Public comments accepted through July 13 on proposed changes that could adversely affect city capital projects

By Delcenia Cosman

Homer Independent Press

City staff and members of the Homer City Council have challenged changes to regulations the federal Office of Management and Budget has proposed governing the award, administration and termination of federal grants. They said the changes pose significant risks to the City of Homer’s ability to plan and deliver major infrastructure projects that rely on federal funding. 

A public comment period on the proposed revisions to the Guidance for Federal Financial Assistance is open through July 13, 11:59 p.m. EDT. The Homer City Council passed a resolution on Monday asking for clarification on several of the provisions and requesting that OMB not finalize these changes.

If adopted, the revisions would be effective Oct. 1. 

OMB’s proposal follows an executive order President Donald Trump issued in August 2025 to improve oversight of federal grantmaking. The revisions are purported to improve transparency, accountability and oversight for federal awards to ensure that “American tax dollars are not wasted or misused, activities performed under Federal awards are consistent with law and policy, and recipients are held accountable when they fail to meet relevant standards.”

In practice, however, according to a June 17 memo to the council from Homer Special Projects and Communication Coordinator Jenny Carroll, the revisions could mean loss of federal grant awards midstream and less equitable competition for federal funding. 

“The proposed revisions would allow federal grants to be canceled at will based on undefined ‘national interest’ grounds, without any finding of wrongdoing by the recipient and without a meaningful appeals process,” Carroll wrote. “They would also allow funding opportunities to be advertised selectively rather than publicly and diminish the merit-based review process that helps ensure fair … competition for federal funding.

“The greatest potential impact is mid-project grant terminations that could strand local matching funds, disrupt expected funding streams for contracts, leave critical infrastructure incomplete or inoperable and, in the worst case, threaten the financial stability of the City.”

The resolution asks OMB to provide a clear and transparent definition of “not in the national interest.”

The executive summary of OMB’s proposal connects the revisions to anti-DEI policy and claims that a “lack of transparency, accountability and proper oversight became increasingly clear between 2021 and 2024,” when federal awards were “often used” to promote a “‘woke’ policy agenda that did not reflect the values of the vast majority of the American public.”

Council member Donna Aderhold, who cosponsored the resolution with Mayor Rachel Lord, called OMB’s proposal “hair-on-fire scary.” 

“(OMB) could come and look at the City of Homer and decide that there’s too many women on our city council, we’re woke, and (they’re) going to take (our) federal grant away,” Aderhold said. 

The City of Homer continues to rely on federal funding for several major capital projects, Carroll wrote via email Monday. The following federally-assisted projects addressing clean water, erosion mitigation, pedestrian safety and port infrastructure would be subject to the new regulations unless they are completed before the revisions take effect:

• A Federal Emergency Management Agency Hazard Mitigation Program award to replace the Raw Water Transmission Main project (presently wrapping up)
  
  
• An Environmental Protection Agency  award to replace the A-Frame Water Transmission Line (obligation process pending)
  
  
•  A National Oceanic and Atmospheric Administration  award to conserve land in the Bridge Creek Watershed Protection District – grant activities underway)
  
  
• A NOAA award, in partnership with Kachemak Bay National Estuarine Research Reserve, to conserve peatlands in the Kachemak Drive area (grant activities underway
  
  
• Alaska Department of Transportation and Public Facilities Homer Spit Erosion Mitigation planning funds utilizing pass-through funding to states from the Promoting Resilient Operations for Transformative, Efficient, and Cost-saving Transportation (PROTECT) program (currently in contract negotiations)
  
  
• Federal Highway Administration Better Utilizing Investments to Leverage Development (BUILD) grant for sidewalk planning/design (just beginning the award negotiation/obligation process)
  
  
• Maritime Administration Port Infrastructure Development Program grant to replace System 4 in Homer Port and Harbor (grant obligation process underway)
  
  

Approximately $20.9 million in current and anticipated direct federal, pass-through and state formula funding could be subject to the discretionary termination risk outlined in OMB’s revisions, Carroll wrote in the memo. 

One revision OMB proposed would allow federal agencies or pass-through entities to terminate a federal award in part or in its entirety, “to the extent permitted by law,” if they determine that termination is in their interest — for example, if the award no longer accomplishes program goals, federal agency priorities or the national interest. 

Currently, federal awards only may be terminated for noncompliance, through mutual agreement or due to expiration of statutory authority. 

The resolution states that this change “would effectively convert long-term federal infrastructure commitments into at-will arrangements” and would cause financial uncertainty and potentially “leave the city with unfunded obligations and partially completed infrastructure it cannot independently finance.”

According to the resolution, OMB’s proposal also could allow the agency to override program-specific authorities. 

Current federal grant conditions, the resolution states, are established through statutes and administered by individual program agencies, with clear avenues for engagement and congressional oversight. The proposed revisions, however, may allow OMB to impose government-wide conditions that would “effectively supersede program-specific statutory frameworks, shifting decision-making away from agencies and oversight structures accessible to the City” and substantially reduce transparency and accountability for agency programs. 

Aderhold spoke to additional uncertainty that implementation of OMB’s proposal may cause.

“The proposal … would be enacted at the beginning of the new federal fiscal year. Implementing this edit when comments aren’t due until the middle of July … that would basically give OMB and all the federal agencies probably less than a month to come up with implementation for it,” she said. “The federal government just doesn’t move that fast. All the rules would change overnight and there would be no clear rules moving forward.”

Resolution 26-044 will also be sent to Alaska’s Congressional delegation and Homer’s state Legislature representatives in a request for their support. 

Read the resolution in full on the City of Homer website.