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FEDERAL FUNDING & OVERSIGHT

OMB Proposes Rule Barring Federal Grants for DEI Activities

• Regulation for Federal Financial Assistance, 91 FR 32198 
  

  
  

OVERVIEW

On May 29, 2026, the Office of Management and Budget (OMB) published a proposed rule in the Federal Register that would revise the government-wide Uniform Guidance for Federal Financial Assistance under 2 CFR Part 200. The proposal was issued jointly with more than 40 federal grant-making agencies and would apply across federal financial assistance programs.

The proposed rule would prohibit recipients of federal funds from using grant money for activities the administration characterizes as involving diversity, equity, and inclusion (DEI), “gender ideology,” disparate-impact frameworks, or viewpoint-based preferences that the administration states are inconsistent with federal anti-discrimination law and current executive orders.

The proposal would also expand agency authority to terminate federal awards for noncompliance, increase oversight across the grant-award lifecycle, and require additional review of discretionary funding decisions. In addition, the rule would require most federal grant competitions to remain open for at least 30 days and would require agencies to provide greater disclosure when grant opportunities are cancelled.

OMB issued the proposal through the federal notice-and-comment rulemaking process under the Administrative Procedure Act. Public comments are due July 13, 2026.

LEGAL INTERPRETATION

The proposed rule represents the administration’s most formal effort to embed anti-DEI restrictions into the federal grantmaking framework. Unlike prior executive orders directing agencies to review DEI-related activities, this proposal would codify those restrictions within the government-wide Uniform Guidance governing federal financial assistance under 2 CFR Part 200.

If finalized, the rule would apply across more than 40 federal agencies and extend throughout the lifecycle of federal awards, including grant issuance, oversight, termination, and enforcement. The proposal incorporates language and priorities reflected in Executive Orders 14151 and 14173, including restrictions related to disparate-impact frameworks, gender identity, and identity-based preferences.

Because the proposal is being issued through notice-and-comment rulemaking under the Administrative Procedure Act, it would be subject to judicial review if finalized. Legal scrutiny is likely to focus on the scope of OMB’s authority, the clarity of the rule’s definitions and enforcement standards, and whether certain restrictions conflict with existing federal civil rights statutes or exceed executive authority over congressionally authorized funding programs.

BRIDGE POV

The proposed OMB rule marks an escalation in how the administration is attempting to operationalize its anti-DEI agenda across the federal government. 

Rather than relying solely on executive orders or agency enforcement priorities, the administration is now seeking to embed these restrictions directly into the regulatory infrastructure governing federal financial assistance. 

The proposal creates the possibility that funding eligibility, grant renewals, and compliance reviews could increasingly become tied to how agencies interpret DEI-related activity across programs, training, research, hiring, and organizational policies. 

At the same time, the rule highlights the growing tension between evolving executive branch interpretations and the fact that longstanding civil rights statutes — including Title VI and Title VII — still remain in force. Many organizations now face the challenge of navigating inconsistent signals between existing anti-discrimination obligations, agency enforcement priorities, and newly proposed federal funding restrictions.

ACTIONABLE STRATEGIES

1. Conduct a Federal Funding Exposure Assessment: Identify where federal grants, cooperative agreements, or pass-through funding intersect with DEI-related programming, certifications, research, training, or reporting obligations across the enterprise.
   
   

2. Align Legal, Compliance, and Program Leadership: Establish a cross-functional review process to evaluate how existing initiatives are documented, funded, and described within federal grant applications, renewals, and compliance frameworks.
   
   

3. Participate in the Rulemaking Process: Review the proposed rule in detail and consider submitting comments directly or through industry associations, higher education coalitions, trade groups, or nonprofit networks before the July 13, 2026 deadline.

See also: Trump Administration Implements New Oversight Procedure to Ensure Federal Grants Are Not Used to Support DEI (Issue 25); GSA Proposes Anti-DEI Certification Requirement for Federal Funding Recipients (Issue 52); Former Officials Warn on SAM.gov Certification Proposal (Issue 58)

EEOC Moves to Withdraw Decades-Old Guidance Protecting Voluntary Affirmative Action Plans

• EEOC Moves to Eliminate 50-Year Safe Harbor for Voluntary Affirmative Action Plans

OVERVIEW

On May 27, 2026, the Equal Employment Opportunity Commission submitted a proposal to the White House seeking to revoke a 1979 interpretive rule that has provided private employers a legal defense when implementing voluntary affirmative action plans in good faith under Title VII of the Civil Rights Act of 1964. 

The proposal is currently under White House review and has not yet been finalized.

