFFICE OF THE PRESIDENT

Office of National Drug Control Policy

2 CFR Part 3603

RIN 3201-AA03

PEACE CORPS

2 CFR Parts 3700 and 3701

RIN 0420-AA37

ELECTION ASSISTANCE COMMISSION

2 CFR Parts 5800 and 5801

RIN 3265-AA00

GULF COAST ECOSYSTEM RESTORATION COUNCIL

2 CFR Part 5900

RIN 3600-AA05

FEDERAL COMMUNICATIONS COMMISSION

2 CFR Part 6000

RIN 3060-AM35

CONSUMER PRODUCT SAFETY COMMISSION

2 CFR Part 6100

RIN 3041-AE26

DELTA REGIONAL AUTHORITY

2 CFR Part 6200

RIN 4718-AA00

APPRAISAL SUBCOMMITTEE OF THE FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

2 CFR Part 6300

RIN 3139-AA07

MARINE MAMMAL COMMISSION

2 CFR Part 6400

RIN 0415-AA00

MILLENNIUM CHALLENGE CORPORATION

2 CFR Part 6500

RIN 0414-AA00

NATIONAL CREDIT UNION ADMINISTRATION

2 CFR Part 6600

RIN 3133-AG07

Regulation for Federal Financial Assistance

AGENCY:

Office of Federal Financial Management, Office of Management and Budget; Department of Health And Human Services; Department of Agriculture; Department of State;

Agency for International Development; Department of Veterans Affairs; Department of Energy; Department of Treasury; Department of Defense; Department of Transportation; Department of Commerce; Department of the Interior; Environmental Protection Agency; U.S. International Development Finance Corporation; National Aeronautics and Space Administration; U.S. Agency for Global Media; Nuclear Regulatory Commission; Corporation for National and Community Service; Social Security Administration; Department of Housing and Urban Development; National Science Foundation; National Archives and Records Administration; Small Business Administration; Department of Justice; Department of Labor; Department of Homeland Security; Institute of Museum and Library Services; National Endowment for the Arts; National Endowment for the Humanities; Department of Education; Export Import Bank; Executive Office of the President, Office of National Drug Control Policy; Peace Corps; Election Assistance Commission; Gulf Coast Ecosystem Restoration Council; Federal Communications Commission; Consumer Product Safety Commission; Delta Regional Authority; Appraisal Subcommittee of the Federal Financial Institutions Examination Council; Marine Mammal Commission; Millennium Challenge Corporation; National Credit Union Administration.

ACTION:

Proposed rule.

SUMMARY:

The Office of Management and Budget (OMB) proposes to revise the Guidance for Federal Financial Assistance to improve government-wide policies and requirements related to the management of grants, cooperative agreements, and other forms of assistance. OMB is proposing revisions that would improve transparency, accountability, and oversight for Federal awards across the Federal Government. This includes ensuring that American tax dollars are not wasted or misused, activities performed under Federal awards are consistent with law and policy, and recipients are held accountable when they fail to meet relevant standards. The revisions also aim to ensure that basic American principles of equality and equal opportunity are upheld throughout all stages of the award making process and that unlawful discrimination is no longer permitted. Proposed changes also include providing further clarification on the regulatory status of the OMB requirements and on the process for future updates to the government-wide requirements. Finally, OMB also proposes changes to reduce recipient burden. The listed Federal grant-making agencies propose conforming changes to their respective adopting regulations, or, in the case of some agencies and other entities, establishing new adopting regulations or policies. The proposed changes reflect the administration's commitment to transparency, accountability, and proper oversight for the Federal grantmaking process. The proposed regulations seek to ensure that American tax dollars are ultimately used to serve the needs of the American public.

DATES:

Comments are due on or before July 13, 2026. Late comments will be considered only to the extent practicable.

ADDRESSES:

Comments on this proposal must be submitted electronically before the comment closing date to

www.regulations.gov.

In submitting comments, please search for recent submissions by OMB to find docket

OMB-2026-0034,

which includes the full text of the proposed revisions and submit comments there. Please provide clarity as to the section of the regulation that each comment is referencing by beginning each comment with the relevant section number in brackets.

For example; if the comment is on 2 CFR 200.414, include the following before the comment [200.414].

Public comments received by OMB and Federal agencies will be posted at

www.regulations.gov

and be a matter of public record. Accordingly, please do not include any confidential business information or personal privacy information in your comments.

FOR FURTHER INFORMATION CONTACT:

Andrew Reisig or Joel Savary at the OMB Office of Federal Financial Management via email at

MBX.OMB.Grants@OMB.eop.gov.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

The Office of Management and Budget (OMB) proposes to revise several parts of the OMB Guidance for Federal Financial Assistance located in title 2 of the Code of Federal Regulations (CFR), subtitle A, to improve and clarify government-wide policies and requirements related to the management of Federal financial assistance including grants and cooperative agreements. In 2 CFR subtitle B, the listed Federal agencies also propose conforming changes to their respective implementing regulations for the OMB policy requirements in subtitle A. As explained in further detail below, OMB proposes revising 2 CFR for reasons including to: (1) improve transparency, accountability, and oversight for use of Federal taxpayer dollars; (2) clarify the status of OMB's policies and requirements set forth in the 2 CFR regulatory text as an OMB regulation; and (3) reduce recipient burden.

Transparency, Accountability, and Oversight.

The overarching goal of OMB's proposed revisions is to improve transparency, accountability, and oversight for how Federal taxpayer dollars are used in the context of Federal grantmaking.

It is essential for the Federal Government to provide more oversight over the design and implementation of Federal programs to prevent wasteful spending and misuse or mismanagement of Federal funds.

Executive Order (E.O.) 14332, 90 FR 38929, “Improving Oversight of Federal Grantmaking” (Aug. 7, 2025); White House Fact Sheet of Aug. 7, 2025, “President Donald J. Trump Stops Wasteful Grantmaking;” and White House Fact Sheet of Feb. 18, 2025, “President Donald J. Trump Requires Transparency for the American People About Wasteful Spending.”

Although Federal spending through grants and other types of Federal financial assistance has grown exponentially since the initial establishment of OMB's policies in earlier Circulars and 2 CFR, corresponding policies capable of ensuring transparency, accountability, and oversight for this increased level of spending remain deficient in the current regulatory text. As a result, Federal financial assistance programs, and the activities performed under Federal awards, have not always remained properly aligned with core purposes authorized by law, nor served the needs of the American public as intended.

This lack of transparency, accountability, and proper oversight became increasingly clear between 2021 and 2024. Federal awards were often used during those years to promote a “woke” policy agenda that did not reflect the values of the vast majority of the American public.

For example, Federal programs and funding opportunities were designed to advance unlawful identity-based “Diversity, Equity, and Inclusion” (DEI) policies and preferences across the country.

These policies were inconsistent with basic American values and civil rights laws, including the equal protection principles of the U.S. Constitution.

They were also misaligned in many cases with underlying public purposes authorized by law.

Collectively, these policies wasted a great amount of taxpayer resources and caused great harm to public trust in government.

E.O. 14332, sec. 1.

See,

e.g.,

David Ditch, Mike Gonzalez, Hans von Spakovsky and Erin Dwinell, “President Biden's `Equity Action Plans' Reveal Radical, Divisive Agenda.” Heritage Foundation Backgrounder No. 3710, May 25, 2022 (hereinafter “Ditch I”).

E.O. 14151 of January 20, 2025, “Ending Radical and Wasteful Government DEI Programs and Preferencing;” E.O. 14173 of January 21, 2025, “Ending Illegal Discrimination and Restoring Merit-

Based Opportunity;” E.O. 14281 of April 23, 2025, “Restoring Equality of Opportunity and Meritocracy.”

E.O. 14332, sec. 1; see also,

e.g.,

David Ditch, “Funding Leftism, Making Power Grabs: The Biden Administration's Bureaucratic Radicalism.” Heritage Foundation, Apr. 18, 2024 (hereinafter “Ditch II”).

The White House Fact Sheet of August 7, 2025, describes examples of the types of wasteful spending that occurred as a result of such policies. For example, Federal grants funded unlawful DEI practices,

various anti-American ideologies in American education,

non-replicable and highly misleading studies,

labs engaged in gain-of-function research,

and AI-powered social media censorship tools.

More recently, another White House Fact Sheet of January 8, 2026 provided examples of the rampant and pervasive problem of fraud in the United States, including under assistance programs in Minnesota.

E.O. 14332, sec. 1.

E.O. 14303 of May 23, 2025, “Restoring Gold Standard Science.”

White House Fact Sheet of Aug. 7, 2025. See also E.O. 14292 of May 5, 2025, “Improving the Safety and Security of Biological Research;” and White House Fact Sheet of May 5, 2025, “President Donald J. Trump Achieves Improved Safety and Security of Biological Research.”

White House Fact Sheet of Aug. 7, 2025. See also E.O. 14149 of Jan. 20, 2025, “Restoring Freedom of Speech and Ending Federal Censorship;” and E.O. 14319 of Jul. 23, 2025, “Preventing `Woke AI' in the Federal Government.”

White House Fact Sheet of Jan. 8, 2026, “President Donald J. Trump Establishes New Department of Justice Division for National Fraud Enforcement.” See also White House Fact Sheet of Jan. 2, 2026, “Here's What the Trump Administration Is Doing to Crush Minnesota's Fraud Epidemic;” DOJ Press Release of Nov. 24, 2025, “Feeding Our Future Defendant Sentenced to 10 Years in Prison.”

Another example of wasteful spending is provided by a 2023 report from Office of Inspector General for the Department of Homeland Security (DHS). That report found that recipients of Federal awards from the Federal Emergency Management Agency (FEMA) potentially misused funds to provide services for illegal immigrants.

Such potential abuse of taxpayer funds highlights the need for proper oversight of taxpayer dollars.

DHS Office of Inspector General, “FEMA Should Increase Oversight to Prevent Misuse of Humanitarian Relief Funds,” DHS OIG-23-20.

In another prominent example, prior to this administration, far-left activists hijacked the critical work done by the U.S. President's Emergency Plan for AIDS Relief (PEPFAR), which was established to respond to the AIDS crisis in Africa. Due to wasteful spending, PEPFAR became a left-wing foreign aid entitlement that attempted to promote abortion and gender ideology. Additionally, an August 2025 report from the Heritage Foundation noted that, according to the U.S. House Foreign Affairs Committee, billions of dollars in overhead and program charges flow to nongovernmental organizations (NGOs) and contractors in Washington, DC rather than providing direct humanitarian aid; and insufficient oversight has resulted in significant waste of taxpayer resources.

Max Primorac, PEPFAR: From AIDS Relief to Leftwing Funding Apparatus,” Heritage Foundation, Aug. 11, 2025. Available at:

https://www.heritage.org/global-politics/report/pepfar-aids-relief-leftwing-funding-apparatus.

See also Tim Meisburger. U.S. Foreign Aid Used to Push Abortion, Gender Ideology Around the World. Heritage Foundation. Jun. 8, 2023. Available at:

https://www.heritage.org/global-politics/commentary/us-foreign-aid-used-push-abortion-gender-ideology-around-the-world.

An additional example is provided by a 2024 report from the U.S. Senate Committee on Commerce, Science, and Transportation regarding the growing failure of objectivity at the National Science Foundation (NSF) during the previous administration.

That report found that out of a sample of over three thousand grants, more than ten percent—totaling over two billion dollars in Federal funding—went to “questionable projects that promoted diversity, equity, and inclusion (DEI) tenets or pushed onto science neo-Marxist perspectives about enduring class struggle.” The report also found that, by 2024, over a quarter of new grants made by NSF (27 percent) directed funding to DEI initiatives and other far-left perspectives. This marked a huge proportional increase over the course of only three years from the 0.29 percent of new grants made by NSF with a similar focus in 2021.

This is just a small sample of many examples across the Federal Government of wasteful spending and other misuse and mismanagement of Federal funds.

U.S. Senate Committee on Commerce, Science, and Transportation, “D.E.I. Diversion. Extremism. Ideology. How the Biden-Harris NSF Politicized Science.” (2024). Available at

https://www.commerce.senate.gov/services/files/4BD2D522-2092-4246-91A5-58EEF99750BC#.

Subsequent to this report, NSF took action during this Administration to review its award portfolio and, to the extent permitted by law, ensure alignment with Federal agency priorities.

Scarce Federal taxpayer dollars should be directed exclusively to achieving results for the American people. Wasteful and divisive activities unrelated to core purposes of Federal grant programs should not be subsidized with taxpayer dollars. Grantmaking practices resulting in wasteful spending that became prevalent during the previous administration can only be stopped through adherence to strong internal controls at Federal agencies and enhanced oversight regarding how Federal dollars are spent.

The Federal Government must provide more oversight and transparency regarding how Federal funds are used in grantmaking to avoid the recurrence of similar issues in the future. Under the proposal described in this document, Federal agencies must return to designing assistance programs and award activities to align with essential public purposes authorized by law. Effective oversight also includes following Executive Branch policies that eliminate various kinds of wasteful spending that occurred in previous years, such as unlawful DEI mandates and other unnecessary add-on activities that increase project costs and complexity without serving the underlying public purpose of the award.

The proposed reforms are necessary to ensure greater accountability for use of public funds, and that every taxpayer dollar the Federal Government spends either improves American lives or advances American interests.

See,

e.g.,

E.O. 14332; and White House Fact Sheets of Aug. 7, 2025 and Feb. 18, 2025.

E.O. 14332, sec. 1.

Clarification of status of regulatory text.

A second objective of this rulemaking is to clarify the status of the 2 CFR regulatory text as an OMB regulation. The proposed revisions align with OMB's statutory authority to provide overall direction and leadership to Federal agencies on financial management matters by establishing financial management policies and requirements. See 31 U.S.C. 503(a)(2). Additional authorities for OMB's proposed revisions are set forth below.

Reducing recipient burden.

A third and final objective of this rulemaking is to reduce recipient burden. For example, rather than needing to focus extensive efforts and resources on DEI mandates or other unnecessary add-on requirements frequently included in funding opportunities in previous years, under the proposed version of the regulation recipients will be able to restore focus on efficient project delivery and actually achieving the basic public purposes of support authorized in law.

OMB also proposes a number of additional revisions throughout chapters I and II of subtitle A of 2 CFR.

OMB summarizes the proposed changes in this preamble. In proposing changes, OMB aimed to maintain the existing structure of the 2 CFR guidance consistent with earlier iterations, including, for example, the structure of parts, subparts, and section numbering.

Plain Language Summary:

A plain language summary of this rule may be found at

https://www.regulations.gov/.

II. Background and Regulatory History

The Office of Management and Budget (OMB) has assisted every modern President in ensuring that the President's priorities, consistent with applicable law, are appropriately accounted for in government-wide grant management policies and agency grant-making decisions. In service of that goal, in 1958, the Bureau of the Budget, OMB's predecessor, first issued Circular A-21, “Cost Principles for Educational Institutions.” In 1968, the Bureau of the Budget first issued Circular A-87, “Cost Principles for State, Local, and Indian Tribal Governments.” In 1976, OMB first issued both Circular A-110, “Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations;”

and Circular A-122, “Cost Principles for Non-Profit Organizations.” All of these Circulars were repeatedly revised in the decades following their initial issuance. Other now-superseded OMB Circulars providing requirements related to grants administration included Circular A-89, “Federal Domestic Assistance Program Information;” and Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations.”

