Presenters warn OMB proposal could allow midstream grant cancellations and clawbacks

NYSAC presenters told the Westchester committee the proposed OMB rule would create a new discretionary ground to terminate federal awards "if it no longer serves the national interest as it exists at the time of termination," and would allow stop-work orders of up to 90 days with narrower appeal rights.

"There would also be a new stop work order that can suspend an award for up to 90 days, and the objection and appeal rights here are more limited than what you normally get in a termination for noncompliance," Alex Regan said. Presenters warned that competitive grants for transportation, economic development and public safety would be particularly exposed, potentially leaving counties holding multiyear contracts and local matching obligations without federal funding.

Regan and Dave Lucas cited recent federal actions as illustrations: in March 2025 pandemic-era funds were clawed back and in January 2026 some SAMHSA grants were cancelled midyear. They urged the committee to press Congress for a delay and to insist that any termination authority be limited to material noncompliance, fraud, waste, or abuse, and include notice-and-cure provisions and defined wind-down rules.

County members voiced concern about uncertainty for ongoing infrastructure and social-services projects and asked for clear exemptions for block and formula grants.