The 1979 rule addressed the tension between voluntary affirmative action efforts designed to remedy historical underrepresentation and Title VII’s anti-discrimination requirements. It established a framework under which employers could voluntarily adopt reasonable affirmative action plans consistent with EEOC guidance without violating federal law.

If rescinded, employers would lose the EEOC’s longstanding interpretive framework supporting voluntary affirmative action plans, including the agency’s good-faith-reliance protections for employers that structured such programs consistent with EEOC guidance.

The proposal follows the EEOC’s May 14, 2026 submission seeking to eliminate annual EEO-1 workforce demographic reporting requirements for large private employers. Together, the proposals continue the agency’s broader effort to dismantle longstanding regulatory frameworks associated with voluntary employer diversity practices.

LEGAL INTERPRETATION

The proposed revocation would remove a longstanding interpretive protection that employers have relied upon when evaluating the legality of voluntary affirmative action programs under Title VII. Without that framework, employers maintaining such programs could face increased exposure to disparate treatment claims, particularly following the Supreme Court’s unanimous 2025 decision in Ames v. Ohio Department of Youth Services, which held that majority-group plaintiffs are not subject to a heightened evidentiary standard in Title VII discrimination cases.

Title VII itself has not changed. Voluntary affirmative action programs that are narrowly tailored, tied to documented workforce imbalances, and do not unnecessarily restrict opportunities for other employees may still be permissible under the Supreme Court’s Weber and Johnson decisions. However, rescinding the EEOC’s 1979 rule would eliminate the agency’s formal interpretive framework supporting those programs and shift greater legal weight to judicial standards and private litigation.

The proposal remains under White House review and has not yet entered formal notice-and-comment rulemaking.

BRIDGE POV

The EEOC’s proposal removes another longstanding mechanism employers have used to address historical exclusion and workforce underrepresentation. Voluntary affirmative action plans were designed to help employers expand opportunity and address documented workforce imbalances while operating within Title VII’s legal framework.

The proposal also comes just weeks after the EEOC moved to eliminate annual EEO-1 workforce demographic reporting requirements, continuing the agency’s broader rollback of regulatory structures associated with voluntary diversity efforts.

Importantly, rescinding the EEOC’s guidance would not automatically render all voluntary affirmative action plans unlawful. Employers may still pursue initiatives designed to expand opportunity and ensure fair access to employment so long as those programs comply with Title VII and do not rely on unlawful race- or sex-based decision-making.

However, employers would lose the benefit of the EEOC’s longstanding interpretive framework and good-faith protections supporting such programs. The proposal also appears to further narrow the circumstances under which the agency would view race- or sex-conscious employment actions as legally defensible under Title VII.

ACTIONABLE STRATEGIES

1. Monitor the EEOC Rulemaking Process: Track the proposal as it moves through White House review and any subsequent notice-and-comment proceedings to assess potential compliance and litigation implications.
   
   

2. Review Existing Voluntary Affirmative Action Plans: Identify whether any current workforce programs rely on the EEOC’s 1979 guidance, including plans tied to workforce representation, hiring, promotion, or advancement initiatives.
   
   

3. Reevaluate Programs Under Current Title VII Standards: Assess whether existing initiatives remain legally supportable under current judicial precedent, including whether programs are narrowly tailored, supported by workforce data, and avoid race- or sex-based employment preferences.

See also: Supreme Court Rules Title VII Protections Apply Equally to All Employees (Issue 15)

EEOC Moves to Replace Enforcement Plan Protecting Vulnerable Workers

• EEOC to debate tossing Biden-era strategic enforcement plan

OVERVIEW

The U.S. Equal Employment Opportunity Commission has scheduled a June 4, 2026 vote on whether to rescind the agency’s 2024–2028 Strategic Enforcement Plan (SEP) and replace it with what the agency describes as a new national enforcement plan.

The current SEP, approved by the Commission in September 2023 by a 3–2 vote, established the EEOC’s national enforcement priorities through fiscal year 2028. Among those priorities was a stated focus on protecting “vulnerable and underserved” workers, including immigrant workers, LGBTQ+ workers, and workers with certain disabilities.

The scheduled vote follows a series of actions under EEOC Chair Andrea Lucas to reverse Biden-era enforcement frameworks, including efforts to rescind the agency’s workplace harassment guidance, narrow disparate impact enforcement, and increase scrutiny of employer DEI programs and religious accommodation claims.

Because the current SEP was adopted through formal Commission vote, it may be modified or rescinded by majority vote. As of the Commission’s meeting notice, the contents of any replacement enforcement plan had not been made public.

