Comment on rule overhauling federal grantmaking process (Office of Management and Budget)

The Trump Administration is proposing to drastically and unlawfully overhaul how federal grants are awarded, terminated, and managed. Public Rights Project and the U.S. Conference of Mayors, alongside 58 local governments and leaders, filed a comment in opposition to the proposed rule. We argue that it violates the Constitution, attempts to bypass Congress, and ignores rulemaking requirements under the Administrative Procedure Act, among other laws.

The proposed rule would prohibit local governments from using federal funds to:

• Support diversity, equity, and inclusion efforts
• Collect data to ensure public services reach everyone in their community
• Participate in activities that the administration deems to promote “anti-American values” and “gender ideology.” 

Our comment highlights how these requirements are so vague that it will be nearly impossible for local officials to know what activities are prohibited. 

The rule threatens both community needs and congressional authority. Local governments rely on billions of dollars in federal grants allocated by Congress to support disaster relief, health care, transportation, infrastructure, housing, development, education, and social services. Our comment lays out the immense harm the rule would cause to communities:

• Funding disruption and uncertainty: The rule will open the door for funding denials, suspensions, and terminations for almost any reason, including solely for political reasons. These erratic actions would threaten critical infrastructure projects, which require multi-year planning and execution. For some local agencies, federal money makes up as much as 60% of their annual budget. Under this rule, budgets created through a democratic process could be thrown permanently into turmoil.
• Increased public health risk: Local governments use this funding to protect public health, build critical infrastructure, and keep food safe. In Harris County, Texas, for example, losing public health funding would damage its ability to prevent, detect, and respond to disease outbreaks.
• Unnecessary administrative burdens: The rule would eliminate fixed-amount grant awards and require written justification for every payment request. It would also force smaller organizations and businesses that receive funding or do this work — not just the original recipients — to use the Treasury Department’s identity verification programs designed for larger federal contractors.

Federal grantmaking has historically been reliable and fairly administered, but the rule gives political appointees the power to cancel or suspend grants at any time for any reason. We urge OMB to rescind the rule and continue to follow the law set by Congress that controls federal grantmaking.

Read the comment.