On September 3, President Donald Trump (R) signed a stopgap spending bill which funds the federal government until Dec. 11. The bill averted a government shutdown, but also delayed the implementation of an Office of Management and Budget (OMB) proposed rule on federal grantmaking that would give political appointees and agencies more say in awarding or terminating grants. As proposed, the rule would have gone into effect on Oct. 1, but the bill prohibits OMB from finalizing or implementing the rule through Dec. 11.

What did the bill do?

HR 6500, titled the “Continuing Appropriations and Extensions Act, 2027,” is a continuing resolution that funds the operations of the federal government until Dec. 11. The federal fiscal year, and with it many existing appropriations, ends Sept. 30. Without the passage of a funding bill the government would have shut down Oct. 1, as it did in 2025. That shutdown, which lasted 42 days, was the longest full shutdown of the government in history. In 2026 there have been two partial shutdowns: funding for some federal agencies lapsed from Jan. 30 to Feb. 4, followed by a lapse in Department of Homeland Security funding from Feb. 14 to April 30.

The continuing resolution was first introduced in the House of Representatives on Dec. 9, 2025, and initially passed the House 340-54 on Jan. 12, 2026. In early August, Senate leadership reached a bipartisan deal use the bill as a vehicle for the continuing resolution, and advanced the bill with amendments 90-6 on Aug. 8. The Senate added Section 157 of the bill, which prohibits the OMB rule from going into effect until after the bill lapses, as part of an amendment introduced on Aug. 5. That section also prohibits OMB from promulgating “a substantially similar rule” before the bill lapses. The House passed the Senate-amended bill 370-48 on Sept. 1.

What is the OMB rule?

The OMB published the proposed rule, titled “Regulation for Federal Financial Assistance,” in the Federal Register on May 29. The proposed rule had a public comment period that ended on July 13 and drew more than 160,000 submissions. As proposed , the rule would have gone into effect on Oct. 1, and would have applied to all funding in Fiscal Year 2027 (which begins that day).

The rule would revise part of Title 2 of the Code of Federal Regulations (2 C.F.R. 200), known as the “Uniform Guidance." This part guides federal agencies in providing various forms of financial assistance, such as grants for scientific researchers or to state and local governments. This guidance was first issued in 2013, replacing at least eight separate OMB guidance publications focused on different categories of aid recipients. Under the Uniform Guidance, grantmaking agencies must implement revised OMB guidance with rulemaking of their own. Reflecting this requirement, parts of the May 29 proposed rule were issued by 41 federal grantmaking agencies alongside OMB (which is not a grantmaking agency).

According to the National Council of State Legislators, the proposed rule “represents the most significant revision to the federal grant-management framework since the Uniform Guidance was established in 2013.”

Among other changes, the rule would:

• Change the status of the Uniform Guidance from OMB guidance for grantmaking agencies to a binding regulation which OMB could amend in the future through its own rulemaking;
• Increase the role of appointed officials in grantmaking determinations, reducing the peer review-based decision making that agencies currently use to an advisory role;
• Restrict fixed-amount awards to instances specifically authorized by statute;
• Expand agencies’ ability to terminate ongoing grants;
• And, codify prohibitions against grantmaking “used to fund, promote, encourage, subsidize, or facilitate" practices like diversity, equity, and inclusion (DEI).

In a July letter to OMB director Russell Vought, the members of the Senate Democratic caucus wrote that “OMB’s proposal unlawfully seeks to substitute Congress’s role in directing federal spending with the President’s preferred priorities, and in doing so, makes it harder for every community and organization in the United States to fairly access federal funding.” The text of the proposed rule said that “federal financial assistance programs… have not always remained properly aligned with core purposes authorized by law, nor served the needs of the American public as intended… Federal awards were often used during [the Joe Biden (D) administration] to promote a ‘woke’ policy agenda that did not reflect the values of the vast majority of the American public.” Heritage Foundation official Daniel Kowalski said that "the whole idea here is to basically have one control tower. There’s one executive, and all the agencies should be working to implement the executive’s agenda.”

Senate Appropriations Committee Chair Susan Collins (R) and Vice-Chair Patty Murray (D), who negotiated the Senate deal to advance the stopgap spending bill, both supported Section 157. In a statement, Sen. Murray wrote that “this bill blocks implementation of OMB’s corrupt new grants rule for the duration of the CR. The proposed rule would systematically politicize federal funding and allow Trump officials to cancel grants at any time for any reason.” Sen. Collins said that she was “pleased that this bipartisan agreement prevents the Office of Management and Budget’s proposed rule regarding federal financial assistance from taking effect.”

Rep. Chip Roy (R), who was part of a group of House Republicans who threatened to block the funding bill, said that “the Senate added a whole bunch of stuff. All of this could have been handled either by putting it in the rule and allowing some amendments, or just doing a clean CR. They didn’t do that, so I’ve got major problems with that." Rep. Roy voted against the bill. House Majority Leader Steve Scalise (R), who voted for the bill, said that the Senate “made some changes, some that we don’t support. But when you weigh the whole thing, it’s much more important for the country to avoid a government shutdown.”