LEGAL INTERPRETATION

The EEOC’s Strategic Enforcement Plan is an internal agency framework that guides how the Commission allocates investigative and litigation resources. It does not carry the force of law and does not alter Title VII, the Americans with Disabilities Act, or other federal employment statutes. The legal protections those laws provide to workers — including LGBTQ+ workers, immigrant workers, and workers with disabilities — remain in effect regardless of changes to the SEP.

However, the SEP has significant practical implications for employers because it signals where the agency intends to concentrate investigations, systemic enforcement activity, and litigation resources. Changes to the plan can materially affect which categories of claims receive heightened agency attention and how the EEOC exercises enforcement discretion.

A replacement plan that narrows or removes protections for “vulnerable and underserved” workers could redirect agency resources away from those enforcement priorities while increasing focus on areas emphasized by the current Commission leadership, including religious accommodation claims, national origin discrimination, and employer DEI programs. While such changes would not alter underlying statutory liability, they could significantly reshape the federal employment enforcement landscape.

BRIDGE POV

The current Strategic Enforcement Plan was created to direct EEOC resources toward workplace issues the agency viewed as systemic, persistent, or difficult for vulnerable workers to challenge without federal intervention. That included protections involving LGBTQ+ workers, immigrant workers, workers with disabilities, pregnancy accommodations, systemic harassment, disparate impact discrimination, and emerging risks tied to AI.

Rescinding that framework signals a meaningful shift in federal enforcement priorities. A replacement plan that removes or narrows protections for “vulnerable and underserved” workers could materially change how aggressively the EEOC pursues investigations and litigation involving those populations and claims.

The proposal also continues Chair Andrea Lucas’s broader rollback of EEOC enforcement frameworks tied to systemic discrimination, disparate impact liability, and protections for vulnerable and underserved workers.

The workplace issues the original SEP was designed to address remain active legal and operational risks for employers.

ACTIONABLE STRATEGIES

1. Monitor the June 4 Commission Vote and Any Replacement Plan: Review any revised enforcement framework closely for changes in investigative priorities, protected worker categories, systemic discrimination focus areas, and AI-related enforcement priorities.
   
   

2. Maintain Compliance Across Existing Civil Rights Obligations: Changes to EEOC enforcement priorities do not alter employer obligations under Title VII, the ADA, the PWFA, or other federal anti-discrimination laws.
   
   

3. Reevaluate Workplace Risk Areas Receiving Reduced Federal Attention: Continue monitoring and addressing systemic harassment, accommodation practices, AI-related bias risks, disparate impact exposure, and barriers affecting vulnerable workers even if federal enforcement priorities shift.

See also: Trump Appoints Anti-DEI Advocate to Lead the EEOC (Issue 38); Federal Enforcement Campaign Targets Corporate DEI as Legal Standards Remain Unchanged (Issue 46); EEOC Moves to Rescind Harassment Guidance and Internal Voting Procedures (Issue 47); EEOC Rescinds Voting Procedures and Workplace Harassment Guidance (Issue 48); EEOC Reports Record Recoveries as Former Officials Challenge Framing (Issue 59)

FEDERAL FUNDING & OVERSIGHT 

USDA Fraud Claims Disputed as Tribal and Farm Groups Join Land Access Grant Lawsuit

• 24 groups, including Native nonprofits, join lawsuit over canceled USDA grants
• The USDA canceled $300M in farm grants, citing fraud. Did it make up the evidence? 

OVERVIEW

On May 26, 2026, twenty-four additional grantees joined USDN v. USDA, expanding the lawsuit to 29 plaintiffs and filing a renewed motion for preliminary injunction in the U.S. District Court for the District of Columbia.

The amended complaint challenges USDA’s cancellation of grants tied to land access, agricultural lending, and farmer training programs following executive orders targeting DEI and climate-related initiatives. Plaintiffs argue the agency improperly treated tribal-serving agricultural programs as racial diversity initiatives despite longstanding federal recognition of tribes as sovereign political entities.

The filings also dispute USDA’s stated justification for the terminations. Cancellation notices cited alleged wasteful expenditures, while multiple grantees state the cited expenses were unrelated to their grants or budgets.

Internal USDA documents produced in the litigation show agency staff used keyword searches to identify grants for termination. The amended complaint also cites findings from USDA’s National Appeals Division concluding the cancellations were driven by broader policy directives rather than individualized program review.

In August 2025, a federal judge restored grant access for the original five plaintiffs while litigation proceeds. The court will now consider whether to extend that relief to the additional plaintiffs.

LEGAL INTERPRETATION

The case has evolved beyond a challenge to the grant termination process into a factual dispute over whether USDA’s stated justifications for cancellation are supported by the administrative record. Under the Administrative Procedure Act, agency actions must be supported by a reasoned explanation grounded in the record. Findings from USDA’s National Appeals Division concluding the terminations were driven by broader policy directives rather than individualized review could strengthen plaintiffs’ argument that the cancellations were arbitrary and capricious.