See,

e.g.,

OMB Circular A-110 (1993). The guidance in Circular A-110 was relocated to 2 CFR part 215 in 2004. See 69 FR 26281 (May 11, 2004).

79 FR 78589 (Dec. 26, 2013).

Between 2012 and 2013, OMB worked with Federal agencies to revise and streamline existing OMB guidance and Circulars related to grants administration to develop the “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (Uniform Guidance) located in part 200 of 2 CFR. 79 FR 78589 (Dec. 26, 2013) (2013 Final Guidance). See also 77 FR 11778 (Feb. 28, 2012) (2012 Advance Notice of Proposed Guidance); 78 FR 7282 (Feb. 1, 2013) (2013 Proposed Guidance). This effort was designed to assist programs in delivering better outcomes on behalf of the American people while also reducing administrative burden and the risk of fraud, waste, and abuse. The Uniform Guidance, published in 2013, consolidated, streamlined, and superseded requirements from several earlier OMB Circulars and guidance documents related to grants management and implementation of the Single Audit Act. At the time, OMB explained that the guidance was also intended to improve clarity and accessibility of the requirements across the Federal Government.

Federal award-making agencies implemented the Uniform Guidance through an interim final rule, which became effective on December 26, 2014. 79 FR 75867 (Dec. 19, 2014) (2014 Federal Agency Interim Final Rule). Following the 2014 Federal Agency Interim Final Rule, most agencies did not reissue implementing regulations each time that the government-wide policies and requirements contained in 2 CFR subtitle A were updated by OMB following public notice and comment rulemaking procedures.

Instead, Federal agencies only occasionally issued or reissued implementing regulations. This generally occurred when specific changes were needed in the agency regulations. Because OMB has exclusive statutory authority under 31 U.S.C. 503(a)(2) to set government-wide financial management policies and requirements, the public comment period for the government-wide policies and requirements has been provided by OMB, not agencies.

See 2 CFR 1.230.

See,

e.g.,

OMB Memorandum M-24-11, Section I (“Implementation of Title 2 of the CFR”) (Apr. 4, 2024); and Council on Federal Financial Assistance (COFFA) Memoranda for the Federal Financial Assistance Community dated January 15, 2025 and August 15, 2024.

OMB periodically reviews the Uniform Guidance in accordance with 2 CFR 200.109. Following establishment of the Uniform Guidance in 2013, OMB made further revisions to the regulatory text in 2020 (85 FR 49506 (Aug. 13, 2020)) and 2024 (89 FR 30046 (Apr. 22, 2024). The 2020 revisions addressed topics including program planning and design, performance measurement to improve program goals and outcomes, sharing lessons learned, and adopting promising practices. OMB again revised the regulatory text in 2024. The objectives of the 2024 update included incorporating statutory requirements and certain policy priorities of the previous administration, reducing agency and recipient burden, clarifying sections that recipients or agencies have interpreted in different ways, rewriting certain sections of the regulatory text in plainer language, improving flow, and resolving inconsistent use of terms.

Since the inception of OMB financial management policies and requirements under now-superseded Circulars,

and the initial establishment of the Uniform Guidance in 2013 based on policies contained in the earlier Circulars, the landscape of Federal financial assistance funding has changed markedly—including massive growth in the scale and volume of assistance provided by the Federal Government, increasing diversification in the purposes and types of assistance, and increasing responsibilities for executive agency administration of discretionary programs. A wide array of new Federal financial assistance programs and statutory responsibilities for executive agencies have been established by Congress, but the oversight and stewardship of Federal financial assistance by executive branch agencies has not always kept pace with or accounted for these changes. Revisions to OMB's policies in 2 CFR part 200 are now warranted to improve transparency, accountability, and efficiency of Federal financial assistance programs.

OMB's 2012 Advance Notice of Proposed Guidance explained that, prior to establishment of 2 CFR part 200, government-wide audit requirements were contained in OMB Circulars A-133 and A-50; cost principles were contained in OMB Circulars A-21, A-87, and A-122; and administrative requirements were contained in the government-wide Common Rule implementing Circular A-102, Circular A-110, and Circular A-89. See 77 FR 11778 (Feb. 28, 2012).

III. Statutory Authority for OMB Regulation for Federal Financial Assistance

The Deputy Director for Management of OMB is authorized under 31 U.S.C. 503 to, among other things, provide “overall direction and leadership to the executive branch on financial management matters by establishing financial management policies and requirements.” 31 U.S.C. 503(a)(2). The Director of OMB is authorized under 31 U.S.C. 6307 to “issue supplementary interpretative guidelines to promote consistent and efficient use of . . . grant agreements . . . and cooperative agreements.”

OMB also relies on authorities including the Single Audit Act Amendments of 1996 (Pub. L. 104-156, as amended, codified at 31 U.S.C. 7501-7507); the Federal Funding Accountability and Transparency Act of 2006 (FFATA or the Transparency Act) (Pub. L. 109-282), as amended; the Digital Accountability and Transparency Act of 2014 (DATA Act of 2014) (Pub. L. 113-101), as amended; the Federal Program Information Act (Pub. L. 95-220 and Public Law 98-169, as amended, codified at 31 U.S.C. 6101-6106); the Federal Grant and

Cooperative Agreement Act of 1977 (Pub. L. 95-224, as amended, codified at 31 U.S.C. 6301-6309); the Office of Federal Procurement Policy Act (codified at 41 U.S.C. 1101-1131); the Budget and Accounting Procedures Act of 1950, as amended (codified at 31 U.S.C. 1101-1126); the Chief Financial Officers Act of 1990 (codified at 31 U.S.C. 503-504); the Trafficking Victims Protection Act of 2000 (TVPA), as amended (codified at 22 U.S.C. 7101-7115); and Executive Order 11541, “Prescribing the Duties of the Office of Management and Budget and the Domestic Policy Council in the Executive Office of the President.”

IV. OMB Objectives for 2026 Proposed Revisions

OMB's objectives for the current proposed revisions to several parts of subtitle A of 2 CFR include: (1) improving transparency, accountability, and oversight for use of Federal funds; (2) clarifying the status of the 2 CFR regulatory text as an OMB regulation; and (3) reducing recipient burden. The proposed revisions generally support one or more of these three objectives. The following is a high-level overview of the proposed rule's three primary objectives, which is followed by a section-by-section discussion of the proposed changes.

A. Objective 1: Improved Transparency, Accountability, and Oversight

OMB's first objective for the proposed revisions is to improve transparency, accountability, and oversight for how Federal funds, including taxpayer dollars, are used in the context of Federal grantmaking.

See E.O. 14332 of Aug. 7, 2025, “Improving Oversight of Federal Grantmaking;” White House Fact Sheet of Aug. 7, 2025, “President Donald J. Trump Stops Wasteful Grantmaking;” and White House Fact Sheet of Feb. 18, 2025, “President Donald J. Trump Requires Transparency for the American People About Wasteful Spending.”

A.1. Background

For too long, the Federal Government has paid insufficient attention to providing proper oversight for Federal financial assistance programs. Deficiencies currently exist throughout the lifecycle of grants—from program design, to award selection, to project delivery and oversight—that impact the ability of the Federal Government to prevent wasteful spending and efficiently implement assistance programs in a manner consistent with law and the needs of the American public. If finalized, OMB's proposed revisions in 2 CFR will improve transparency, accountability, and oversight in the government-wide system of grants administration, including by ensuring that Federal award programs are properly aligned with law and policy and that Federal agencies act as responsible stewards of taxpayer dollars.

Recent years have provided evidence of the need for meaningful reform in Federal grants administration. Instead of aiming to broadly serve the needs of all Americans, in 2021 Federal agencies became increasingly focused on using their award programs to serve a “woke” policy agenda that deliberately favored certain identity groups over others. In seeking to advance this agenda, programs were often designed to include a long list of ideological terms and conditions with little connection to the core purpose of public support.

These burdensome conditions were consistently imposed through funding opportunities and award agreements regardless of the objective of the assistance program. This approach contributed to long delays in program implementation as Federal agencies and recipients focused their efforts and taxpayer resources on divisive policy requirements that were often unrelated to or misaligned with core purposes of Federal grant programs. Various commenters have remarked on how this approach resulted in waste, inefficiency, long delays in project delivery, and reduced program effectiveness across a range of activities receiving Federal support.

In one notorious example, under a $42.5 billion broadband internet access program, the previous administration failed to connect a single person to the internet over the course of three years—instead focusing efforts and attention on imposing a long list of burdensome policy requirements.

See,

e.g.,

Ditch II (including summary of the “ideological terms and conditions bundled into” funding opportunities for infrastructure grants by the previous administration.).

See,

e.g.,

Ezra Klein, “The Problem with Everything-Bagel Liberalism,” The New York Times, April 2, 2023 (describing the tendency of the previous administration to structure Federal award programs to address many unrelated policy goals at once, leading to a dramatic increase in the cost and complexity of projects, long delays in project delivery, and poor outcomes for American taxpayers); Ditch II (explaining how the prior administration structured award programs to simultaneously include a wide array of “novel and contentious” policy requirements, which diverted focus from core public purposes authorized in law and caused “tremendous amounts of waste and inefficiency”).

“Fact Sheet: Ending Biden's Broadband Burdens,” National Telecommunications and Information Administration (NTIA), June 6, 2025; John Thune, “Broadband Blunders Leave Americans Disconnected,” Prairie Pioneer, Oct. 2, 2024; Donald Kimball, “The $42 billion internet program that has connected 0 people,” Washington Policy Center, Sept. 18, 2024.

Among various other policy requirements, Federal programs were frequently designed between 2021 and 2024 to include preferences and selection criteria aimed at advancing identity-based DEI policies.

This included using a variety of labels, such as promoting DEI, or using other intentional proxies for race, sex, or sexual identity, to give priority to certain favored identity characteristics and groups at the expense of others in the distribution of Federal awards and associated benefits.

The concerted effort to impose unlawful DEI policies on Federal award programs began on the very first day of the previous administration through issuance of Executive Order 13985.

That order instructed Federal agencies to set aside the decision-making processes used in previous years—which generally aimed to ensure that all Americans were treated equally—and to instead focus on remaking the system of grants administration with divisive identity-based DEI policies imposed throughout.

Following issuance of Executive Order 13985 in January 2021, Federal agencies began attaching these policies to all aspects of their award programs, including program design, award selection, and award conditions imposed on recipients. This continued for the duration of the previous administration.

See E.O. 14151 of Jan. 20, 2025, “Ending Radical and Wasteful Government DEI Programs and Preferencing;” see also Ditch I; Ditch II.

See

Lisa Friedman, “White House Takes Aim at Environmental Racism, But Won't Mention Race,” The New York Times, Feb. 15, 2022 (explaining how the previous administration used various intentional proxies for race to continue directing Federal grants and associated benefits to preferred racial-identity groups); see also Ditch I; Ditch II.

E.O. 14151, sec. 1 (Discussing E.O. 13985); E.O. 13985 of Jan. 20, 2021, “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,”

revoked

by E.O. 14148 of Jan. 20, 2025.

E.O. 13985.

Based on these efforts, Federal funding was used between 2021 and 2024 to advance unlawful DEI policies and preferences across the country.

These and other burdensome policies and requirements imposed through Federal award programs diverted substantial amounts of taxpayer funding away from traditional public purposes recognized in law—such as transportation, infrastructure, scientific research, public health, and other essential public goods that serve all Americans—to instead support favored identity groups and left-wing activists.

As a result, Federal award programs that once had broad public support became tied to a divisive policy agenda that unlawfully discriminated against many of the Americans those programs were intended to serve. These policies were inconsistent with basic American values and civil rights laws, including the equal protection principles of the U.S. Constitution.

They were also misaligned with core purposes of relevant assistance programs.

All together, these policies wasted a large amount of American taxpayer resources and significantly undermined public trust in government across the country.

See,

e.g.,

E.O. 14151, sec. 1.

See,

e.g.,

U.S. Senate Committee on Commerce, Science, and Transportation, “D.E.I. Diversion.

Extremism. Ideology. How the Biden-Harris NSF Politicized Science,” (2024) (finding an increase of more than 9,000 percent between 2021 and 2024 of new NSF grants focused on funding and promoting DEI initiatives); Ditch II (explaining how the previous administration tied nearly every major infrastructure program to DEI mandates and other add-on policy requirements unrelated to, and often conflicting with, the core objective of delivering needed infrastructure improvements across the country in a timely and cost-efficient manner); Ditch I (explaining how “equity plans” issued by Federal agencies including the Departments of Commerce, Defense, Education, Energy, Justice, and State, and the National Science Foundation, called for “group-based preferential treatment in grant and research programs and foreign aid”); U.S. DOT Press Release of Mar. 10, 2025, “U.S. Transportation Secretary Sean P. Duffy Rescinds Memos Issued By Biden Administration That Injected Social Justice, Radical Environmental Agenda Into Infrastructure Funding Decisions” (summarizing DOT decision to rescind policies from the last administration attempting “to push a radical social and environmental agenda” with “no basis in statute” on Federal infrastructure programs); Judge Glock, “Biden's Progressive Infrastructure Boondoggle,” City Journal, Summer 2025 (explaining that, in working to implement the Infrastructure Investment and Jobs Act, many in the previous administration were not “especially interested in traditional infrastructure” or advancing “core transportation goals—[instead] elevating a host of progressive priorities in their place”); James B. Meigs, “The Big Squeeze: How Biden's Environmental Justice Agenda Hurts the Economy and the Environment,” Manhattan Institute, Sep. 7, 2023 (explaining how “environmental justice” (EJ) policies diverted “spending and administrative resources away from straightforward environmental goals;” made “government programs less focused and less effective across the board;” and were “particularly burdensome for environmental and infrastructure projects,” adding “layers of bureaucracy and red tape to existing programs” and making individual projects “more time-consuming” and “more expensive” to deliver); James B. Meigs, “Biden's `Justice40' Is Bad Environmental Policy,” National Review, Nov. 9, 2023 (describing EJ policies as diverting “spending and administrative resources from straightforward environmental goals, such as reducing pollution,” and redirecting “them toward vague social goals,” such as “satisfy[ing] community activists' demands.”).

E.O. 14151; E.O. 14173 of January 21, 2025, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity;” E.O. 14281 of April 23, 2025, “Restoring Equality of Opportunity and Meritocracy.”

E.O. 14332, sec. 1; see also Ditch II.

In January 2025, President Trump announced the end of the discriminatory DEI policies and requirements that had extended through virtually all aspects of the Federal Government in the prior administration.

In the grantmaking context, the President's Executive orders released Federal programs from the divisive DEI mandates and other burdensome policy requirements imposed in previous years. Free of these constraints, Federal programs were able to restore focus on efficiently supporting core program purposes and public goods that serve all Americans, including ensuring that scarce public resources are best used in support of the essential public goods at which they aim.

See,

e.g.,

E.O. 14151, sec. 1.

