On May 29, the Office of Management and Budget (OMB) published a proposed rule to modify OMB’s Guidance for Federal Financial Assistance, which is in title 2 of the Code of Federal Regulations (2 CFR), subtitle A. The proposal runs more than 400 pages and is organized around three objectives: 1) improving transparency, accountability, and oversight of federal funds; 2) clarifying that 2 CFR is a regulation rather than guidance; and 3) reducing recipient burden.
Many of the proposed changes are technical, but several would affect state and local governments, including:
- Establishing 2 CFR as a regulation rather than guidance and renaming Part 200 as the “Uniform Grants Regulation” (Parts 1 and 200)
- Expanding the authority to terminate discretionary grant awards, with exceptions for block, formula, and disaster relief grants (§ 200.340)
- Providing new authority to issue written stop-work orders that temporarily suspend awards (§ 200.340(e))
- Eliminating fixed amount awards and subawards except where federal statute authorizes them (§§ 200.201, 200.333)
- Implementing several executive orders relating to Diversity, Equity, and Inclusion (DEI); “gender ideology;” disparate-impact liability; and other matters (§§ 200.218, 200.300)
- Imposing “viewpoint-neutrality” for events held on property under a public entity’s control (§ 200.219)
- Imposing new payment and pre-payment verification requirements, including “Do Not Pay” checks and E-Verify enrollment (§§ 200.303, 200.305)
- Strengthening subaward reporting to SAM.gov (§§ 200.329, 200.331, 200.332)
- Permitting federal agencies to cooperate with individuals or organizations in pursuing private causes of action or remedies against recipients or subrecipients (§ 200.339)
Notably, the proposal states that it is “not proposing updates to the indirect cost rate negotiation system in this rulemaking and asks that commenters not submit comments on that topic because no significant changes are being proposed.”
This Issue Brief highlights these proposals and identifies additional relevant but less-controversial components of the proposed rule.