Over 100,000 Comments Flood OMB as Public Comment Period Closes on $1.1 Trillion Grant Overhaul

Over 100,000 Comments Flood OMB as Public Comment Period Closes on $1.1 Trillion Grant Overhaul

The public comment period for the White House Office of Management and Budget’s (OMB) sweeping proposed rule, "Regulation for Federal Financial Assistance" (Docket No. OMB-2026-0034), officially closed on July 13, 2026. The historic rulemaking drew a massive wave of public feedback, exposing a stark ideological division over the administration's efforts to exert political control over federal grants.

Watchdogs and Advocacy Groups Warn of Unconstitutional Overreach

A coalition of nearly 2,000 national organizations, alongside independent government watchdogs like the Project On Government Oversight (POGO), submitted strongly worded public comments urging the OMB to withdraw the rule. Opponents argue that the proposal violates the separation of powers, the Impoundment Control Act, and basic due process by allowing political appointees to override merit-based peer reviews and terminate discretionary grants based on vague "national interest" or "agency priorities."¹

Under the proposed rule, a senior political appointee would review every discretionary award before issuance, using independent judgment rather than deferring to technical experts.

"Subordinating the peer review system in favor of leaving decisions up to a political appointee politicizes the federal funding process," POGO wrote in its official regulatory comment. "It disregards years of staff experience and bottlenecks final funding decisions. It would also add an unnecessary layer of bureaucracy that would leave agencies, states, grant recipients, and beneficiary families across the country under continual uncertainty."

Opponents also raised alarms over the proposed elimination of administrative hearings and appeal rights for discretionary terminations, leaving grant recipients with no formal recourse.

Conservative and Business Groups Champion Accountability Reforms

Conversely, conservative policy groups, including the American Legislative Exchange Council (ALEC), filed formal comments strongly supporting the proposed rule. Proponents argue that the new internal controls are vital tools to prevent fraud and ensure proper stewardship of taxpayer dollars.

In particular, ALEC championed proposed section 200.303(f), which mandates that all federal grant recipients and subrecipients participate in the Department of Homeland Security’s E-Verify program to confirm employment eligibility, and section 200.303(g), which requires states to perform pre-payment checks using systems like the Treasury's Do Not Pay (DNP) database.

"Federal award funds are taxpayer dollars, and it is entirely appropriate to condition their receipt on ensuring those dollars do not finance the employment of individuals who are not authorized to work in the United States or flow to ineligible or fraudulent payees," ALEC wrote in its comment supporting the rule. "Requiring E-Verify participation and pre-payment eligibility checks will close an important gap, giving Federal agencies and pass-through entities a concrete, auditable tool to confirm that award funds are supporting eligible workers and eligible payees before money goes out the door."

With the comment window closed, the OMB is legally required to review the feedback before drafting and publishing a final rule in the Federal Register.