Among other things, the President's Executive orders announced that the Federal Government would renew its commitment to serving every American with equal dignity and respect;

restore its policy of prohibiting, rather than mandating, illegal discrimination;

and make necessary changes to ensure that the grant review process is no longer used to undermine the interests of American taxpayers.

A subsequent Executive order in August 2025 emphasized that Federal agencies must ensure that all Americans are treated equally and make merit-based decisions related to the ability of an applicant or recipient to produce actual results for the American taxpayer.

On July 29, 2025, the U.S. Department of Justice (DOJ) also issued new government-wide guidance intended to ensure that recipients of Federal funding do not engage in unlawful discrimination.

On December 2, 2025, DOJ's Office of Legal Counsel (OLC) also released an opinion finding that certain race-based grant programs administered by the Department of Education violate the Fifth Amendment's equal-protection component.

That opinion explained that any “allocation of benefits and burdens based on a person's race is anathema to the U.S. Constitution.”

Id.

E.O. 14281, sec. 1.

E.O. 14151.

E.O. 14332; White House Fact Sheet of Aug. 7, 2025.

DOJ Memorandum of July 29, 2025, “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.”

Constitutionality of Race-Based Dep't of Educ. Programs, 2025 WL 4055305 (Dec. 2, 2025).

Slip Op. 2.

This rulemaking proposes to institutionalize needed reforms in the Federal grantmaking process to address the unlawful discrimination and other serious problems that occurred during the previous administration. The basic values embedded in the Federal Government's decision-making processes for grants management must be consistent with law and designed to serve the public good of all Americans. OMB's 2 CFR regulations are a key instrument for improving the standards, processes, and requirements that apply to all Federal grant programs. They are also an important tool for making needed reforms to the organizational culture within Federal grantmaking agencies. These agencies are entrusted to make discretionary decisions regarding the use of many billions of dollars of precious taxpayer resources, and must remain accountable to the American people when doing so.

Consistent with policies in recent executive orders, taxpayer dollars must be used to support essential public purposes authorized by law—not wasted to promote divisive doctrines of the far left.

E.O. 14151, sec. 1; E.O. 14332, sec. 1.

Id.

OMB and Federal agencies now propose to address the problems summarized above as they impact Federal grantmaking. This includes removal of any remaining pieces of the old discriminatory policies that agencies may still apply to decision-making processes in the area of grants management. It also includes ending government sponsorship of gender ideology and other radical doctrines the previous administration sought to impose across the country through Federal funding programs. By renewing the Federal Government's commitment to basic American values, and proposing other needed reforms to responsibly manage and safeguard taxpayer funds used in grantmaking, OMB seeks to prevent the types of unlawful discrimination, wasteful spending, and other significant problems that arose in recent years from recurring in the future. As explained in Executive Order 14332, the Federal Government holds tax revenue in trust for the American people, and Federal agencies should treat it accordingly.

A.2. Improved Transparency

Changes are needed to ensure improved transparency for how Federal funds are used. American taxpayers have a right to know the projects that their tax dollars are supporting and the entities to which those dollars are flowing. They should also feel confident that recipients and subrecipients of Federal awards are engaged in activities consistent with the basic public purposes of support authorized by law, that do not unlawfully discriminate against American citizens, that do not harm the interests or reputation of the

Federal Government, and that do not threaten the national or economic security of the United States. For example, Federal grant funds should not be used to support recipients and subrecipients that work in partnership with our foreign adversaries. Improved transparency will shine a light on the full scope of Federal agency activities and the network of recipients and subrecipients of Federal awards that the American people are trusting to accomplish public purposes of support on their behalf.

A 2023 report from the Government Accountability Office (GAO) also emphasized the benefits of greater transparency in Federal grants management.

The report explained that “greater transparency of how the Federal Government spends its funds offers many potential benefits,” which may include “enabling data-driven decisions about how to use government resources, opportunities for improving the efficiency and effectiveness of Federal spending, and improving government's accountability to the public.” OMB agrees that certain reforms are needed to provide greater transparency and accountability for use of public funds, and greater oversight to ensure that every taxpayer dollar the Federal Government spends improves Americans' lives or advances American interests.

Jeff Arkin, “Grants Management, Observations on Challenges with Access, Use, and Oversight,” United States Government Accountability Office, GAO-23-106797, May 2, 2023.

E.O. 14332, sec. 1.

A.3. Improved Accountability

Proposed revisions related to improved accountability aim to ensure that recipients are held properly accountable for how Federal award funds are used. This includes ensuring that recipients only use Federal award funds for authorized public purposes, and comply with requirements related to reporting, nondiscrimination, and other topics.

A.4. Improved Oversight

The proposed revisions related to improved oversight aim to ensure that every discretionary award program is designed by Federal agencies to effectively achieve its underlying statutory purpose, and to align, where applicable, with administration policies and priorities set by the President.

This includes treating every American with equal dignity and respect, applying the principle of merit-based opportunity throughout the grant lifecycle, and avoiding unlawful discrimination when selecting recipients to receive awards.

Improved oversight refers both to oversight of decision-making processes within Federal agencies and oversight of recipients using Federal award funding.

E.O. 14332, sec. 4(b)(i).

See,

e.g.,

E.O. 14151; E.O. 14173 of January 21, 2025, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity;” and E.O. 14281 of April 23, 2025, “Restoring Equality of Opportunity and Meritocracy.”

A.5. Examples of Proposed Changes Related to First Objective

OMB proposes many changes throughout this document related to improving transparency, accountability, and oversight for Federal grants. For example, OMB proposes updated language related to conflicts of interest (§ 200.112) and mandatory disclosures (§ 200.113). In § 200.202 related to program planning and design, OMB proposes a variety of changes seeking to ensure that programs align with law and Executive Branch policy.

In §§ 200.201 and 200.333, and throughout part 200, OMB proposes to eliminate the use of fixed amount awards and subawards, which can limit transparency and hinder effective oversight. For example, under fixed amount awards there is no expected routine monitoring of actual costs incurred by the recipient or subrecipient, and no financial reporting is required.

This proposed change further ensures that Federal agencies exercise an appropriate level of oversight on how tax dollars are spent under all types of awards. This will help to ensure that Federal dollars are not wasted on activities that may not fully support the achievement of program outcomes. The American people deserve to know where all Federal tax dollars are flowing.

See 2 CFR 200.201(b)(1) (existing version).

In §§ 200.204 through 200.206 related to funding opportunities, selection of recipients, and reviewing risk of applicants, OMB proposes a variety of changes designed to ensure and emphasize the need for merit-based selection of recipients for discretionary awards.

Other proposed changes seek to align the regulatory text with requirements in Executive Order 14332 regarding oversight in grantmaking. In § 200.206, some of the proposed changes seek to ensure that recipients with a history of questionable practices or poor financial management are not rewarded with scarce taxpayer resources.

See,

e.g.,

E.O. 14173 of January 21, 2025, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity;” and E.O. 14281 of April 23, 2025, “Restoring Equality of Opportunity and Meritocracy.”

In § 200.208, OMB proposes to update the standards for including specific conditions in Federal awards. In § 200.211, OMB proposes to clarify information that must be included in Federal awards. In §§ 200.218, 200.219, 200.220, and 200.300, OMB proposes various changes to ensure that award funds are not used for unlawful discrimination or other purposes inconsistent with law and Executive Branch policy.

In § 200.305, proposed changes seek to ensure that both Federal agencies and pass-through entities exercise appropriate due diligence before issuing payments of Federal funds, including requiring a justification for payment requests. Proposed revisions also address use of Treasury's “Do Not Pay” system before issuing payments.

In §§ 200.329 through 200.332, OMB proposes changes related to further ensuring that pass-through entities follow through on their statutorily-required responsibility to report subawards on

SAM.gov

. In addition to ensuring that required reporting occurs, the proposed changes seek to ensure that Federal dollars are tracked as subawards in circumstances in which recipients transfer funds to affiliates, subsidiaries, or other related organizations. Proposed changes also emphasize the need for Federal agencies to ensure that their recipients comply with subrecipient reporting requirements on

SAM.gov

. The 2023 GAO report referenced above also identified “challenges with the completeness and accuracy of subaward data displayed on

USAspending.gov

.” OMB is proposing several revisions in 2 CFR to ensure that pass-through entities meet this reporting obligation and that Federal agencies exercise appropriate monitoring and oversight over the responsibilities of the recipients they decide to partner with under their programs.

In § 200.340, OMB proposes to further clarify the existing regulatory text related to award termination and further ensure that Federal agencies provide clear notice to all recipients of the Federal Government's ability to terminate discretionary awards for discretionary reasons in a manner consistent with law.

This proposed clarification is similar to the existing authority at § 200.340(a)(4) to terminate awards found to be inconsistent with program goals or agency priorities. It would also be similar to the long-standing authority to terminate Federal contracts for convenience at 48 CFR 49.502 and 52.249-2. If finalized, this revision will further ensure that Federal agencies retain ongoing programmatic

discretion after an award is made, consistent with law, to terminate a discretionary award that is not effective at achieving program goals or Federal agency priorities, or that an agency otherwise determines is no longer in the Federal Government's interest. In the same section, OMB also proposes similar changes related to award suspension.

E.O. 14332, sec. 5 and 6.

In addition, OMB proposes additional changes in subpart E (cost principles at §§ 200.400 through 200.476) related to improving transparency, accountability, and oversight. For example, OMB proposes various changes to further distinguish between allowable and unallowable costs.

B. Objective 2: Clarification of Regulatory Structure

OMB's second objective for the current proposed revisions is to clarify the status of OMB's government-wide financial management policies and requirements contained in 2 CFR subtitle A, as an OMB regulation. In support of this objective, OMB and the grantmaking agencies joining this rulemaking collectively propose revisions in 2 CFR to clarify the regulatory status of OMB's government-wide policies and requirements. This change is intended to establish a standardized framework across all Federal grantmaking agencies—now including those that did not join the 2014 Federal Agency Interim Final Rule—and to promote predictability, transparency, and consistency across the Federal Government. This proposal would modernize and streamline Federal grants management consistent with OMB's statutory authority to enhance financial management across the Executive Branch.

The current framework in which each agency issues a brief regulation to adopt OMB's requirements will generally be preserved through this interagency rulemaking, but OMB proposes to make minor adjustments in the regulatory text to clarify that OMB's requirements in subtitle A carry regulatory effect in their own right. Agencies will participate in this one-time joint interagency rulemaking to implement the clarified regulatory structure and amend their adopting regulations accordingly. Thereafter—in rulemakings

following

the current one—when OMB amends the regulatory text of 2 CFR through a government-wide notice-and-comment (N&C) rulemaking, those changes will apply government-wide on the effective date of OMB's final rule. This distinction is less relevant for the present rulemaking because relevant grantmaking agencies are joining OMB in proposing these changes.

In the future, the public will continue to have a full and meaningful opportunity to comment during OMB's N&C rulemakings, and agencies will continue providing input to OMB during interagency review periods and implementing the requirements. As discussed below, this proposal is generally consistent with the way that most agencies have implemented OMB amendments of the 2 CFR regulatory text since 2013.

All, or nearly all, grantmaking agencies in the Executive Branch have joined this proposed rulemaking and plan to actively adopt the specific policy changes in tandem with OMB through the joint interagency final rule. Thus, the proposed clarifications in this document regarding the process that OMB will follow for 2 CFR amendments will primarily affect

future

OMB amendments of the government-wide requirements in which other agencies are not directly participating. Although OMB and agencies are currently undertaking a joint interagency rulemaking process through this document, it would be inefficient to repeat this process of assembling every grantmaking agency in the Federal Government to directly join all future OMB rulemakings. As discussed in this document, OMB is authorized by law to set government-wide policies and requirements for grants management. Moreover, as also discussed in this document, the proposed process for 2 CFR amendments is very similar to how the existing process for such amendments has already worked for the last decade.

This proposal maintains the familiar structure of 2 CFR, but will increase predictability, transparency, and uniformity regarding how OMB amendments are implemented following future N&C rulemakings. Consistent with OMB's government-wide authorities, the proposal will allow for timely amendments of administrative requirements, cost principles, and audit requirements for grants and other Federal awards across the Federal Government.

B.1. Current Regulatory Structure

In 2013, OMB combined previously separate OMB circulars and guidance documents into one centralized guidance document published in 2 CFR subtitle A. 2 CFR part 200 is commonly referred to as OMB's “Uniform Guidance” or “Uniform Grants Guidance.” Following establishment of the guidance by OMB in 2013, most Federal grantmaking agencies initially adopted the guidance in 2014 through implementing regulations in 2 CFR subtitle B.

The guidance currently provides that “[p]ublication of the OMB guidance in the CFR does not change its nature—it is guidance, not regulation.”

78 FR 78590; (Dec. 26, 2013); 79 FR 75871 (Dec. 26, 2014).

2 CFR 1.105.

The existing structure of 2 CFR—including its classification as guidance—has tended to result in questions and uncertainty in the Federal grants community regarding the process for agency implementation of OMB amendments of the government-wide requirements in the regulatory text of subtitle A.

The existing version of 2 CFR 200.110(a) already provides that part 200's requirements become effective for the “administration of Federal awards by Federal agencies”

either

“once implemented by Federal agencies [under the process described at 200.106 (existing version)]

when any future [OMB] amendment to . . . part [200] becomes final.” 2 CFR 200.110(a) (existing version) (emphasis added). As explained below, OMB proposes to retain the quoted regulatory text without change, but further clarify its meaning to address recurring questions regarding the effect of OMB amendments.

See,

e.g.,

OMB Memorandum M-24-11, Section I (“Implementation of Title 2 of the CFR”) (Apr. 4, 2024); and COFFA Memoranda for the Federal Financial Assistance Community dated January 15, 2025 and August 15, 2024.

After the initial agency adoption of part 200 in 2014, secondary or follow-on rulemakings by Federal agencies to implement OMB amendments of part 200 or other parts have generally either not occurred at all

or not been initiated by agencies in a timely manner. The sporadic secondary rulemakings that have occurred following 2014 have generally only been initiated in circumstances in which an agency had something specific to add or modify in its own adopting regulations. In most cases, consistent with 2 CFR 200.110(a) (existing version), agencies have simply implemented OMB amendments of the 2 CFR regulatory text based on the text of their existing adopting regulations, and through the terms and conditions of Federal awards issued following the government-wide effective date of the OMB amendments.

Following initial agency adoption, implementing revisions on the effective date provided in OMB's final rulemaking is consistent with the information provided to the public in 2 CFR 200.110(a) (existing version) regarding the process for implementing future amendments.

See 2 CFR 200.105(b) (existing version).

There are many practical reasons why agencies have not generally completed secondary rulemakings to readopt OMB amendments following 2014. Beginning dozens of secondary agency N&C rulemakings only after OMB has already completed a year-long government-wide N&C rulemaking process—including extensive interagency coordination before the formal rulemaking process even begins—would generally be

redundant, create long administrative delays, constitute a major drain on agency resources, and frustrate the objective of government-wide uniformity for OMB policy changes. For example—as with the Federal Acquisition Regulation (FAR) that applies to Federal procurement contracts—it is sometimes necessary for OMB to amend the regulatory text to align with legislative changes on specific government-wide effective dates. Secondary agency rulemakings could result in staggered and sometimes wildly inconsistent effective dates for OMB's amendments and associated policies across the Federal Government—with agency rules only being proposed and finalized as agency resources allow. This would effectively delay implementation of OMB's government-wide requirements by an extended period of time. Such delays would create confusion for recipients, auditors, and the entire Federal grants community, and be inconsistent with OMB's statutory authority to set government-wide requirements for grants administration that agencies must follow. Moreover, agencies would generally have little of substance to say in response to public comments on government-wide policy requirements already settled by OMB pursuant to its own statutory authorities and firmly established in the regulatory text of subtitle A.

