What is the proposed rule? 

On May 29, 2026, the U.S. Office of Management and Budget (OMB), in coordination with federal agencies, published a proposed rule titled "Regulation for Federal Financial Assistance" (OMB-2026-0034) in the Federal Register. If finalized, the proposal would significantly revise the federal grant management framework contained in the OMB Uniform Guidance (2 CFR Part 200)—the government-wide requirements governing how federal financial assistance is awarded, administered, and monitored. 

• Federal Register notice: https://www.federalregister.gov/documents/2026/05/29/2026-10817/regulation-for-federal-financial-assistance  
• Regulations.gov docket: https://www.regulations.gov/document/OMB-2026-0034-0001 

The Uniform Guidance establishes the administrative, cost and audit requirements that apply to most federal grants, cooperative agreements, loans and pass-through awards received by state and local governments, nonprofit organizations, institutions of higher education, and other recipients of federal financial assistance. These requirements affect organizations receiving funding from all federal agencies, including the U.S. Economic Development Administration (EDA), U.S. Department of Housing and Urban Development (HUD), U.S. Department of Agriculture (USDA), U.S. Department of Transportation (DOT), U.S. Small Business Administration (SBA), and the U.S. Environmental Protection Agency (EPA). 

According to OMB, the proposed rule is intended to strengthen oversight, improve consistency across federal agencies and incorporate recent Executive Orders and Administration priorities into the federal financial assistance framework. Among other changes, the proposal would convert portions of the Uniform Guidance into binding regulation, establish new government-wide policy requirements, expand agency authority to suspend or terminate certain awards, integrate grant administration with the Treasury Department's Do Not Pay system, and revise requirements related to subrecipient oversight, audits, and grant administration. 

The proposed rule is not final. OMB is accepting public comments through July 13, 2026, after which the agency will review stakeholder feedback before determining whether to issue a final rule. 

Why this matters to economic development organizations 

Economic development organizations rely on a wide range of federal financial assistance to support infrastructure, workforce development, entrepreneurship, business expansion, rural development, innovation, broadband deployment, community revitalization, and disaster recovery efforts. Many organizations also administer federal funds on behalf of local governments or serve as pass-through entities to other organizations. 

Because these programs are generally subject to the Uniform Guidance, any revisions to 2 CFR Part 200 could affect how organizations apply for, administer, monitor, and close out federal awards. Depending on the final rule, changes could also influence grant compliance responsibilities, reporting requirements, subrecipient oversight, and the administration of competitive federal grants. 

Potential stakeholder concerns

While the proposed rule remains subject to public comment and could change before becoming final, stakeholders have identified several areas that may warrant additional review and clarification: 

• Increased uncertainty in discretionary grant awards due to a new senior political appointee review before certain competitive awards are issued. 

• Reduced transparency in award decisions, including questions regarding the information provided when applications are not selected for funding. 

• Expanded agency discretion to suspend or terminate competitive awards during the performance period under certain circumstances. 

• Additional administrative and compliance responsibilities, particularly if organizations must implement new certifications, reporting requirements or monitoring procedures. 

• Budgeting and project planning challenges for organizations managing multi-year federal awards if grant requirements change after awards are made. 

• Potential barriers for smaller organizations with limited administrative capacity if compliance requirements become more complex or resource intensive. 

What would change under the proposed rule? 

The proposal includes numerous revisions throughout 2 CFR Part 200. The following summarizes several of the most significant provisions that could affect organizations administering federal financial assistance. 