The litigation also raises a separate legal question involving tribal status. Federal law treats tribes as sovereign political entities rather than racial classifications. Plaintiffs argue USDA improperly applied DEI-related directives to tribal-serving programs without distinguishing tribal political status from the racial classifications targeted by the executive orders.

The pending preliminary injunction motion asks the court whether relief previously granted to the original five plaintiffs should extend to the additional organizations now joined in the case. The ruling could further define the extent to which agencies may terminate previously awarded grants based on shifting political priorities.

BRIDGE POV

The lawsuit highlights the growing collision between shifting federal political priorities and longstanding legal frameworks governing tribal sovereignty, federal grants, and administrative process.

At the center of the dispute is not simply whether USDA could change priorities, but whether the agency lawfully terminated previously awarded grants without individualized review while treating tribal-serving agricultural programs as DEI initiatives rather than programs tied to sovereign tribal status.

The case also underscores how anti-DEI directives are increasingly intersecting with programs that were not originally designed as race-based preference initiatives, including land access, agricultural lending, and tribal economic development efforts.

ACTIONABLE STRATEGIES

1. Review Federal Grant Exposure: Assess whether federally funded programs could be vulnerable to shifting agency priorities tied to DEI, climate, or related executive order directives.
   
   

2. Strengthen Administrative Recordkeeping: Maintain detailed documentation showing how funded programs satisfy statutory, contractual, and programmatic requirements independent of political or ideological characterizations.
   
   

3. Monitor Litigation Involving Tribal and Underserved Programs: Track how courts evaluate agency authority to terminate obligated grants, particularly where tribal status, sovereign classifications, or categorical policy directives are involved.

See also: USDA Keyword Purge Targets "Diversity" and "Climate" Grants (Issue 39); Depositions Reveal AI-Driven Review Used to Terminate Federal DEI Grants (Issue 56); States Sue USDA Over DEI Funding Conditions (Issue 57); USDA Terminates Tribal Agriculture Grants Under $300M Program (Issue 59); Court Strikes Down DOGE Humanities Grant Cuts (Issue 66)

Project 2025 at the 16-Month Mark: What the Implementation Data Means for Employers

• Project 2025 Executive Action Tracker

The Center for Progressive Reform and Governing for Impact’s Project 2025 Executive Action Tracker reports that, as of its February 2026 update, the administration had initiated or completed 283 of 532 tracked domestic administrative actions, or 53 percent of the Project 2025 agenda it monitors across 20 federal agencies.

Separately, Heritage Foundation President Kevin Roberts has claimed that the administration has implemented 1,055 of Project 2025’s 1,913 recommendations. While the figures measure different sets of actions, both point to the same reality: despite distancing itself from Project 2025 during the campaign, the administration has implemented significant portions of the agenda across the federal government.

What the tracker makes increasingly clear is that Project 2025 was designed less as a legislative agenda and more as an administrative implementation blueprint. Many of the recommendations are being advanced through executive orders, agency rulemaking, enforcement priorities, personnel appointments, grant conditions, and regulatory restructuring rather than through Congress.

Many of the most consequential changes affecting workforce policy, DEI, civil rights enforcement, federal funding, immigration, LGBTQ+ protections, and regulatory oversight are already reshaping the operating environment for employers, universities, nonprofits, and federally funded institutions.

See also: BRIDGE Project 2025 Resources

Fair Housing Coalition Sues CFPB to Block Fair Lending Rollback

• Lawsuit challenges CFPB's ending anti-discrimination protections under Trump
  

  
  

On May 27, 2026, the National Fair Housing Alliance and several fair lending and compliance organizations filed suit challenging the Consumer Financial Protection Bureau’s April 22, 2026 final rule eliminating disparate impact liability under the Equal Credit Opportunity Act and Regulation B.

The lawsuit, filed in federal court in Washington, D.C., argues the rule is arbitrary and capricious, exceeds the CFPB’s statutory authority, and violated Administrative Procedure Act requirements during the rulemaking process.

The complaint also challenges the rule’s narrowed discouragement standards and new restrictions on Special Purpose Credit Programs historically used to expand credit access for underserved communities. Plaintiffs allege the CFPB failed to conduct a required small business review process and made no substantive revisions despite receiving more than 64,500 public comments opposing the rule.

The rule is scheduled to take effect July 21, 2026. Plaintiffs are seeking to vacate the rule before that date.

See also: CFPB Moves to Eliminate Disparate Impact Standards From Fair Lending Enforcement (Issue 64)