B.2. Proposed Clarification of Regulatory Structure

a. In general.

Through this rulemaking, OMB and Federal grantmaking agencies seek to collectively clarify how government-wide “financial management policies and requirements” codified in OMB's 2 CFR regulatory text in subtitle A will be implemented by Federal agencies in the future.

The current classification of the OMB regulatory text as “guidance, not regulation” is confusing for award recipients, is generally inconsistent with the history of agency implementation of OMB amendments since 2014, and fails to provide adequate predictability and transparency for the Federal grants community regarding how future OMB amendments of the regulatory text of subtitle A will be implemented by agencies. To promote predictability, transparency, uniformity, efficiency, and other objectives described in this document, OMB seeks to provide further clarity regarding the regulatory structure and status of 2 CFR through this rulemaking.

31 U.S.C. 503(a)(2).

b. Similar to existing frameworks.

The proposed clarification in this document is similar to the already

existing

process for agency implementation of OMB amendments of the regulatory text in part 200. Information on the existing process is provided at 2 CFR 200.110(a) and discussed in this document above. Thus, at least for agencies that have already implemented the OMB requirements, OMB's proposed amendments related to this objective are primarily intended to clarify the status of the regulatory text in subtitle A, rather than constituting a fundamentally new approach or change in direction. As discussed above, the approach described in this document is consistent with how most agencies have implemented OMB amendments of the regulatory text of 2 CFR subtitle A since the Uniform Guidance was first adopted by agencies in 2014.

The proposed clarification is also procedurally similar to the long-standing “adoptable guidance” model for the suspension and debarment requirements in 2 CFR part 180.

In the 2005 preamble establishing part 180, OMB observed the need to “[s]treamline the process for updating the government-wide requirements” by centralizing the process for substantive updates to the rule at OMB—with agencies only needing to complete one initial adoption. The “adoptable guidance” approach allowed OMB to “publish proposed changes to the [government-wide requirements] in the

Federal Register

, with an opportunity for the public to comment.” Once agencies had completed the initial step of adopting the part 180 guidance in agency regulations, “the process for future updates [would] be complete [each time that] OMB issues . . . final guidance” amending the regulatory text. In other words, agencies would “not need to amend their regulations adopting the guidance” through dozens of separate agency rulemakings following future OMB amendments. That regulatory structure has remained the status quo for 2 CFR part 180 for the past 20 years.

70 FR 51863, 51864 (Aug. 31, 2005).

Like part 180, OMB also issued part 200 for agency adoption in 2013, which represented a major improvement from the older patchwork of OMB Circulars and agency-specific regulations. However, despite the information provided at 2 CFR 200.110(a), questions regarding the process for agency implementation of OMB amendments of part 200 have lingered, which has impacted the predictability, transparency, and consistency of government-wide implementation of the OMB requirements.

Consistent with the approach described in the preamble for part 180 and the existing regulatory text at § 200.110(a), this document proposes to further clarify how agency adopting regulations in subtitle B apply to future amendments of subtitle A. The proposal will also clarify the status of OMB's regulatory text throughout subtitle A as an OMB regulation. Agencies will remain partners with OMB in the process for future amendments by participating in OMB's development of proposed policy changes and continuing to implement the effective requirements. However, OMB proposes to clarify that the legal mechanism for futures updates will be streamlined to a single

Federal Register

document issued by OMB following public N&C, rather than dozens of rulemakings across the Federal Government with generally identical requirements but inconsistent effective dates. For the reasons discussed above, beginning dozens of agency N&C rulemakings after OMB has completed its own N&C rulemaking process would be impractical, inefficient, and impede OMB's ability to timely exercise its own statutory authorities to set government-wide requirements for grants management.

c. OMB government-wide authorities related to grants administration.

Congress authorized OMB at 31 U.S.C. 503 to set government-wide requirements for grants administration, and agencies must follow the OMB requirements in their award programs. Congress also authorized OMB under the Federal Grant and Cooperative Agreement Act of 1977, codified in relevant part at 31 U.S.C. 6307, to issue interpretative guidelines to Federal agencies to promote consistent and efficient use of Federal financial assistance awards. Congress also authorized OMB at 31 U.S.C. 7505 to provide government-wide requirements for Single Audits of recipients, and agencies must also follow those requirements. Congress also authorized OMB under the Transparency Act (Pub. L. 109-282), as amended, to provide instructions to agencies related to ensuring public transparency of their assistance programs—including with respect to award recipients, award amounts, unique entity identifiers, subawards, and various other information—which agencies are also required to follow. At 31 U.S.C. 6105, Congress also assigned oversight responsibility to OMB for the exercise of all authorities and responsibilities related to Federal program information. At 41 U.S.C. 1125, Congress authorized

OMB to prescribe government-wide requirements that agencies must follow in providing for the procurement of property or services by recipients of Federal grants or other forms of financial assistance. Pursuant to all of these authorities, and others described in this document, the proposed rule clarifies that 2 CFR subtitle A is OMB's issuance of government-wide requirements under Federal law that agencies must carry out.

d. Summary of proposed Uniform Grants Regulation (UGR).

Under the proposed rule, OMB will issue the “Uniform Grants Regulation” as an OMB regulation with one government-wide effective date, pursuant to OMB's statutory authority described above, to provide government-wide grants management requirements. The text of 2 CFR subtitle A will be revised to reflect its status as an OMB regulation, especially in key provisions in parts 1 and 200. OMB proposes to remove the statement in 2 CFR 1.05 that the regulatory text is only guidance and “not regulation.” Otherwise, the structure of title 2 of the CFR will generally remain the same, with OMB requirements in subtitle A and agency “adopting” chapters in subtitle B. Federal agencies join this proposal, and plan to issue the final rule as a joint rulemaking with a common preamble to implement this structure.

The proposed changes will provide regulatory clarity to the entire Federal grants community regarding the effective date and binding effect of OMB's policies and requirements, and their application to agencies and recipients for new awards issued after the effective date of OMB's amendments. The “Uniform Grants Regulation” framework will avoid the need for dozens of secondary agency rulemakings merely to reaffirm identical requirements that apply government-wide—which OMB is authorized by statute to determine. Following 2014, such secondary agency rulemakings have generally not occurred under the existing structure. Advantages of the clarifications provided through the “Uniform Grants Regulation” proposal include: (1) uniform, transparent requirements; (2) reduced redundancy and regulatory volume; and (3) a streamlined approach allowing for efficient updates and responsive government-wide policy changes. The proposed approach will also maintain public participation.

(i) Uniformity, transparency, and regulatory clarity.

The “Uniform Grants Regulation” framework will make it easier for recipients and auditors to find and understand the rules that apply to Federal awards, and the date on which those rules become effective. The modified regulatory text would resolve recurring questions on these topics, and reinforce that OMB's government-wide requirements are legally binding pursuant to OMB's statutory authorities for future updates on the effective date of OMB's amendments of the regulatory text. OMB's authorities contemplate OMB setting binding policy related to financial assistance for all agencies—which is effectively what the Uniform Guidance already does today. This proposal will simply clarify the regulatory status of subtitle A, and ensure that OMB policies apply uniformly across all agencies on the effective date intended by OMB without the need for redundant and open-ended agency rulemaking processes to implement them. From a recipient's perspective, OMB's requirements in 2 CFR will still generally carry the same weight as before, but calling them OMB regulations will further emphasize and clarify their binding effect across the Federal Government.

(ii) Reduced redundancy.

The proposed clarification will promote efficiency and save government resources by preventing the need for dozens of secondary agency rulemakings. Agencies may still undertake such rulemakings as appropriate to make adjustments in their own chapters, but will not be required to in the case of every OMB amendment. Existing provisions in the regulatory text, which OMB proposes to retain, also provide mechanisms for exceptions and otherwise maintaining alignment with agency program statutes in the case of conflict.

See 2 CFR 200.100(a)(1), 200.101(a)(2) and (d), 200.102, 200.105, and 200.106.

Moreover, agencies will not be entirely removed from the process of 2 CFR updates, but will remain involved as partners in OMB's regulatory process, and through participation in interagency workgroups such as the Council on Federal Financial Assistance. Although, in general, agencies will not need to directly join future OMB rulemakings, they will remain engaged in the interagency review processes, ensuring that agency grant experts have appropriate input on legal and practical considerations for their agencies before rules are proposed or finalized by OMB.

See also section IV.C.2.g of this preamble regarding “continued public and agency participation.”

(iii) Efficiency and responsiveness.

The “Uniform Grants Regulation” framework recognizes the practical reality of needing to ensure that OMB is able to efficiently exercise its statutory authority to provide government-wide grants management requirements in a timely and responsive manner. Given that updates to OMB's requirements in subtitle A may already take upwards of a year to complete prior to any secondary agency rulemakings—from initial policy development at OMB to inter-agency coordination, drafting and obtaining clearance for proposed rulemaking documents, completing N&C procedures, responding to comments, drafting and obtaining clearance for final rulemaking documents, additional inter-agency coordination, and typically, but not necessarily, providing some gap between issuance of the final rule and its effective date—the proposal will ensure that OMB can actually establish government-wide requirements within a reasonable timeframe. The proposal will clarify that agencies do not need to initiate another lengthy N&C rulemaking process just to implement OMB amendments for which OMB already followed robust public N&C procedures. The framework will ensure that OMB remains able to efficiently respond to emerging compliance issues or implement new statutory requirements in a timely manner across all agencies.

Both the Federal Government and American public will benefit from such timely adjustments. This may include, for example, faster incorporation of legislative changes from Congress. This is far more workable and efficient than an alternative model in which dozens of agency rulemakings to implement new requirements would only begin after OMB has already completed a year-long process to propose and make amendments. Such an alternative model would effectively prevent timely implementation of needed government-wide policy reforms related to grants management, and frustrate OMB's ability to efficiently perform its own statutory functions.

(iv) Note regarding proposed names for title 2 and part 200.

This document proposes to use “Uniform Grants Regulation” (UGR) as a plain language name or designation for 2 CFR part 200 following issuance of a final rule. See § 1.100 (proposed version). OMB does not propose a change to the existing header for Title 2, which would remain “Federal Financial Assistance.” Thus, the various parts of Title 2 would collectively constitute the Federal Government's “Regulation for Federal Financial Assistance” (RFFA), while part 200 would constitute the UGR. OMB also does not propose a change to the (formal) header for part 200, which

would remain “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (UAR). Thus, the name UGR, as referred to in § 1.100 (proposed version), would be used in a way similar to how “Uniform Guidance” is currently used as a plain language way of referring to part 200—despite its formal header. The acronym UAR would also remain acceptable and accurate, as would simply referring to “part 200.”

The proposed name of UGR for part 200 would not have any impact on the part's broader applicability to cooperative agreements and other forms of financial assistance, which remain subject to part 200 under the proposed regulatory text. See 2 CFR 200.1 and 200.101 (proposed versions). Grants are a common and widely used form of Federal financial assistance. See 2 CFR 200.1. Outside of its technical meaning, the term “grant” is also generally understood and used in ordinary speech by the general public in a way that more technical terms may not be. OMB proposes to refer to part 200 as the UGR to retain a name that will be widely understood, easy to say, and still similar to the existing name for part 200—the “Uniform Guidance”—which is widely known and used throughout the Federal financial assistance community. Under the existing structure, “Uniform Guidance on Grants” and “Uniform Grants Guidance” (UGG) are also frequently used to refer to part 200, which are also similar to the name proposed in this document.

In selecting a proposed plain language name and acronym, OMB also considered “Financial Assistance Regulation,” but determined that the acronym for this name would conflict with the acronym that is already used for, and widely known as applying to, the Federal Acquisition Regulation (FAR). Creating a second FAR that applies to Federal financial assistance instead of Federal procurement contracts would cause confusion and be unworkable. OMB believes that UGR will be a simple and clear way to refer to part 200 following issuance of the final rule and easily distinguishable from the FAR. As is currently the case, the regulatory text of 2 CFR part 200 may also be referred to as the UAR (based on the formal header) or simply as “part 200.”

e. Continued public and agency participation.

Finally, the proposed “Uniform Grants Regulation” framework will also maintain public and agency participation in the development of policies. OMB will continue to follow public N&C rulemaking procedures for substantive updates, and all stakeholders will have the ability to comment on any changes proposed by OMB. Thus, interested parties can focus on a single unified proposal rather than tracking and commenting on dozens of separate agency proposals. Agencies will still be involved during the development stage for OMB policy amendments and various interagency review periods, and still have the ability to raise agency-specific issues with OMB before amendments are proposed or finalized. After OMB's final determination, secondary public N&C periods at each agency would serve little practical purpose, as the key policy decisions would already have been made by OMB with input from both public commenters and Federal agencies.

A Federal agency would still be permitted to engage in such secondary rulemaking procedures if it determines that codified exceptions are needed and consistent with procedures and basic parameters for codified exceptions set forth in the regulatory text of subtitle A. As under the existing regulatory text, an agency could immediately implement any exceptions required by statute in advance of a secondary rulemaking and without the need for additional approval from OMB under 2 CFR. See 200.101(d)(1) and 200.102(b) (proposed version).

B.3. Proposed Changes to Agency Chapters in Subtitle B of 2 CFR

Through this proposed rulemaking, certain Federal grantmaking agencies that currently lack an existing chapter in 2 CFR subtitle B propose to add chapters, which is intended to streamline implementation and reduce variability across the Federal Government. Federal agencies that have existing chapters in 2 CFR subtitle B propose certain targeted and conforming changes to support OMB's broader rulemaking effort. Following this rulemaking, subtitle B will provide a complete list of all grantmaking Federal agencies,

including certain agency-specific policies and procedures. This proposed change will make OMB's policies and requirements in 2 CFR truly “uniform” across the Federal Government for first time since OMB's “Uniform Guidance” was established in 2013.

Limited exceptions are noted at 2 CFR 1.221 (proposed version) for agencies with limited, if any, rulemaking authorities. Like all other agencies, the listed agencies at 2 CFR 1.221 (proposed version) would be required to implement OMB's government-wide requirements in 2 CFR subtitle A, but would not be required to issue regulations due to the limited nature of their authorities.

C. Objective 3: Reducing Recipient Burden

The third and final objective of this rulemaking is to reduce recipient burden. The proposed revisions in support of this objective are aimed at ensuring that the requirements contained in 2 CFR are only those that OMB finds necessary for the efficient implementation and oversight of assistance programs authorized by law.