• Uniform Guidance Becomes Binding Regulation: Portions of the Uniform Guidance would be converted from government-wide guidance into binding federal regulation. If finalized, future revisions issued by OMB could become effective government-wide without separate rulemaking by individual federal agencies, a change OMB says is intended to improve consistency across the federal government.  
• New Government-wide Policy Requirements: The proposal would establish new government-wide policy conditions applicable to federal financial assistance. Organizations receiving federal funding may need to evaluate whether grant-funded activities, organizational policies or program administration would require changes if the rule is finalized. Several provisions have generated stakeholder questions regarding implementation and interpretation because certain terms are not defined within the proposed regulation. 
• Senior Political Appointee Review of Competitive Awards: The proposal would establish a new review process requiring certain discretionary grant awards to receive review by senior political appointees before awards are issued. Under the proposed language, discretionary awards should advance Administration priorities, agency priorities, and the national interest. This has raised questions regarding how awards would be selected for review and the criteria that would be applied. 
• Expanded Award Termination Authority: Federal agencies would receive expanded authority to terminate certain competitive grant awards if they determine an award no longer advances program goals, agency priorities, or the national interest at the time of termination. Formula grants, block grants, and disaster recovery grants generally would not be subject to this proposed termination authority. Organizations administering multi-year competitive awards may wish to review these proposed changes carefully. 
• Stop-Work Orders: The proposal would authorize federal agencies — and in some cases pass-through entities — to issue written stop-work orders suspending work on certain competitive awards for up to 90 days. The proposal does not establish detailed standards governing when these orders may be issued or describe a formal appeal process. 
• Treasury Department Do Not Pay Integration: Federal agencies and pass-through entities would be required to verify recipients and subrecipients through the U.S. Treasury Department's Do Not Pay system before making payments. Organizations that administer pass-through funding may experience additional administrative responsibilities if these requirements are finalized.  
• Expanded Subrecipient Oversight and Reporting: The proposal would establish additional reporting and oversight requirements for pass-through entities, including expanded SAM.gov reporting requirements for subawards and enhanced monitoring responsibilities. Organizations that administer federal funding to partner organizations or subrecipients may need to review internal grant management procedures should these provisions become final. 
• Indirect Cost Rates: OMB states that the proposal does not revise the current indirect cost rate negotiation process. However, some stakeholders have expressed concern that organizations could experience increased compliance responsibilities without corresponding changes to indirect cost recovery.  
• Multi-Year Awards: One provision encourages federal agencies to make greater use of multi-year awards where appropriate. If implemented, this change could reduce application and renewal burdens for some grant recipients while providing greater certainty for longer-term projects.  

Implementation Timeline 

The proposed rule is currently undergoing the federal notice-and-comment process and has not been finalized. OMB will review comments received from stakeholders before determining whether to issue a final rule. 

Key dates include:  

• May 29, 2026: OMB published the proposed rule in the Federal Register. 

• July 13, 2026: Deadline for submission of public comments. 

• Future Effective Date: If OMB issues a final rule, any effective date will be established in the final regulation. OMB has indicated that, if finalized as proposed, the changes generally would apply to new and renewed awards beginning October 1, 2026. 

How to Submit a Comment 

IEDC encourages our member organizations that receive, administer, or manage federal financial assistance to review the proposal and consider whether to provide comments during the federal rulemaking process. Public comments become part of the official administrative record and are reviewed by OMB as it considers whether to revise the proposed rule before issuing a final regulation. 

Comments may be submitted electronically through Regulations.gov using Docket No. OMB-2026-0034. The public comment period closes on July 13, 2026. 

Organizations preparing comments may wish to consider the following best practices: 

• Describe specific federal programs or grant awards that could be affected, including the federal agency, program name or type of award whenever possible. 

• Explain potential operational impacts, such as changes to grant administration, reporting requirements, project implementation, subrecipient oversight or compliance responsibilities. 

• Quantify anticipated costs or administrative burden, including additional staff time, legal review, technology upgrades or other implementation expenses, whenever possible. 

• Identify areas where additional clarification may be needed, particularly if proposed language could create uncertainty or conflict with existing grant administration practices. 

 IEDC has created a template letter EDOs may customize.  

 Additional Resources 

• Federal Register notice: https://www.federalregister.gov/documents/2026/05/29/2026-10817/regulation-for-federal-financial-assistance  
• Regulations.gov docket: https://www.regulations.gov/document/OMB-2026-0034-0001 

IEDC Will Continue to Monitor Developments  

The proposed rule represents one of the most significant revisions to the Uniform Guidance since its original implementation in 2014 and has the potential to affect economic development organizations that receive, administer or oversee federal financial assistance. Because many economic development organizations rely on federal funding to support community and regional development initiatives, IEDC encourages members to review the proposal, evaluate any potential impacts on their organizations, and consider participating in the public comment process.