Recent policy enacted by the Trump Administration has generated uncertainty for existing federal grant agreements and future federal infrastructure funding. The issuance of Executive Orders (EO) as well as revisions to the RAISE (now BUILD, again) Notice of Funding Opportunity have resulted in implementation guidance that affects TGC clients in various forms.

This is an evolving situation, and as of January 29, 2025, here is a summary of what TGC knows in addition to our thoughts about what’s next:

Temporary Pause on Federal Financial Assistance

On January 27, 2025, Office of Management and Budget (OMB) released a memo issuing a “temporary pause [on] all activities related to obligation or disbursement of all Federal financial assistance…” The pause was scheduled to go into effect on January 28, 2025 at 5 p.m. The purpose of the pause was to allow government agencies time to review federal financial assistance programs and how they may be implicated by any of the recently issued EOs. This is assumed to pause funding reimbursements, grant execution, and grant awards until resolved.

The repercussions of this pause have the potential to be impactful, especially for agencies delivering and/or operating infrastructure projects with federal funding support. However, the consensus expectation amongst contacts in and around Washington, D.C. is that the pause will be short lived.

On January 29, 2025, the OMB released a memo rescinding the prior memo. However, the White House Press Secretary has stated that the memo was simply a rescission of the prior memo itself, not the implementation of the executive orders mentioned below. In response to the confusion, a federal judge issued a temporary restraining order barring the administration from freezing federal loans and grants. It is expected this will keep disbursement processes open for the time being. The temporary restraining order is in place through Monday, February 3 at 5 p.m.

“The repercussions of this pause have the potential to be impactful, especially for agencies delivering and/or operating infrastructure projects with federal funding support. However, the consensus expectation amongst contacts in and around Washington, D.C. is that the pause will be short lived.”

Executive Order: Unleashing American Energy

The Unleashing American Energy EO (https://www.whitehouse.gov/presidential-actions/2025/01/unleashing-american-energy/) addresses a variety of topics including but not limited to; procurement, environmental permitting (NEPA), and electric vehicle funding programs. Most notably, the EO places a hold on the disbursement of funding through the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) related to the ‘Green New Deal.’ The EO specifies the Charging and Fueling Infrastructure (CFI) program as well as the National Electric Vehicle Infrastructure (NEVI) programs.

The broader language referencing the IRA and IIJA led to significant confusion and caused federal payment systems to shut down for several hours. It is our understanding that federal payment systems are back online but a pause remains over certain electric vehicle related programs. It is not clear how this may impact other programs which have funds that have been awarded but not yet disbursed, like through the Environmental Protection Agency’s Clean Ports and Community Change programs.

Other notable items from this EO include:

A reference indicating that modifications are coming to federal procurement policies by the Office of Management and Budget (OMB).

Streamlining the federal environmental approval processes, especially for oil and gas related projects, limiting analysis to only what is specifically legislatively required.

Revokes previously enacted EOs pertaining to environmental justice as it relates to screening and project evaluation. Notably, the Climate and Environmental Justice Screening Tool (CEJST), used over the last four years to evaluate and prioritize federally funded projects, has been removed from the internet.

Executive Order: Ending Illegal Discrimination and Restoring Merit Based Opportunity

The Ending Illegal Discrimination and Restoring Merit Based Opportunity EO (https://www.whitehouse.gov/presidential-actions/2025/01/ending-illegal-discrimination-and-restoring-merit-based-opportunity/) rescinds the Biden-era emphasis on diversity, equity, and inclusion (DEI) principles at both the public and private sector levels. This eliminates prioritizing areas and projects based on equity-based considerations. Instead, it refocuses outreach and project prioritization towards the community as a whole, creating a ‘neutral’ approach to ensure that federal funds do not exclude or prioritize groups based on demographic considerations.

The EO frames DEI as illegal discrimination, which could have far reaching implications on local public agencies with adopted DEI programs or principles. It is not clear how this EO and future actions will impact long standing federal programs related to disadvantaged business enterprises, which have always extended to areas of social and economic consideration. In the official, codified regulations for the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) program—namely 49 CFR Part 26—the term “equity” does not appear explicitly. Instead, the regulatory language refers to ensuring nondiscrimination, creating a level playing field, and removing barriers for small businesses owned by socially and economically disadvantaged individuals.

However, in broader federal policy documents and administrative guidance, the DBE program is sometimes referenced under the umbrella of advancing equity—particularly in policy memos, press releases, or executive branch statements about inclusive economic opportunity. In those non-regulatory contexts, the DBE program may be described as a mechanism to foster equity in federal contracting, even though “equity” does not appear as a defined term within the DBE regulations themselves.

Revised NOFO: RAISE/BUILD

These EOs have necessitated revisions to the RAISE/BUILD Notice of Funding Opportunity. In addition to simply changing the moniker of the program back to what it was under the previous Trump Administration, the NOFO revisions largely remove merit criteria areas in a manner consistent provided in the EOs. Notable changes include:

Changing historically disadvantaged community definitions to solely focus on areas of persistent poverty – the key distinction here is that areas of persistent poverty are focused on household income/poverty rates alone rather than other sociodemographic factors.

Removes reference to all DEI principles, including references to environmental justice and access for those with limited English ability in public/agency improvement processes.

Removes eligibility for zero-emissions related projects and direct references to climate change.

Removes merit criteria related to reducing vehicle miles travelled and reducing emissions (in certain areas) but otherwise leaves in language about reducing pollution and improving quality of life.

Removes language about reducing vehicle dependence and about mode shift from vehicles to active transportation, as well as the linkage between active transportation and health outcomes.

Removes reference to utilization of disadvantaged business enterprise firms and union goals as it relates to economic competitiveness.

The end of the NOFO includes a notable paragraph related to anti-discrimination, tying DEI to discrimination-based activity. The clause indicates that a local public agency must not operate any DEI programs to be eligible to disburse grant related funding. It is assumed that this language will be incorporated into future grant notices and agreements.

What we do not know: Will this clause and the related EO will be challenged successfully in court? In the short term, this language is concerning for any public agencies with formal and adopted DEI programs or policies.

Federal Anti-Discrimination As expressed in Executive Order Ending Illegal Discrimination and Restoring Merit-Based Opportunity, as a condition of grant award, each recipient must agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code and that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.

Summary

These Executive Orders mark a departure from previous federal priorities around environmental considerations, equity initiatives, and zero-emissions program support, creating uncertainty in the near term for public agencies reliant on federal funding. Some aspects of the changes are clear, such as the shift in focus to household income and poverty rates instead of broader sociodemographic factors in discretionary grant programs. Other areas, like how DEI-focused local policies will be reconciled with federal anti-discrimination provisions, remain unresolved. We anticipate further clarifications and potential legal challenges, particularly regarding the definitions and eligibility conditions introduced by these EOs.

Ultimately, local agencies may wish to re-examine their current practices, monitor the evolving regulatory environment, and prepare for possible adjustments to funding priorities and compliance requirements in the months ahead.

Please reach out to TGC with any questions regarding these changes. We are here to help you navigate federal policy and funding pursuit.

Let's Connect

Texas State Capitol _iStock-1401614999.jpg

For additional information or questions, contact TGC to learn more about our services, our team, and our mission to connect capital to communities across Texas and beyond.

Analysis of Recent Federal Policy Actions (Last Updated: January 29, 2025)