The Trump Administration Comes to Town: What Now?
In the five days since his inauguration, President Trump has issued a bevy of Executive Orders and penned other memoranda and directives with far-reaching impacts for the nonprofit grants and contracts community. Below is a summary of some of these changes that the nonprofit community will need to address in the coming months.
- EPA: Shortly after his inauguration, President Trump ordered a "temporary suspension" of all new business activities at the U.S. Environmental Protection Administration (EPA). The directive (issued via email) essentially freezes the disbursements of new grants, and new task orders and assignments for its contractors. There is no indication that this directive applies to assistance agreements or contracts already in place that have an agreed-upon disbursement schedule. The EPA is therefore expected to honor its current contractual obligations, but will be suspending new grants and contract activities, including the issuance of new task orders. Unfortunately, it is not yet clear whether this will impact the issuance of options under existing contracts. We hope to learn more about this directive soon. Nevertheless, it is essential that nonprofit grantees and contractors with EPA funding:
- Know their termination rights under each funding instruments. Although terminations have not been announced, future cuts could occur;
- Engage in a dialogue with EPA about whether program income 1) can be repurposed to increase available funding for the active years; or 2) earned outside the period of performance belongs to the federal government or the nonprofit organization.
- Mexico City Policy: On January 23, 2017, the President issued a memorandum, which has the same force and effect as Executive Orders, which reinstated the "Mexico City Policy" (the policy). The policy prohibits federal funding for non-governmental organizations (NGO) that "perform or actively promote abortion as a method of family planning," provide "voluntary population control," or provide "coercive abortion or involuntary sterilization." Notably, this policy is restricted to "global health assistance" and should not have a domestic impact. This policy, which has toggled back and forth between Republican and Democratic administrations since the Reagan administration, does not directly address the use of federal funds to support abortion-related activities, which have long been prohibited under other legal restrictions. However, this policy goes a step further by prohibiting the NGOs from receiving funds altogether if they plan to use non-federal funds for abortion-related services. Operationally, any NGO receiving funds from any division of the federal government (not limited to the U.S. Agency for International Development, the U.S. Department of Health and Human Services, or the U.S. Department of State) must certify that it will not "perform or actively promote abortion as a method of family planning," using funds from any source (including non-federal funds) as a term of their agreement. Nonprofit grantees providing funding abroad should revisit their policies and practices regarding the selection and awarding of subawards, and related certifications and agreements, to determine whether changes are required and that their federal funding eligibility is not endangered.
- Hiring Freeze: On January 23, 2017, the President signed a Presidential Memorandum instituting a federal government hiring freeze. It states that there may be no new positions created; however, retiring or exiting personnel may be replaced under the order because the order is silent on attrition. Military personnel, as well as any positions deemed (by the head of the executive department or agency) to be "necessary to meet national security or public safety responsibilities," are exempted. This standard may deviate from the lists of "essential" personnel for purposes of a government shutdown, so the policies among the agencies and departments may vary widely. The order also requires the U.S. Office of Management and Budget to create a plan to reduce the size of the federal government through attrition that will be implemented as a replacement for the hiring freeze. Practically speaking, the hiring freeze will likely increase government officials' workload, potentially lower morale, and likely result in elongated response time for all actions. In this environment, it is critical that nonprofit organizations properly and completely prepare and submit all submissions, including invoices or claims for reimbursement the first time, to avoid delays in processing.
- Regulatory Freeze Pending Review: The Presidential Memorandum on regulations was issued on January 20, 2017, which withdraws rules that were in the pipeline for publication in the Federal Register and orders a review of rules that were published as final, but have a delayed effective date. There is precedent for this type of regulatory review freeze in a new administration – the first time a similar order was issued was in 2001, in the first days of the Bush administration. In the early days of implementation, the agencies seem to be interpreting this freeze broadly and are withdrawing meeting notices. It is possible that Notices of Funding Availability or award notifications may be delayed if they are required to be published in the Federal Register. The delay would persist until the new Cabinet Secretary is in place.
More executive orders are anticipated. In pre-administration remarks made on Twitter, the President shared that he intended to work on a number of issues that would be addressed via Executive Order. By and large, that playbook has been followed. The orders that are forthcoming are expected to address cybersecurity issues and regulatory reform (for every new regulation to be introduced, two old regulations must be eliminated), among other issues. There are other tools available to this administration to effect change on a somewhat expedited basis. These include disapproval under the Congressional Review Act (for "major" rules only), appointments, new regulatory interpretations, the federal budget process, and congressional appropriations.
As additional changes occur, we will work to update you.