The public comment period closed this week for a proposed White House-backed rule that would profoundly change how federal agencies design, review, and administer grants and other awards. If approved, the changes would give the executive branch significantly more control, and codify many of the Trump administration’s more controversial moves in the last 18 months.
In its proposal, the Office of Management and Budget stated the changes would “improve transparency, accountability, and oversight for use of federal taxpayer dollars,” and prevent the use of federal awards to “promote a ‘woke’ policy agenda that does not reflect the values of the vast majority of the American public.”
For the Department of Energy, which administers billions of dollars in funding for energy deployment, research, and grid modernization, the changes would formalize the unprecedented level of control the White House has exerted over funding decisions and program priorities in the second Trump administration. Since January of 2025, that has included canceling major infrastructure awards, and directing funding away from Democrat-led states and toward favored technologies, including coal power infrastructure and geothermal.
The notice of proposed rulemaking, which OMB published at the end of May, has drawn widespread criticism, including from Democratic lawmakers who last week sent a letter to OMB arguing the proposed changes represent “dangerous executive overreach” and would “usurp Congress’ constitutional power of the purse.” The concerns are particularly acute at DOE, the letter added, where program participation could decline in the face of the instability brought on by the changes.
But that instability wouldn’t be limited to DOE: Federal household assistance efforts, including the Low Income Energy Assistance Program, LIHEAP, a Department of Human Health and Services program which helps low-income families cover utility bills during extreme weather events, would be especially at risk under the changes, according to the National Consumer Law Center. The rule could cause “widespread confusion” for program administrators and ultimately disrupt time-sensitive distribution of funds, the Center said in a statement.
Among the most notable changes is a new requirement that a senior political appointee sign off on all discretionary awards. That appointee would assess whether an award “demonstrably [advances] the President’s policy priorities,” and ensure no awards “fund, promote, encourage, subsidize, or facilitate” a range of “anti-American” activities, including illegal immigration or considering race as a factor in hiring or program participation. It’s an approach already reflected by an executive order the president signed last summer, requiring agencies to designate a senior political appointee to review grants at announcement and award stages.
As former DOE senior advisor Janie Thompson wrote in an analysis for the Department of Energy Alumni Network, that’s a significant pivot from the agency’s longstanding approach of using merit review to select funding recipients.
“Merit review is performed by technical expert civil servants, who are nonpartisan and dedicate their careers to understanding at a deep level the best opportunities for scientific and technological progress within their disciplines,” Thompson wrote.
Policy considerations outside project merit are currently allowed in DOE guidance, she added, but only when they’re designed to increase the effectiveness of a program: for example, to ensure that selected awardees “represent diverse geographies or provide complimentary approaches to other applicants.” But those policy factors have to be explicitly outlined in the original funding opportunities.
Codifying the Trump era approach
When the second Trump administration took office early last year, it moved quickly to implement sweeping changes across government agencies including DOE. Many of the changes aligned closely with those suggested in the ultra-conservative policy blueprint “Project 2025,” drafted by The Heritage Foundation before President Trump took office for the second time.
Following the inauguration, OMB ordered a pause on all federal funding assistance, though its directive was almost immediately rescinded in the face of legal challenges.
That directive was in essence an earlier iteration of the current proposed spending changes, in that it attempted to centralize political control over grants and loans, block any spending directed towards “woke gender ideology” and “Green New Deal” activities, and give senior appointees broad discretion to withdraw or cancel funding.
Throughout 2025, the agency canceled hundreds of projects, totalling more than $7.5 billion, left others in project-ending limbo, conducted mass layoffs, and conducted a restructuring effort that dropped two renewable energy offices, and realigned the agency under nuclear and fossil fuel priorities.
In January of this year, a federal court ordered DOE to reinstate seven grants, totaling around $28 million. The Trump administration violated the Fifth Amendment by specifically targeting funding recipients based in states that voted for Kamala Harris in the 2024 election, the judge determined.
The vast majority of projects that lost their funding have not been reinstated, however.
Moving forward, OMB’s proposed rule would make it easier for an administration to terminate active awards, meaning those that are already under contract and eligible to draw federal funds. Under the rule, if an award “does not effectuate agency priorities” or “the national interest,” the government could cancel projects even if they are meeting all performance requirements and milestones outlined in their award.
The changes would also make it harder for recipients to push back when awards are canceled.
Throughout the first 18 months of the current administration, hundreds of canceled awards used existing dispute resolution rules and administrative appeal processes to challenge those decisions. But under the OMB proposal, “discretionary terminations” — meaning those the agency decides are not in line with administration priorities or the national interest — wouldn’t have a guaranteed right to object or appeal.
The outcome, Thompson wrote, would likely be decreased confidence in the durability of any DOE award. Over time, that will result in “fewer meritorious applicants pursuing ambitious and potentially risky but high-reward energy initiatives in partnership with the government,” she added.
