OMB Proposed Overhaul of Federal Grant Regulations

Overview

On May 29, 2026, the Office of Management and Budget (OMB) published a proposed rule that would represent the largest overhaul of federal grant regulations since the Uniform Guidance was established in 2013. Developed pursuant to a series of executive orders, most notably Executive Order 14332, "Improving Oversight of Federal Grantmaking" (August 7, 2025), and supported by earlier orders addressing DEI programs (EO 14173), gender ideology (EO 14168), and "Gold Standard Science" (May 2025), the proposal would restructure the entire lifecycle of federal grant awards across all agencies, including USDA and NSF. If finalized the rule poses significant risks to multi-year research projects, peer-reviewed funding mechanisms, and the stable federal investment that underpins the work of PAA members.

Nearly 500,000 public comments were submitted by the July 13, 2026, deadline. PAA submitted comments in partnership with professional associations holding similar concerns.

What the Proposed Rule Intends to Do

• Alignment with Presidential Policy Priorities as Award Criterion: Programs must be designed, and awards selected, to "demonstrably advance the President's policy priorities." Funding opportunities must include a determination of alignment with these priorities before publication, which could drastically change from administration to administration.

• Cross-Cutting Prohibitions Embedded in All Awards: All federal awards would be required to include prohibitions on DEI-related activities, "gender ideology," disparate-impact liability theories, and collaboration with designated foreign entities, regardless of the scientific nature of the project.
• Expanded Grant Termination Authority: Agencies would gain authority to terminate or suspend active discretionary awards at any time if a grant no longer aligns with agency "interest," program goals, or the national interest. This mirrors federal contracting "termination for convenience" provisions; however, it is normally done through each department—not OMB. No finding of misconduct would be required to cancel a multi-year award in the middle of a project.
• Peer Review Reduced to Advisory Status: The rule explicitly states that peer review recommendations "remain advisory and are not ministerially ratified, routinely deferred to, or otherwise treated as de facto binding by senior appointees." This is a structural departure from the current scientific funding model in which merit-based expert review determines award outcomes.
• Political Pre-Issuance Review of All Discretionary Awards: Under proposed §200.205(b), agency heads must designate one or more senior political appointees to review and approve every discretionary grant before it is awarded. Appointees are expressly instructed to use independent judgment and are forbidden from routinely deferring to scientific peer reviewers.
• Conversion from Guidance to Binding Regulation: OMB proposes to reclassify 2 CFR Part 200 from agency guidance into binding OMB regulation, applying it uniformly across all federal agencies and eliminating agency discretion to implement their own supplementary requirements.
• "Gold Standard Science" Compliance Condition: Awards may be conditioned on adherence to a "Gold Standard Science" standard, as referenced in a May 2025 executive order, which could introduce political criteria into scientific methodology assessments.
• Preference for Institutions with Lower Indirect Cost Rates: Agencies would be directed to favor applicants with lower indirect cost (IDC) rates in award selection, potentially disadvantaging research universities that host significant science programs.
• Prohibition on Federally Funded Foreign Collaborations: Proposed §200.220 would bar recipients and subrecipients from using any federal funds, including indirect costs, to support bilateral or multilateral collaborations with "covered foreign countries" or "covered foreign entities" (defined to include foreign adversaries, countries of particular concern, and sanctioned nations). The prohibition extends to direct research activity, technical assistance, travel, and indirect costs allocable to the collaboration. Exceptions require agency-head approval.
• Restrictions on Allowable Costs: The rule would significantly narrow allowable costs for publication fees, conference attendance, memberships in professional organizations, and public communications.

You Can Take Action in the Following Ways

Before engaging, always ensure that you are familiar with and adhere to your university’s, agency’s, or organization’s policies; and do not speak on behalf of the Potato Association of America

• Engage your Congressional leader
  Share how federally funded agricultural research supports your state and the risks posed by the proposed changes.
• Spread the word to your network
  Share this news with those outside of the member community who may be impacted by the proposed ruling.