Some of the changes related to this objective are aimed at ensuring that recipients can focus on timely and efficient delivery of core program purposes. As discussed under the first objective in this document, in previous years Federal agencies often required award recipients to spend great amounts of time, effort, and financial resources to implement unlawful DEI mandates and other unnecessary add-on requirements that increased project costs, complexity, and completion timelines, but did not serve the underlying public purpose of support of the relevant assistance program. By contrast, under the proposed version of the regulation, OMB seeks to ensure that Federal agencies will appropriately reduce the scope of award activities to only what is necessary to achieve the objectives identified in law consistent with Executive Branch policy. If finalized, recipients should be able to restore focus on achieving core public purposes in a cost-efficient and timely manner.

In seeking to reduce recipient burden, OMB also reviewed the guidance to look for other opportunities to further standardize and streamline the grantmaking process where feasible. For example, in § 200.202, the proposed regulation encourages the use of multi-year awards, thereby reducing the frequency of applications and individual awards that are generated each year. In § 200.204, OMB encourages Federal agencies to adopt more efficient Notice of Funding Opportunities and application practices, including the use of statements of interest, which will simplify the process for thousands of prospective applicants. In addition, the proposal would require that all Federal funding opportunities be posted on

Grants.gov

ensuring agencies use a single, consistent platform that reduces duplicative processes and increases transparency for award applicants. Under the proposed regulation, agencies are not prohibited from announcing opportunities on their websites or in other locations in addition to

Grants.gov

. Federal agency heads (or designees) may approve exceptions to this requirement when the agency determines that publicly announcing an opportunity would pose a national security risk or is in the national interest of the United States. The removal of superfluous policy requirements reduces costs and complexity without undermining

accountability for Federal financial assistance awards.

OMB is also committed to continuing to support this objective following the current rulemaking process. For example, efforts to address this objective may also involve longer-term initiatives to: (i) review and streamline existing government-wide forms to ensure that only necessary data is being collected a single time; and (ii) work with Federal grantmaking agencies to eliminate or reduce burdensome program regulations and requirements.

V. Regulatory Impact Analysis

The attached Regulatory Impact Analysis (RIA) evaluates the benefits, costs, and transfers associated with the proposed rule. For example, the RIA evaluates the proposed elimination of fixed amount awards and fixed amount subawards; proposed payment accountability reforms, including requirements for Federal payment requests; proposed reforms related to subrecipient oversight; proposed clarifications of authority for termination and suspension of Federal awards; proposed changes to national policy provisions; and proposed changes related to eligibility restrictions for research and development awards. The draft RIA finds that the proposed rule is expected to generate qualitative benefits, modest administrative costs, and minimal transfer effects. OMB invites comments on the analysis provided in the attached RIA.

VI. Section-By-Section Discussion of the Proposed Revisions to Subtitle A of 2 CFR

OMB invites comments on the proposed revisions throughout subtitle A of 2 CFR.

Part 1—About Title 2 of the Code of Federal Regulations and Subtitle A

OMB proposes to revise various sections of 2 CFR part 1 to replace references to “guidance” with “regulation” to reflect that the OMB policies contained in 2 CFR subtitle A constitute an OMB regulation. Additional analysis related to this change is provided in this document above.

OMB proposes to add a new § 1.221 to explain that certain listed Federal agencies received approval from OMB to implement the OMB regulations in subtitle A as policy applicable to their Federal awards without establishing agency regulations in subtitle B. Approval of this alternative implementation method is generally based on the limited rulemaking authorities of these agencies.

Parts 25, 170, 175, 180, 182, and 183

OMB proposes limited revisions in parts 25, 170, 175, 180, 182, and 183. As throughout the regulatory text, OMB proposes to replace the term “guidance” with “regulation” or “policy,” as appropriate, for the reasons set forth above. In some cases, depending on the context, the use of the word “guidance” is maintained, such as instances in which the term does not refer to the regulatory text of 2 CFR. OMB also proposes various grammatical changes in these parts.

In part 170, OMB proposes certain revisions to reflect that, as of March 8, 2025,

FSRS.gov

was retired, and all subaward reporting data and functionality are now on

SAM.gov

. Thus, certain references to FSRS are replaced with references to

SAM.gov

In part 180, consistent with other changes throughout the regulatory text, OMB proposes to remove the statement in § 180.15 that the policy contained in the regulatory text “is guidance not regulation.” OMB also proposes to revise § 180.25 to clarify that agencies must not deviate from the requirements of this part on matters for which discretion is not provided.

OMB proposes to revise §§ 180.745 and 180.840 to require agencies to provide entities or individuals with a transcribed record of fact-finding proceedings for suspensions and debarments within five business days. Under this proposal, the entity or individual requesting the transcript would remain responsible for purchasing it and paying applicable costs. Although not addressed directly in either the existing or proposed regulatory text, in some cases it is possible that other laws may restrict what information may be provided in this context, such as classified information.

In § 180.915, OMB proposes to update the reference to the Program Fraud Civil Remedies Act (PFCRA) of 1986 to reflect that, on December 23, 2024, Congress amended the PFCRA, including changing its name to the Administrative False Claims Act (AFCA).

Public Law 118-159, sec. 5203(a).

Similarly, in part 182, OMB proposes to remove the statement in § 182.15 that the policy contained in the regulatory text “is guidance not regulation.” In § 182.25, OMB also proposes to clarify that Federal agencies must not deviate from the requirements of this part on matters for which discretion is not provided.

OMB also proposes to revise part 183 to replace the term “guidance” with “regulation.” Finally, OMB proposes to update the definition of “covered combatant command” in § 183.35 to simply reference the definition existing in law.

Part 176—Award Terms for Assistance Agreements That Include Funds Under the American Recovery and Reinvestment Act of 2009

OMB proposes to remove the guidance in part 176 related to the American Recovery and Reinvestment Act of 2009 (ARRA). Part 176 was initially issued to govern the use of funds appropriated under ARRA as part of the Nation's economic recovery efforts following the 2008 financial crisis. The regulations in part 176 are no longer needed because awards are no longer being made under ARRA. The removal of part 176 aligns with OMB's broader objective of streamlining Federal financial assistance regulations by eliminating outdated or unnecessary provisions that no longer serve a practical function.

Part 200—Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

Throughout part 200, consistent with changes discussed above, OMB proposes to replace the term “guidance” with “regulation” when referring to the regulatory text of 2 CFR. In some cases, OMB also proposes to replace the term “guidance” with “policy” or other terms that fit within the context of the regulatory text.

Subpart A—Acronyms and Definitions

Section 200.1—Definitions

OMB proposes to revise § 200.1 to align with the proposed policy changes and to be consistent with Federal law. These changes include revisions to the definitions for “Federal award date,” “improper payment,” “personally identifiable information (PII),” and “unobligated balance.” Other proposed changes include removing definitions for “fixed amount awards” and “protected personally identifiable information (Protected PII).” The existing definition of Protected PII is not necessarily consistent with other OMB guidance, which does not distinguish between PII and Protected PII. Other conforming changes were proposed in other sections of the regulatory text that use the term Protected PII.

OMB also proposes to revise the definition of “compliance supplement” to delete the words “annually updated.” OMB is in the process of reevaluating the appropriate frequency for issuing the compliance supplement. Pursuant to the Financial Management Risk

Reduction Act (Pub. L. 118-207), OMB and the Office of Inspector General for the Department of Health and Human Services (HHS) are currently analyzing the single audit process. OMB plans to engage stakeholders ahead of any substantial changes.

Subpart B—General Provisions

Section 200.101—Applicability

OMB proposes to revise § 200.101(b)(4) to remove references to fixed amount awards. OMB proposes to remove the reference to fixed amount awards for consistency with other changes proposed in this document, which eliminate the use of both fixed amount awards and subawards, which can limit transparency and hinder effective oversight. OMB also proposes to include a reference to the FAR in § 200.101(c)(2).

OMB also proposes to make certain clarifying edits regarding which provisions govern in the case of conflict in paragraph (d) of § 200.101. OMB now proposes to address statutory and regulatory conflicts in separate paragraphs. Paragraph (d)(1) regarding statutory conflicts remains substantially unchanged except for the proposed deletion of the reference to regulations. OMB proposes a new paragraph (d)(2) under § 200.101 addressing non-statutory conflicts with agency regulations. OMB proposes to specify that the following provisions of part 200 will govern in any circumstances where they conflict with a regulatory provision not required by Federal statute: all sections in subpart F and § 200.340 in subpart D. For other non-statutory conflicts with an agency's regulatory provision, the proposed regulatory text would encourage Federal agencies to apply the government-wide policies in part 200 to the greatest extent permitted by law. OMB also proposes to recommend that Federal agencies clarify which provisions govern in funding opportunities and Federal award documents. The proposed text explains that the default presumption would generally be for the Federal agency to apply the government-wide policies in this part if it can do so consistent with law. Finally, the proposed revision recommends that Federal agencies also work to resolve such non-statutory conflicts consistent with their rulemaking authorities; applicable provisions in part 200, such as §§ 200.102, 200.106, and 200.110; or both. For example, this may involve amending an agency regulation outside of 2 CFR to eliminate the conflict or codifying an exception to the government-wide policy in the agency's implementing regulations in subtitle B.

It should be recognized that § 200.101(d)—under both the existing and proposed versions—only applies to Federal programs to which part 200 applies. The proposed policy regarding program applicability in this section remains generally unchanged. The proposed edits regarding regulatory conflicts seek to increase uniformity and transparency regarding management and administration of Federal financial assistance across the Federal Government. Recipients, subrecipients, and auditors should not have to speculate or guess regarding which regulatory provisions govern a Federal program or specific Federal award.

Section 200.102—Exceptions

OMB proposes to revise § 200.102(b) regarding “statutory and regulatory exceptions” to include reference to the proposed change at § 200.101(d)(2) discussed above. OMB also proposes to revise § 200.102(c) regarding “Federal agency exceptions” to remove reference to fixed amount awards for reasons discussed elsewhere in this document. Additionally, OMB proposes to revise the authority for case-by-case exceptions made by a Federal agency to highlight examples of sections in which other approval by OMB is expressly required by this part, such as at § 200.340.

Section 200.106—Agency Implementation and Responsibilities

OMB proposes to revise § 200.106 to add a new paragraph (b) regarding agency responsibilities. The proposed paragraph references the responsibilities of Federal agencies under other parts of OMB's grants administration policies in the regulatory text of 2 CFR. This proposed change will further clarify that Federal agencies are responsible for adhering not only to part 200, but also to the other existing parts contained in subtitle A, including parts 25, 170, 175, 180, 182, 183, and 184.

Section 200.110—Effective Date

OMB proposes to revise § 200.110 to clarify and supplement the existing policy in paragraph (a). The proposed changes to paragraph (a) are discussed in further detail in section IV.C of this preamble regarding the proposed clarification of the regulatory structure of 2 CFR. As discussed above, the proposed changes to paragraph (a) are generally consistent with the existing regulatory text, but provide further clarity and context regarding its meaning.

Section 200.111—English Language

OMB proposes to revise § 200.111 to focus only on the basic requirement that all Federal announcements, applications, and Federal award information must be in the English language and must be in terms of U.S. dollars. This revision is intended to highlight the importance of recipients being able to understand Federal award requirements and program information in English to effectively meet program objectives and communicate with Federal officials about program and Federal financial assistance matters.

Section 200.112—Conflict of Interest

OMB proposes to revise § 200.112 to require, in the interest of transparency, that a recipient or subrecipient must disclose whether any employees who worked on the proposal or will support the resulting Federal award were employed by the awarding Federal agency within the preceding two years prior to application submission. OMB further clarifies that this information is for informational purposes and does not by itself represent a conflict of interest. This revision is intended to enhance transparency and allow Federal agencies to identify potential conflicts of interest arising from recent employment relationships between agency staff and recipient personnel. While the disclosure does not create a prohibition or automatic bar to participation, it provides awarding Federal agencies with visibility into situations where prior employment could give rise to questions about impartiality, preferential treatment, or insider knowledge. This change strengthens integrity standards in the award-making process while limiting burdens by requiring only disclosure, not additional approval or review.

Section 200.113—Mandatory Disclosures

OMB proposes to revise § 200.113 to require an Office of Inspector General to transmit any disclosures it receives under this section to the United States Attorney's Office for the District of Columbia within ten days of receipt. The purpose of this revision is to strengthen enforcement and accountability by ensuring that credible allegations of fraud or misconduct are promptly transmitted to prosecutorial authorities. This 10-day transmission standard would reduce delays and accelerate prosecutorial awareness, thereby reducing the risk that criminal (or civil) misconduct continues without the initiation of appropriate remedies if warranted.

Subpart C—Pre-Federal Award Requirements and Contents of Federal Awards

Section 200.201—Use of Grants, Cooperative Agreements, and Contracts

OMB proposes to revise § 200.201(b) to eliminate the use of fixed amount awards unless otherwise authorized by Federal statute. Fixed amount awards were introduced in 2014 with the initial release of the Uniform Guidance. Extensive standards and guardrails regarding the use of fixed amount awards were never established in the regulatory text of part 200, sometimes resulting in inconsistent use or application of this type of award across Federal agencies. In response to public comments on the 2024 rulemaking, OMB attempted to establish additional standards and provisions related to fixed amount awards in the 2024 revisions. OMB now proposes to change course, and eliminate this type of award from part 200. OMB is concerned that use of this type of award can limit transparency and hinder effective oversight, and believes the limited standards for fixed amount awards in part 200 remain inadequate to address these concerns. The existing regulatory text also remains ambiguous with respect to application of the cost principles and certain other requirements to fixed amount awards, with important context, in some cases, only provided in the 2024 preamble. This proposed change will ensure increased consistency across Federal agencies in the execution and implementation of Federal financial assistance and promote greater transparency and oversight. OMB proposes to relocate the definition of “fixed amount awards” to this section. This proposed change is not intended to impact any existing fixed amount awards or subawards issued prior to the effective date of the proposed rule.

OMB also proposes a minor revision to § 200.201(a) to make Federal agencies the exclusive focus. OMB proposes to add a cross-reference to § 200.331, which more directly addresses how pass-through entities determine the appropriate type of agreement for a subaward or contract.

Section 200.202—Program Planning and Design

OMB proposes to revise § 200.202(a) to further clarify the elements of program design. As “goals and objectives” do not directly “provide” meaningful results, OMB proposes to clarify that the goals and objectives must “aim to achieve meaningful results.” OMB also proposes to clarify that goals and objectives must be consistent with the public purpose of Federal authorizing legislation and aligned with administration policies and priorities.

OMB also proposes to add five new paragraphs. In § 200.202(c), OMB proposes to clarify that Federal agencies must develop Federal programs and implement activities under those programs in a manner that ensures compliance with all applicable restrictions on the use of Federal funds, including ensuring that Federal program funds are only used for public purposes of support authorized by law. This proposed addition reiterates what has long been a foundational principle of Federal financial assistance: funding must only be used to “carry out a public purpose of support or stimulation authorized by law,”

not for other extraneous activities or initiatives of recipient organizations. This proposed revision increases transparency and predictability for applicants and recipients by ensuring that program announcements are aligned with statutory authority from the outset. OMB proposes to include an example related to ensuring that program funds are not used to subsidize political activities or initiatives unrelated to authorized public purposes.

See 31 U.S.C. 6304, 6305, and 6307.

