On Friday, May 29, 2026, the Office of Management and Budget (OMB) issued a proposed rule that would make significant changes to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), codified at 2 C.F.R. Part 200. Comments on the proposed rule are due on or before July 13, 2026.  

The proposed rule would require all recipients and subrecipients of Federal financial assistance to participate in the Department of Homeland Security’s (DHS) E-Verify program to confirm employment eligibility of employees and contractors hired in or performing work in the United States under a Federal award. This is one part of a broader revision of the Uniform Guidance governing federal grants and cooperative agreements, aimed at ensuring federal funds are not used to support the employment of unauthorized workers.

Implications for Federal Grantees 

If adopted as written, the proposed rule would create mandatory immigration-related compliance obligations for all recipients and subrecipients of Federal financial assistance, including enrollment in E-Verify. Most notably, it would convert what has historically been a voluntary reporting framework for most private employers into a mandatory requirement for federal funding recipients.

Some employers are already subject to E-Verify requirements, specifically those with federal contracts or subcontracts containing the Federal Acquisition Regulation (FAR) E-Verify clause, as well as employers in states that have enacted their own E-Verify mandates through legislation or court rulings. For many grant recipients, however, this would represent a new obligation.

The proposed rule also introduces a new reporting requirement: federal funding recipients would be required to submit Final Nonconfirmation (FNC) notices to the applicable federal agency or pass-through entity. A FNC is the notice issued when E-Verify is unable to confirm an individual’s work authorization in the United States after completing all steps in the verification process. OMB has indicated it does not intend to alter existing exceptions or limitations under DHS program requirements,  but has not indicated how it intends to use the reported FNC data.  

Failure to comply with E-Verify requirements under a final rule could result in enforcement actions, up to and including termination of a federal award.

Feldesman’s federal grants attorneys will continue monitoring developments related to the proposed Uniform Guidance changes. If you have any questions, please contact Jesi Carlson or Madelyn Phinney.