OMB Proposes Rule That Would Subject DOE Grants to Political Appointee Control

The U.S. Office of Management and Budget (OMB) published on May 29, 2026, a proposed rule that formalizes political appointee control over Department of Energy (DOE) grants. The text authorizes cancellation of active projects that, in the agency's judgment, are not aligned with presidential priorities or the national interest.

The proposal codifies a practice the DOE has applied since January 2025, when the incoming administration began canceling awards on political alignment grounds. According to Latitude Media, the DOE has canceled more than $7.5 billion in projects since then. In January 2026, a federal court ordered the restoration of seven grants totaling $28 million after determining that their cancellation had violated the Fifth Amendment. The proposed rule, published in the Federal Register on May 29, modifies the framework governing more than $1 trillion in annual federal financial assistance to establish discretionary termination as a permanent authority.

The text introduces three changes to the grant process. First, it requires a senior political appointee to review each discretionary grant and certify that the project demonstrably advances the president's policy priorities. Second, it allows cancellation of an active grant even if the project meets all its performance targets, on the grounds that it no longer serves the national interest. Third, it eliminates the right to appeal terminations classified as discretionary. According to the Federal Register text, the proposal equates this authority to the termination of federal contracts for convenience.

The comment period closed on July 13 with approximately 497,000 submissions. OMB plans to publish the final rule in September 2026, with an effective date of October 1. The outcome will define the degree of regulatory certainty under which private investors co-investing with the DOE operate in U.S. energy projects (from geothermal and storage to hydrogen and grid infrastructure) and, by extension, in Latin American energy markets.

This article was drafted with artificial intelligence assistance from verified sources and reviewed by a human editor before publication.