In § 200.202(d), OMB proposes to add a paragraph explaining that Federal agencies may, to the extent permitted by law, restrict eligibility among different types of nonprofit organizations. This proposed revision promotes transparency by ensuring applicants can determine eligibility without guessing or interpreting agency intent. In addition, the proposed revision ensures that such restrictions are not applied in a manner inconsistent with law. As a result, applicants will have greater clarity and confidence about eligibility requirements before spending time and resources on preparing applications.

In § 200.202(e), OMB proposes to add a paragraph to establish a government-wide policy governing eligibility and the use of international elements in Federal research and development awards. Through this proposed change, OMB seeks to strengthen alignment between Federal research and development funding and national priorities, enhance consistency across grant-making agencies, and clarify expectations for applicants, while preserving appropriate flexibility to support international engagement that demonstrably advances the interests of the United States. Consistent with OMB's authorities discussed above, which authorize the establishment of uniform policies governing the management of Federal financial assistance, this proposed change is intended to ensure consistent application of eligibility limitations applicable to research and development awards. OMB and the participating agencies seek to ensure that such awards remain aligned with the national interest of the United States. As with other sections of the regulatory text, the policy must be implemented consistent with relevant appropriations and authorizing statues.

In § 200.202(f), OMB proposes to add a paragraph that encourages agencies to design awards as multi-year award when consistent with program objectives and subject to restrictions in law. Under this approach, awards would use budget periods longer than one year instead of requiring annual re-competition. Such awards must be structured to avoid Antideficiency Act violations. This proposed revision promotes efficiency and reduces unnecessary administrative burden on both agencies and recipients. In addition, the proposed revision provides greater funding stability for recipients, enabling long-term planning and execution of complex projects.

Lastly, in § 200.202(g), OMB proposes to add a paragraph that would require agencies that issue Federal financial assistance for scientific research to categorize those awards as basic research, applied research, and experimental development consistent with the definitions in OMB Circular A-11. This categorization would need to be communicated to the recipient and included in the terms and conditions of the award.

Section 200.204—Notices of Funding Opportunities

OMB proposes to revise in § 200.204 to clarify, supplement, and revise the government-wide policy regarding notices of funding opportunity, commonly referred to as NOFOs. OMB proposes to require that Federal agencies must publicly announce funding opportunities for

all

discretionary awards—not just those that will be openly competed. Consistent with the definition of discretionary award and longstanding practice, OMB also proposes to clarify that, as appropriate and consistent with authorizing law, funding opportunities may allow for open competition, limited competition, or selection on a non-competitive basis. In addition, OMB also proposes to require that applicants apply for awards using

Grants.gov

unless a program specific exception is

expressly authorized by Federal statute or approved by the Federal agency head (or designee). OMB also highlights the importance of drafting NOFOs in plain language so that completing the application generally does not require the applicant to employ technical or legal experts. These proposed revisions streamline and standardize the policies for Federal funding opportunities, while also promoting transparency regarding the use of Federal tax dollars. In addition, the proposed revisions reduce barriers for participation by promoting greater accessibility for eligible applicants.

OMB also proposes to revise this section by adding a new paragraph (c) regarding use of Statements of Interest (SOI). The proposed paragraph encourages agencies to use SOIs as part of their NOFOs when high application volume or lengthy proposals are expected. These revisions are intended to reduce burden on applicants who would otherwise prepare lengthy, resource-intensive proposals with little chance of being selected for funding in some cases. The proposed revision would also improve efficiency by focusing agency review on the most competitive applicants.

OMB also proposes to revise the existing best practice that executive summaries should not exceed 500 words. OMB proposes to make this a requirement, but allow Federal agency heads (or their designee) to authorize exceptions. This proposed revision would more consistently provide applicants with a clear, concise overview of NOFOs while maintaining agency flexibility when needed to communicate complex opportunities. As a result, applicants will more often be able to quickly assess whether a program is relevant before reading the entire funding opportunity.

OMB also proposes to revise the requirement that opportunities be posted for no less than 30 days unless the agency determines that exigent circumstances exist. Under the proposed revision, agencies would be required to include such a determination in the NOFO. This proposed revision is intended to prevent unreasonably short application windows that disadvantage certain applicants. The proposed revision also promotes fairness, accountability by Federal agencies, and adequate preparation time for applicants. As a result, applicants will have a more predictable timeframe to prepare strong applications.

Lastly, OMB proposes several revisions related to the full text of funding opportunities. Specifically, OMB proposes that Federal agencies, when feasible, should strive to ensure that NOFOs are accessible to a broad range of applicants, including those that have not previously received Federal awards. In addition, OMB proposes a new requirement that Federal agencies may be required to submit a report to OMB detailing the specific recipients or types of recipients that received Federal awards from the Federal agency over a specific time period. These proposed revisions strengthen clarity and accessibility obligations for agencies and provide OMB with oversight tools to ensure funding is not inappropriately concentrated among a narrow set of recipients.

Section 200.205—Federal Agency Review of Merit of Proposals

OMB proposes to revise § 200.205 to strengthen requirements for agency merit review and to establish a new pre-issuance review process consistent with Executive Order 14332. Under the proposed requirements for pre-issuance review, as part of the broader merit review process, agencies must ensure that proposals selected for funding are consistent with applicable law, Federal agency priorities, and the national interest. Consistent with the Executive order, senior appointees must conduct these reviews and apply specific principles when evaluating proposals. These principles include ensuring that discretionary awards advance the President's policy priorities, prohibit the use of funds for discriminatory or otherwise impermissible purposes, and emphasize ensuring compliance with applicable law. Additionally, the proposed revisions encourage agencies to broaden the range of recipients, prioritize institutions demonstrating rigorous and reproducible scholarship, incorporate benchmarks for measuring performance of “Gold Standard Science,” and direct agencies to weigh institutional commitment to research integrity when making award decisions. Proposed revisions in this section also clarify that peer review remains advisory and does not replace agency discretion. Finally, the proposed revisions clarify that agencies are not required to issue awards solely as a result of issuing a NOFO. These proposed updates are intended to enhance consistency across agencies, accountability, and alignment of Federal awards with administration priorities, while also reducing the risk of award being made contrary to statutory or policy requirements.

Section 200.206—Federal Agency Review of Risk Posed by Applicants

OMB proposes to revise § 200.206(b)(2) to expand the list of factors that agencies may consider when evaluating applicant risk. The changes clarify that agencies may assess an applicant's financial capacity to manage high-dollar awards, in addition to overall financial stability. The revisions also clarify that prior performance must be evaluated against the goals of the funding opportunity, and that both positive and negative outcomes must be given equal weight. OMB also proposes to add a provision that agencies may consider an applicant's history of questionable practices based on publicly available and verifiable information. In addition, OMB proposes to add a provision that agencies may consider an applicant's compliance with foreign gift and contract disclosure requirements, as applicable. Additionally, OMB proposes a new provision that agencies may consider an applicant's affiliations with organizations engaged in activities that violate Federal law, undermine public safety or national security, or advocate for the overthrow of the United States Government. Lastly, OMB proposes a new provision that agencies should consider, as applicable, an applicant's compliance with foreign gift and contract disclosure requirements under section 117 of the Higher Education Act of 1965 (Pub. L. 89-329, as amended, codified at 20 U.S.C. 1011f). The proposed revisions are intended to provide agencies with clearer authority to evaluate financial and organizational capacity, integrity, and institutional affiliations in order to mitigate risks and protect the integrity of Federal programs.

Section 200.207—Standard Application Requirements

OMB proposes to revise § 200.207 to clarify that Federal agencies must periodically review programmatic and administrative requirements specific to the agency, program, or award(s) to determine whether such requirements are unnecessary and not required by this part. Federal agencies should also update OMB annually on any such requirements that have been removed.

Section 200.208—Specific Conditions

OMB proposes to revise § 200.208 to clarify how agencies may apply, adjust, and remove specific conditions under Federal awards. OMB proposes to authorize agencies, subject to applicable law, to add or remove specific conditions throughout the period of performance based on the risk factors

identified in paragraph (c) or other factors associated with a recipient or program.

A new requirement is proposed to require that any such adjustments based on any of the factors listed in paragraph (c) must occur within 15 calendar days after the agency's determination. The existing regulatory text already preserves the right of agencies to impose specific conditions based on these enumerated factors, which recipients knowingly accept when they agree to receive awards. OMB also proposes to clarify that specific conditions not based on factors in paragraph (c) may be added or removed during the period of performance only with the agreement of the recipient.

In § 200.208(d), OMB also proposes to expand the list of examples of specific conditions to include requiring information on payments to contractors or vendors, or financial integrity-related site visits. These examples are intended to provide agencies with more practical tools to address risk identified during the administration of Federal awards.

At § 200.208(f), OMB also proposes a new paragraph recognizing that agencies may impose program-level specific conditions when elevated programmatic risks are identified across a Federal program. The proposed text explains that agencies may remove such conditions once the underlying risks have been resolved, thereby allowing the use of program-level conditions to remain tied to ongoing risk management rather than continuing indefinitely. Collectively, these proposed changes provide agencies with greater flexibility to manage risk during award administration while establishing safeguards related to transparency and fairness.

Section 200.211—Information Contained in the Federal Award

OMB proposes to revise § 200.211 to clarify that Federal agencies must always include the termination provisions under § 200.340 in each Federal award or expressly incorporate them by reference, and must inform recipients of any additional termination provisions that apply to the award. This revision is intended to ensure recipients are always clearly and unambiguously informed of the potential for termination under § 200.340, including termination based on discretion of the Federal agency. OMB also proposes deleting the reference to providing “a copy of the terms and conditions” to the recipient upon request. This requirement is outdated given the access that applicants and recipients now have to general terms and conditions on the internet. To the extent that applicable general term and conditions are not available on the internet, agencies would be responsible for providing them to the recipient—typically in electronic form—with the Federal award instrument. Federal agencies would still be permitted to mail a hard copy of the terms and conditions to recipients upon request even with removal of this provision, but would not be required to provided that the recipient has electronic access.

Section 200.216—Prohibition of Certain Equipment, Services, and Systems

OMB proposes to revise § 200.216 to incorporate a new legal requirement related to the use of unmanned aircraft systems procured with Federal financial assistance. First, OMB proposes amending the section header to reflect a broader scope that continues to include, but is no longer limited to, telecommunications and video surveillance. A new paragraph (a) is proposed to appropriately frame the existing prohibition on certain telecommunications and video surveillance equipment or services. OMB also proposes removing the existing paragraph (d). Although still technically a legal requirement, considering that the statute has been in effect since 2020 and Federal agencies are unlikely to still be funding a transition to different systems, OMB considers this language to be outdated and no longer necessary for express inclusion in 2 CFR.

OMB proposes to add a new paragraph (b) in § 200.216 under the header: “Prohibition on procurement and operation of prohibited unmanned aircraft systems.” This paragraph will implement the requirements of section 1825 of the American Security Drone Act of 2023 (Pub. L. 118-31). This statute prohibits Federal agencies from issuing Federal financial assistance that results in the procurement of unmanned aircraft systems prohibited by the Federal Acquisition Security Council (FASC), and requires recipients and subrecipients to implement specific safeguards and compliance measures for these systems. The statutory requirements became effective on December 22, 2025. Thus, agencies, recipients, and subrecipients should be aware that the statute already applies even before the proposed revision of this section becomes final. See OMB Memorandum M-26-02 dated November 21, 2025, “Ensuring Government Use of Secure Unmanned Aircraft Systems and Supporting United States Producers.”

Section 200.218—Prohibition of Using Federal Awards To Promote or Support Theories of Disparate-Impact Liability

OMB proposes a new § 200.218 related to Executive Order 14281, “Restoring Equality of Opportunity and Meritocracy.” Consistent with the Executive order, this section proposes to establish a government-wide policy in 2 CFR regarding use of Federal financial assistance to promote or support theories that impose disparate-impact liability based on federally protected characteristics such as race, sex, or age. OMB proposes to direct agencies and pass-through entities, to the maximum extent permitted by law, to ensure that awards are administered in a manner that does not promote or support theories of disparate-impact liability, including by not issuing terms, conditions, or guidance that would advance theories of disparate-impact liability. Recipients and subrecipients are also directed to avoid using Federal award funds for this purpose unless expressly required by law. OMB proposes to recognize an exception related to analysis for internal use if the activities are not funded by the Federal award and not used in connection with activities under the award. OMB proposes a definition of disparate-impact liability to ensure clarity and consistency. The proposed definition is generally consistent with the Executive order. These proposed revisions are intended to align government-wide administration of Federal financial assistance with administration policy and to reinforce the principle that merit-based opportunity—rather than theories of disparate-impact liability or other forms of unlawful discrimination based on race or other protected characteristics—will govern the administration of Federal awards.

The legal authority for this section (hereinafter referred to as the “Disparate-Impact Provision”) is similar to the authority for including the unlawful DEI provision in § 200.300, as both are generally intended to prevent discrimination on the basis of federally protected characteristics. To limit repetition in this preamble, OMB includes further analysis of the Disparate-Impact Provision under § 200.300 in connection with the unlawful DEI provision, including analysis of legal authority and related considerations.

See also 90 FR 57141 (Dec. 10, 2025) (rule amending DOJ's implementing regulations for Title VI of the Civil Rights Act of 1964 to remove disparate-impact provisions); DOJ Press Release of Dec. 9, 2025, “Department of Justice Rule Restores

Equal Protection for All in Civil Rights Enforcement.”

Section 200.219—Prohibition of Discriminatory Event Services

To ensure that Federal funds are not used, directly or indirectly, to subsidize violations of the First Amendment of the U.S. Constitution involving suppression of free speech of disfavored groups, OMB proposes a new § 200.219. The proposed provision would establish in the regulatory text that public entities that are a recipient or subrecipient of Federal financial assistance must not discriminate on the basis of the viewpoint, content, or subject matter of speech—including on the basis of political, ideological, or religious affiliation or perspective—in providing services for events, meetings, or other expressive activities. This requirement would ensure that public entities do not improperly use control over facilities or services to disadvantage or suppress the speech of disfavored groups. The proposed text further provides that it applies regardless of whether an event is directly funded by the Federal award if it occurs on property or facilities under the control of the public entity. As public entities are subject to the First Amendment in their own right, this broad application is constitutionally permissible.

See,

e.g., Christian Legal Soc. Chapter of the Univ. of California, Hastings Coll. of the L.

Martinez,

561 U.S. 661 (2010) (holding that public universities may adopt neutral, generally applicable access rules but cannot invoke their own expressive autonomy to exclude disfavored viewpoints);

Bd. of Regents of Univ. of Wisconsin Sys.

Southworth,

529 U.S. 217 (2000) (holding that viewpoint neutrality is mandatory when distributing student activity funds).

The proposed additions are intended to prevent public entities from using Federal funds—including indirect costs used for buildings and facilities—in a discriminatory manner. This requirement would further ensure that public entities receiving Federal awards do not use their control over facilities or services to disadvantage disfavored groups, such as colleges and universities charging additional fees—sometimes referred to as “heckler's fees”—to provide security for conservative speakers.

Consistent with the First Amendment, the proposed language should not be construed to prohibit public entities from enforcing content- and viewpoint-neutral time, place, and manner restrictions, or from applying reasonable, viewpoint-neutral restrictions in nonpublic forms. If finalized, public entities must not seek to evade these requirements through pretextual or post hoc forum classifications.

See,

e.g.,

Young America's Foundation Press Release, “YAF Wins Landmark Free Speech Lawsuit, UC Berkeley To Pay $70,000 And Rescind Unconstitutional Policies,” Dec. 3, 2018.

The proposed language in § 200.219 is not intended to alter the allowability of costs under subpart E, including costs associated with speakers or events. Rather, it would require that any fees, security costs, or other charges imposed in connection with events be applied in a viewpoint-neutral and consistent manner.

OMB also proposes to clarify application to non-public entities. To ensure that Federal funds are not used in a manner inconsistent with the First Amendment, OMB proposes to apply the requirements of paragraph (a) to non-public entities to the extent that the relevant activities are within the scope of a Federal program under which the non-public entity accepts a Federal award. Applying the prohibition to activities within the scope of a Federal program does not present constitutional concerns under the First Amendment, provided that the Federal agency does not seek to leverage funding to regulate speech outside the contours of the Federal program.

By knowingly accepting such a Federal award, the recipient or subrecipient acknowledges its ability to perform the federally funded activities in a manner consistent with law and its own constitutional rights. For example, if a non-public recipient or subrecipient agrees to accept a Federal award that includes hosting a public forum, it must comply with the terms and conditions of the Federal award in a viewpoint-neutral manner.

See,

e.g., Agency for Int'l Dev.

All. for Open Soc'y Int'l, Inc.,

570 U.S. 205 (2013) (holding that, as a general matter, if a party objects to limits imposed by a grant, its recourse is to decline the funds).

Proposed paragraph (b) must be implemented in full accordance with the U.S. Constitution. Outside of performance of award activities, the proposed revision must not be construed to require a non-public entity to make its property, facilities, or services available for speech, expression, or events in a manner that would either directly violate its First Amendment rights or otherwise require access or association that would constitute compelled speech or association under the U.S. Constitution. Consistent with law, a Federal agency may consider adjusting the terms and conditions of a Federal award to a non-public entity to clarify the application of this provision and to ensure that performance of required award activities can proceed consistent with law.

Section 200.220—Prohibition of Using Federal Funds for Covered Foreign Collaborations

To protect the national security interests of the United States and to ensure consistent implementation of longstanding statutory restrictions, OMB proposes a new § 200.220 to prohibit the obligation or expenditure of Federal funds to support certain foreign collaborations involving covered foreign countries or covered foreign entities.

Some Federal statutes direct Federal agencies to restrict the use of appropriated funds for bilateral or multilateral activities with foreign adversaries and entities affiliated with foreign military or intelligence services. Most notably, section 1340 (a) of the “Department of Defense and Full-Year Continuing Appropriations Act” for fiscal year 2011 (Pub. L. 112-10) (commonly referred to as the “Wolf Amendment”) prohibited the National Aeronautics and Space Administration and the Office of Science and Technology Policy from using appropriated funds to develop, design, plan, promulgate, implement, or execute any bilateral policy, program, order, or contract of any kind to participate, collaborate, or coordinate bilaterally with China or any Chinese-owned company, absent specific statutory authorization. The Wolf Amendment has continued to apply as a rider in subsequent annual appropriations acts.

See,

e.g.,

Public Law 117-103, sec. 526, which applied to the National Aeronautics and Space Administration (NASA), the Office of Science and Technology Policy (OSTP), and the National Space Council (NSC).

Federal financial assistance is frequently awarded through grants, cooperative agreements, and subawards that may support collaborative research, technical assistance, or programmatic activities involving foreign entities. While the Wolf Amendment only applies directly to specific agencies and appropriations, OMB proposes to find that a uniform regulatory standard, providing consistent application of these restrictions across Federal assistance programs, would reduce risk related to national security and program integrity for all agencies and the Federal Government as a whole.

The proposed § 200.220 establishes a government-wide baseline rule prohibiting recipients and subrecipients from using Federal funds to support bilateral or multilateral collaborations, agreements, programs, or activities with covered foreign countries or covered foreign entities, unless expressly authorized by Federal statute or

approved by the Federal agency in accordance with the proposed exception authority and applicable law. This provision is intended to ensure that Federal financial assistance is not used, directly or indirectly, to support activities that may pose a risk to U.S. national security, defense, or intelligence interests. Congress has expressly determined that such a risk exists in the case of some agencies.

The prohibition would apply regardless of whether Federal funds are used for direct programmatic activities, research, technical assistance, travel, or indirect costs allocable to such collaborations. This approach would ensure that restrictions on foreign collaboration—including those expressly required by law—are not circumvented through the structure of funding mechanisms or cost allocation practices.

The proposed rule also provides for limited exceptions where expressly authorized by Federal statute or where the head of the Federal agency (or designee) determines that the activity does not pose a risk to national security and is in the national interest of the United States. These exceptions are intended to preserve necessary agency discretion while ensuring that any departure from the general prohibition is subject to appropriate senior level review and accountability at grantmaking agencies. This provision does not prohibit recipients from engaging in foreign collaborations using non-Federal funds.

Subpart D—Post Federal Award Requirements

Section 200.300—Statutory and National Policy Requirements

OMB proposes to revise § 200.300 to streamline existing references to legal and policy obligations. OMB also proposes to supplement § 200.300 to reflect key administration policies and priorities.

1. Executive orders and Executive Branch guidance.

In January 2025, President Trump issued a series of Executive orders (EOs) establishing a government-wide policies to, consistent with applicable law, end Federal funding for unlawful DEI programs, promotion of “gender ideology,” and the so-called “transition” of a child under 19 years of age from one sex to another. These include Executive Order 14151 of January 20, 2025, “Ending Radical and Wasteful Government DEI Programs and Preferencing” (DEI Executive Order);

Executive Order 14173 of January 21, 2025, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (Ending Discrimination Executive Order);

Executive Order 14168 of January 20, 2025, “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government” (Gender Ideology Executive Order);

and Executive Order 14187 of January 28, 2025, “Protecting Children from Chemical and Surgical Mutilation” (Protecting Children Executive Order). The President later issued Executive Order 14281 of April 23, 2025, “Restoring Equality of Opportunity and Meritocracy” (Restoring Equality Executive Order).

90 FR 8339.

90 FR 8633.

90 FR 8650.

On March 21, 2025, the Department of Justice (DOJ) issued guidance to all Federal agencies regarding implementation of EOs 14151 and 14173 (March 2025 DOJ Guidance).

Subsequently, on July 29, 2025, DOJ issued additional guidance regarding unlawful discrimination (July 2025 DOJ Guidance).

The July 2025 DOJ Guidance was intended to ensure that recipients of Federal funding do not engage in unlawful discrimination.

In particular, it clarified that Federal antidiscrimination laws apply to programs or initiatives that involve discriminatory practices, including those labeled as DEI programs. Entities that receive Federal funds, like all other entities subject to Federal antidiscrimination laws, must ensure that their programs and activities comply with Federal law and do not discriminate on the basis of race, color, national origin, sex, religion, or other protected characteristics—no matter the program's labels, objectives, or intentions. DOJ's guidance emphasized the significant legal risks of initiatives that involve discrimination based on protected characteristics and offered non-binding best practices to help entities that receive Federal funds avoid the risk of violations and the revocation of Federal grant funding.

On September 12, 2025, OMB issued Memorandum M-25-33, which instructed agencies to follow the July 2025 DOJ Guidance when managing Federal programs and overseeing recipients of Federal funding. Most recently, on December 2, 2025, DOJ's OLC released an opinion finding that certain race-based grant programs administered by the Department of Education violate the Fifth Amendment's equal-protection component.

DOJ Memorandum of March 21, 2025, “Implementation of Executive Orders 14151 And 14173: Eliminating Unlawful DEI Programs in Federal Operations.”

DOJ Memorandum of July 29, 2025, “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination” (“July 2025 DOJ Guidance”).

DOJ Press Release of Jul. 30, 2025, “Justice Department Releases Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.”

For additional Executive Branch guidance regarding application of Federal anti-discrimination laws, see also U.S. Equal Employment Opportunity Commission (EEOC) Letter to the Fortune 500 Companies Regarding Title VII Compliance Related to DEI Initiatives, Feb. 26, 2026; and EEOC Questions and Answers about “What You Should Know About DEI-Related Discrimination at Work,”

https://www.eeoc.gov/wysk/what-you-should-know-about-dei-related-discrimination-work

(last visited April 14, 2026).

Constitutionality of Race-Based Dep't of Educ. Programs, 2025 WL 4055305 (Dec. 2, 2025).

2. Proposed revisions.

OMB, in consultation with DOJ and other agencies, proposes to amend paragraph (b) of § 200.300, to provide that, in administering Federal awards, to the maximum extent permitted by law, the Federal agency or pass-through entity must ensure that the Federal award is not used to fund, promote, encourage, subsidize, or facilitate:

• “Diversity, equity, and inclusion” (DEI) or “diversity, equity, inclusion, and accessibility” (DEIA) policies, principles, or practices that violate any applicable Federal anti-discrimination laws. This includes racial preferences or other forms of racial discrimination used by the recipient or subrecipient that violate any applicable Federal anti-discrimination laws, including activities where race or intentional proxies for race will be used as a selection criterion for employment or program participation (the “Unlawful DEI Provision”);

• Gender ideology as defined in Executive Order 14168. Gender ideology includes theories or ideologies that deny the biological reality of sex or the sex binary in humans, or endorse or advocate for the notion that sex is a chosen or mutable characteristic (the “Gender Ideology Provision”); or

• The so-called “transition” of a child under 19 years of age from one sex to another, including the chemical and surgical mutilation of children. The term “chemical and surgical mutilation” has the meaning provided in Executive Order 14187 (the “Protecting Children Provision”).

The qualifier “to the maximum extent permitted by law” is intended to ensure that Federal agencies give due consideration to applicable authorizing legislation for their programs when applying this provision. As discussed above, OMB also proposes a related

provision at § 200.218 (the “Disparate-Impact Provision”).

The existing language in paragraph (a) of § 200.300 already provides that the Federal agency or pass-through entity “must manage and administer the Federal award in a manner so as to ensure that Federal funding is expended and associated programs are implemented in full accordance with the U.S. Constitution” and “applicable Federal statutes and regulations,” including “those prohibiting discrimination.” The proposed amendments would clarify and emphasize specific applications of that principle consistent with direction in the President's EOs and recent DOJ guidance. In addition, the proposed revisions would also reinforce that use of Federal funds must remain properly aligned with core public purposes authorized by law, not diverted to subsidizing radical political ideologies, harmful experimentation on American children,

or unlawful discrimination.

White House Fact Sheet of Apr. 28, 2025, “Report to the President on Protecting Children from Surgical and Chemical Mutilation Executive Summary.”

OMB also proposes to add revised language in § 200.300(a) clarifying that, in managing and administering Federal awards, no person otherwise eligible will be excluded from participation in, unlawfully denied the benefits of, or otherwise subjection to unlawful discrimination in the administration of Federal programs, activities, projects, assistance, and services. Such non-discrimination language would encompass requirements, as applicable, not to discriminate on various bases, including race, color, national origin, disability, sex, religion, or conscience.

OMB also proposes to amend paragraphs (b) and (c) of the 2024 version of § 200.300 to remove commentary on the Supreme Court's decision in

Bostock

Clayton County,

140 S. Ct. 1731 (2020). OMB proposes to find that this commentary is unnecessary within the government-wide regulatory text, and no longer consistent with Administration policy. The Gender Ideology Executive Order explained at section (3)(f) that the prior Administration's position regarding

Bostock

Clayton County

is legally untenable and has harmed women. The order also directed the Attorney General to issue guidance to agencies to correct the misapplication of the Supreme Court's decision, and to assist agencies in protecting sex-based distinctions. The Acting Associate Attorney General issued guidance to the DOJ Civil Rights Division on February 12, 2025 clarifying DOJ's position regarding

Bostock

Clayton County

(“February 2025 Bostock Memo”). Consistent with the February 2025 Bostock Memo and the July 2025 DOJ Guidance, Federal agencies may decide what additional guidance, if any, to provide recipients of Federal financial assistance regarding the Supreme Court's decision in

Bostock

Clayton County.

To the extent additional government-wide guidance regarding the decision is provided in the future, it would most likely come from the Attorney General or the Civil Rights Division at DOJ.

Finally, OMB proposes to add a new paragraph (c) regarding non-discrimination against faith-based organizations. The proposed paragraph (c) provides that Federal agencies and pass-through entities may not discriminate against or in favor of an applicant on the basis of the organization's religious character, affiliation, exercise, or lack thereof, nor on the basis of conduct that would not be considered ground to favor or disfavor a similarly situated secular organization. It also provides that faith-based organizations are eligible to apply for Federal financial assistance on the same basis as any other organization. It also explains that applicants that meet all eligibility requirements may be considered for a Federal award under a notice of funding opportunity.

In both the existing and proposed versions of § 200.300(a), the examples of laws applicable to Federal awards include “religious liberty [laws] . . . and those [laws] prohibiting discrimination.” All Federal agencies must comply with the Religious Freedom Restoration Act (RFRA) (42 U.S.C. 2000bb,

et seq.

) and any applicable statutes prohibiting discrimination on the basis of religion or protecting the exercise of conscience. The First Amendment, RFRA, and applicable statutes prohibiting discrimination based on religion or protecting the exercise of conscience require Federal agencies, pass-through entities, recipients, and subrecipients to respect the exercise of religion. This includes considering and providing reasonable accommodations or exemptions for religious or conscience-based objections as required by law.

Where such legal protections apply, Federal agencies, pass-through entities, recipients, and subrecipients should not structure internal procedures in a way that would require discretionary case-by-case approval of requests for an accommodation or exemption.

Federal agencies, pass-through entities, recipients, and subrecipients should be aware of their ongoing statutory obligations regarding religious liberty and conscience. The proposed revision of § 200.300 is intended to clarify that conscience and religious liberty are protected under multiple statutes and the Federal Government will enforce such statutes as applicable.

See,

e.g., Burwell

Hobby Lobby Stores, Inc.,

573 U.S. 682 (2014) (holding that RFRA requires the government to use the least restrictive means when substantially burdening religious exercise).

A “case-by-case exemption procedure leaves religious organizations unable to predict their legal exposure” and does not “further[ ] any compelling antidiscrimination interests.”

Catholic Benefits Ass'n

Kennedy,

No. 3:23-cv-00203-PDW-ARS (D.N.D. June 5, 2025), Dkt. 78 at 14. See also Catholic Benefits Association, “CBA Permanently Protected from Federal Gender Transition Mandates,” Jun. 9, 2025.

Recent and ongoing litigation regarding some of the topics addressed in § 200.300 indicates the need for a clear regulatory framework reflecting administration policy that can be uniformly applied by Federal agencies to recipients of Federal financial assistance. By engaging in N&C rulemaking, OMB seeks to provide clarity regarding government-wide policies, consider public input, and arrive at a final policy that is consistent with law, including longstanding legal principles applicable to Federal financial assistance.

3. Authorities of OMB and agencies.

OMB's legal authorities for this rulemaking are discussed in various sections of this preamble, and need not be repeated here at length. Generally, OMB relies on authorities including 31 U.S.C. 503 and 31 U.S.C. 6307 to establish government-wide policies and requirements related to the management of Federal financial assistance across all Federal agencies. These provisions authorize OMB to set uniform conditions on Federal awards to ensure that Federal funds are expended in accordance with U.S. law and policy.

In addition, Congress has broadly authorized Federal agencies—including those participating in this rulemaking—to enforce Federal nondiscrimination laws in their assistance programs. Recipient of Federal financial assistance must comply with applicable civil rights laws, including Title VI of the Civil Rights Act of 1964, Title VII of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, and the Equal Protection Clause of the Fourteenth Amendment.

OMB's statutory authority includes coordinating such cross-cutting requirements as applied to

administration of Federal financial assistance.

See July 2025 DOJ Guidance.

In designing assistance programs and making new Federal awards, it is both permissible and required for Federal agencies to review proposed uses of funds to ensure they remain aligned with Congressional intent, and are not improperly diverted to subsidizing activities that fall outside of public purposes authorized by law—especially if those activities conflict with key administration policies expressed in EOs. The use of Federal funds must always remain consistent with the purpose of appropriations and the authorizing program statutes of the Federal agency. See, for example, 31 U.S.C. 1301(a) (commonly referred to as the “Purpose Statute”). The Federal Grants and Cooperative Agreements Act of 1977—which authorizes OMB to provide government-wide guidelines “to promote consistent and efficient use” of grants and cooperative agreements—also recognizes that Federal awards must be used to “carry out a public purpose of support or stimulation authorized by law.” 31 U.S.C. 6304, 6305, and 6307. Federal agencies are not required to subsidize activities that fall outside of the core public purposes of the programs they administer. OMB is not aware of Federal laws that expressly require funding the relevant activities referenced in the proposed regulatory text of § 200.300. Multiple Federal statutes, however, support not funding them, including Federal nondiscrimination laws and other laws referenced in relevant EOs and the July 2025 DOJ Guidance.

The EOs discussed above also provide further indication of Executive Branch policy relevant to these proposals to be implemented consistent with law. While EOs themselves do not supersede statutes, they guide Executive Branch polices and actions where discretion exists under statute. Here, OMB and the participating agencies are using their discretion to shape financial assistance policy consistent with applicable law and the clear direction from the President provided in the recent EOs. Similar to the EOs, the proposed rule expressly includes the qualifier “to the maximum extent permitted by law” to recognize that particular assistance programs could have purposes, requirements, or limitations affecting application of this provision—although, as discussed below, that generally should not occur based on the way OMB has designed the proposed regulatory text.

The proposed revisions in § 200.300 are consistent with relevant authorizing laws. By defining public purposes for particular assistance programs, Congress certainly afforded executive agencies with authority to condition Federal awards to only be used for those congressionally-sanctioned purposes, and not for extraneous ideological activities inconsistent with anti-discrimination laws or Executive Branch policy. Discretion to attach award conditions can be analyzed by reference to both authorizing legislation for particular assistance programs and other government-wide legislation that applies to all assistance programs, such as Federal anti-discrimination laws and OMB's authorities related to providing coordinated requirements for the management and administration of Federal financial assistance across the Federal Government.

Based on the authorities of OMB and agencies summarized above, Congress has afforded the Executive Branch discretion to establish the proposed provisions, which ensure that award funds are used solely for authorized public purposes and not for other extraneous activities that conflict with anti-discrimination laws or Executive Branch policy. Unlike a hypothetical award condition designed to induce recipients to undertake activities unrelated to the underlying purposes of a particular Federal award program, these provisions are designed to ensure that Federal funds are

only

used for authorized public purposes—not ideological side missions that are misaligned with Federal law and policy, including program goals and objectives as designed by Federal agencies in accordance with law. Activities performed under Federal awards must be aligned with both relevant legislation for assistance programs and the discretionary design of those programs by Federal agencies within legislative bounds. Under the proposed text, OMB will clarify that award funds must not be used in support of activities that violate Federal anti-discrimination laws, promote divisive ideologies unrelated to program goals and objectives, or are otherwise unrelated to Federal agency's discretionary design of programs to satisfy core public purposes authorized by law.

4. Clear and unambiguous incorporation in award agreements.

By codifying the provisions in 2 CFR, and incorporating them in new award agreements, applicants and recipients will be provided with clear and unambiguous notice of their applicability. The Supreme Court has explained that if “Congress intends to impose a condition on the grant of federal [funds], it must do so unambiguously.”

Pennhurst State Sch. & Hosp.

Halderman,

451 U.S. 1, 17 (1981). The Court has further explained that “Congress must express clearly its intent to impose conditions on the grant of federal funds so that the States can knowingly decide whether or not to accept those funds.”

Id.

at 24. The

Pennhurst

notice principle also generally applies to an executive agency's discretionary decision to impose conditions on awards based on its discretion available under law. By defining these parameters in the regulatory text of 2 CFR based on the statutory authorities outlined above, OMB and the participating agencies will further ensure that such conditions are unambiguously incorporated by the Federal agencies in award agreements.

The formal codification of the principles in regulation will eliminate any ambiguity for the Federal grants community regarding what conditions apply to Federal awards on these topics. Following issuance of a final rule, a recipient will have no basis to claim that it was unaware that, for example, DEI practices that violate Federal anti-discrimination laws, such as disparate treatment on the basis of race or sex, would jeopardize its Federal funding. Even under the existing version of OMB's guidance, there is already little or no basis for such claims considering that the relevant principles arise under long-standing anti-discrimination statues already referenced in the regulatory text, governing constitutional principles, and binding Supreme Court precedent. See, for example,

Students for Fair Admissions, Inc.

President & Fellows of Harvard Coll.,

600 U.S. 181 (2023) (“

Students for Fair Admissions”

). The principles were also recently highlighted and reinforced by a series of high-profile Presidential EOs and guidance documents from DOJ. Following formal codification of these principles in 2 CFR through issuance of a final rule, OMB will make these conditions even more clear and unambiguous to all applicants for and recipients of financial assistance. This promotes fairness, as all applicants will know the rules upfront when applying for and accepting new awards. It will also avoid the “unfair surprise” concerns discussed in

Pennhurst

and similar cases.

5. Spending Clause framework.

The proposed revisions are also consistent with established jurisprudence related to the Spending Clause. In

South Dakota

Dole,

the Supreme Court outlined the framework governing the authority of Congress under the Spending Clause to attach funding conditions to Federal award programs. 483 U.S. 203 (1987). Under this framework, a funding

condition must: (1) promote “the general welfare;” (2) be clear and unambiguous so that recipients can “knowingly” accept the term; (3) be reasonably related “to the federal interest in particular national projects or programs” at issue (or “reasonably calculated” to support “a purpose for which the funds are expended”); (4) not induce recipients to engage in activities “that would themselves be unconstitutional;” and (5) not be unduly coercive such that “pressure turns into compulsion.”

Id.,

at 207-11 (quotations omitted). Because executive authority to attach funding conditions to assistance awards is derived from the enactment of legislation by Congress, evaluating executive authority to attach such conditions also generally involves consideration of this framework. The proposed amendment of § 200.300 is well within the bounds of the framework provided in

Dole.

First, the proposed revision promotes the general welfare by ensuring that Federal funds are not used to undermine the U.S. Constitution or Federal anti-discrimination laws, to support divisive ideologies misaligned with core purposes of discretionary assistance programs and Executive Branch policy, or to harm minors. Ensuring that Federal tax dollars are only used for purposes authorized by the Federal Government—and not for extraneous ideological missions unrelated to Federal awards—certainly promotes the general welfare.

Second, the proposed rule is designed to clearly define the prohibited activities in the regulatory text of 2 CFR and Federal awards made after its effective date. This satisfies the requirement to allow recipients to “knowingly” accept the provisions. See also

Pennhurst,

451 U.S., at 17. Further discussion of the

Pennhurst

notice principle as applied to § 200.300 is provided in the immediately preceding section of this analysis.

Third, the amended provision is designed to ensure that activities preformed under a Federal award remain aligned with the “federal interest” in particular appropriations and program statutes. See also

New York

United States,

505 U.S. 144, 167 (1992) (grant “conditions must (among other requirements) bear some relationship to the purpose of the federal spending”). In other words, the provision seeks to ensure that Federal funds are only used for the core public purposes for which the funds are expended, and not for illegal discrimination or promoting divisive ideologies or harmful practices. The provision would further ensure that activities carried out under Federal awards are reasonably related to the Federal interest in the project or program at issue, and not improperly diverted to other activities or ideological initiatives unrelated to the purposes authorized by Congress and implemented by discretion of the Executive Branch. There is a strong Federal interest in ensuring that award activities do not drift away from authorized public purposes into activities that conflict with key Executive Branch policies expressed in Presidential Executive orders and reflected in program design by agencies. Thus, preventing violations of nondiscrimination laws, avoiding circumstances in which Federal award funds are improperly used to support divisive ideologies misaligned with core public purposes authorized by law, and protecting the health and safety of children are all Federal interests applicable to all discretionary assistance programs.

To the extent that some as-yet unidentified assistance program expressly required performance of such activities without violating the U.S. Constitution, the proposed qualifier “to the maximum extent permitted by law” could apply in those circumstances. The government-wide presumption, however, would be that Federal financial assistance programs will not be designed or administered by Federal agencies to support such activities, which are not expressly authorized by Congress and conflict with Executive Branch policy. All statutes must be administered in accordance with the U.S. Constitution and Federal anti-discrimination laws, and OMB is not aware of legislation establishing an entitlement to funds for the purposes of unlawful discrimination, promoting “gender ideology” as defined by Executive Order 14168, or assisting in the so-called “transition” of a child from one sex to another as discussed in Executive Order 14187.

Fourth, the proposed revisions do not induce unconstitutional conduct. On the contrary, the Unlawful DEI Provision and related Disparate-Impact Provision at § 200.218 align with the Constitution's equal protection principles by clarifying that Federal awards may not be used to support activities involving unlawful discrimination based on protected characteristics—as discussed in more detail in section 8.a below. Regarding the Protecting Children Provision, no court has recognized a constitutional entitlement to such procedures, and certainly not at the public expense. Moreover, with regard to all provisions, the proposed regulatory text for this rulemaking merely says that Federal award funds may not be used for certain defined activities—which will generally fall outside of the authorized public purposes a particular award program is intended to support—without attempting to more broadly regulate other activities beyond the scope of the Federal award.

Fifth and finally, the proposed revision is not unduly coercive. An applicant or prospective recipient may simply opt out of particular Federal award or program if it cannot manage to design its project or program in a way that does not violate Federal anti-discrimination laws or use Federal funds to promote gender ideology or assist in sex-transition procedures for minors.

6. Permissibility under the First Amendment.

The proposed revisions also do not implicate free speech concerns under the First Amendment. All of OMB's proposed revisions related to national policy are merely providing clear notice to applicants for, and recipients of, Federal awards that, unless expressly required by law, executive agencies do not intend to use their discretionary authority to fund these categories of activities. As such, the proposed provisions do not infringe on protected speech—they merely set parameters for Federal

funding

subsidization

of speech, clarifying that the Federal Government will not subsidize certain categories of ideological activities. All executive agencies have received clear policy direction through the President's Executive orders and other executive actions, which they will follow in their administration of discretionary award programs. The proposed provisions only apply to activities performed under the federally funded award programs, and do not penalize or scrutinize recipients' speech outside of the Federal award.

The Supreme Court has long been clear that the First Amendment provides the government significant flexibility when it acts as patron to

subsidize

speech under Federal spending programs, as opposed to when it acts as sovereign to regulate speech beyond the scope of such programs. The distinction that has emerged from the Supreme Court regarding whether a funding condition may result in an unconstitutional burden on First Amendment rights is between: (i) conditions that define the limits of the government spending program by specifying the activities the Federal Government wants to subsidize; and (ii) conditions that seek to leverage funding to regulate speech outside the contours

of the Federal program itself.

Agency for Int'l Dev.

All. for Open Soc'y Int'l, Inc.,

570 U.S. 205, 206, 215-15 (2013). The “decision not to subsidize the exercise of a fundamental right does not infringe the right.”

Regan

Taxation with Representation of Washington,

461 U.S. 540, 549 (1983). The government is permitted to make a value judgment regarding the public interest and “implement that [value] judgment by the allocation of public funds.'”

Rust

Sullivan,

500 U.S. 173, 192-93 (1991) (quoting

Maher

Roe

, 432 U.S. 464, 474 (1977)). Thus, when acting as a patron to subsidize speech—using discretion to fund certain activities under a Federal program and not others—the government can choose which activities to fund without implicating concerns under the First Amendment. “[C]ho[osing] to fund one activity to the exclusion of the other” is permissible.

National Endowment for the Arts

Finley

, 524 U.S. 569, 588 (1988) (citation omitted). The “Government can, without violating the Constitution, selectively fund a program to encourage certain activities it believes to be in the public interest.”

Rust

at 193. Conversely, the government is not required to subsidize activities that it does not wish to promote.

Id.

Constitutional concerns arise only when the Federal Government is using the funding to affect speech beyond the scope of the federally-funded spending program. See also

California ex rel. Becerra

Azar,

950 F.3d 1067, 1093 n.24 (9th Cir. 2020) (“The Supreme Court has repeatedly reaffirmed . . . that the government may constitutionally preclude recipients of federal funds from addressing specified subjects so long as the limitation does not interfere with a recipient's conduct outside the scope of the federally funded program.”).

The proposed revisions to § 200.300 are focused on activities within the scope of federally-funded programs. In the previous administration, executive agencies frequently chose to subsidize and expressly prioritize projects based on their ideological alignment with the categories of activities discussed in the proposed version of § 200.300. See, for example, E.O. 13985, sec. 1, 86 FR 7009, 7009 (Jan. 25, 2021) (“It is therefore the policy of [the Biden] Administration that the Federal Government should pursue a comprehensive approach to advancing equity . . . .”). In this administration, executive agencies will continue to use their discretionary authorities in a manner consistent with current Executive Branch policy. If executive agencies were entitled to subsidize those types of activities during the previous administration, there is no constitutional basis to prevent the government from reaching a different policy determination regarding which activities to fund during this administration. For the purposes of the proposed regulatory text for this rulemaking—which is all that is relevant to this analysis—the government does not propose to deny recipients the right to pursue such activities outside of activities performed under their Federal awards. In the context of Federal grants administration, OMB and Federal agencies propose to make a constitutionally permissible decision not to subsidize those activities with Federal funds unless expressly required by law. The First Amendment does not require providing taxpayer resources to support, promote, or advocate for policies that the government finds are not in the public interest. Selective government funding that leaves private entities free to express themselves as they wish outside of Federal award activities, and using their own resources, does not implicate concerns under the First Amendment.

7. Permissibility under equal protection principles.

The proposed revisions are permissible under the equal protection component of Fifth Amendment's Due Process Clause. The revisions provide clear notice that the government will not fund these categories of activities, but do not direct agencies to take actions that discriminate on the basis of protected characteristics such as race or sex.

First, the Unlawful DEI and Disparate-Impact Provisions seek to ensure that unlawful discrimination is not permitted to c

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