By Julie Sneider, Senior Editor
Over the past couple of months, Rich Meene has been responding to a deluge of phone calls and emails from clients — including some in the transportation industry — wondering about the status of their federal grant funding as the Trump administration’s policies and strategies take hold.
Meene is a partner in the government contracting practice at CohnReznick Advisory LLC, a tax advisory and consulting firm. He has decades of experience working with contractors and recipients of government funds. Clients include those in the public and private sectors that receive federal grants for transportation infrastructure projects, including rail.
While it’s not unusual for Meene to field clients’ questions about how a change in presidential administrations might impact federal grant funding for infrastructure projects, confusion and uncertainty over federal funding under Trump 2.0 is at a level that Meene hasn’t seen before.
First, mass confusion erupted nationwide just days after the Trump administration took office, when the Office of Management and Budget (OMB) issued a memo advising all federal agencies to temporarily pause disbursement of federal grants and loans until it could be determined that the funding meets President Trump’s policies and goals. Although federal judges issued injunctions against the freeze, the administration has continued to pause, cancel or delay funding previously approved by Congress.
Then on Jan. 30, Transportation Secretary Sean Duffy authorized a series of actions to rescind what the administration describes as "woke" diversity, equity and inclusion (DEI) policies and roll back "burdensome and costly" regulations. Duffy’s "Woke Recission" memo directed the U.S. Department of Transportation’s secretarial officers and heads of operating administrations to identify and eliminate all programs, policies, activities, rules and orders from President Biden's administration that "promote climate change activities, DEI initiatives, racial equity, gender identity policies, environmental justice and other partisan objectives," a USDOT press release stated at the time.
That memo was intended to align the department with several of Trump's executive orders. At the same time, Duffy signed another memo to ensure that all USDOT policies, grants, loans and actions are "based on sound economic principles, positive cost-benefit analyses and pro-economic growth priorities" that align with the Trump agenda.
In his practice, Meene advises clients on all aspects of the federal funding process, from drafting grant proposals to ensuring funding recipients’ compliance with government requirements to audits and, in some cases, grant terminations.
Of late, he’s been helping several clients work through the administrative process of closing down a grant early at the government’s demand. As part of the process, Meene also prepares clients for navigating the business impact of stop-work and termination orders once those federal dollars dry up.
Additionally, Meene educates current and potential federal grant recipients how to stay up to date on evolving federal actions and guidance. Recently, during a webinar Meene co-hosted on the new administration’s priorities, webinar attendees said that changes to federal funding have created the most uncertainty in their businesses, with 40% noting it as their top concern.
When it comes to federal grants, the government can terminate funding for any reason, including a change in policy, he says.
For example, under Trump’s first term, the Federal Railroad Administration rescinded about $1 billion federal dollars for California’s high-speed rail project. Under the Biden administration, the FRA announced California would receive a $4 billion grant for building a 171-mile stretch of the high-speed rail line between Bakersfield and Merced. But Trump has long opposed California’s high-speed rail line. So, in February, the Trump administration once again targeted the project’s funding, announcing an FRA investigation into whether the state should receive the $4 billion grant promised under the Biden administration.
For those who’ve received rail infrastructure grants through the Infrastructure Investment and Jobs Act (IIJA), Meene advises that recipients pay close attention to what the Trump USDOT has outlined in memos to meet compliance.
“People may not like all the memos, but the Department of Transportation is being pretty clear with their explanations about why they’re doing what they’re doing,” Meene says. As a result, grant applicants and recipients should produce economic analyses of their projects to show the government that the projects align with the administration’s policies.
Grant applicants and recipients also should take care to remove language in their project description, website or grant application that indicates their federally funded project would benefit one specific area or group over another, Meene says.
For example, after the OMB memo came out in January, many of his clients scrubbed their websites and grant solicitations and applications of language referring to DEI, which, as a policy, can be defined broadly.
“If you remember a lot of those active grants that were awarded in the last few years were during the Biden years, and if you looked at the Biden agenda, it would simply say you’ve got to show how your funding benefits economically disadvantaged communities,” says Meene. As a result, some clients used that as an opportunity to take an existing project and apply for grant funding that fell under that Biden-era criteria.
But under the Trump agenda, grant applicants and recipients must demonstrate the business case for how the federal dollars would benefit all, not a specific community, he says. It goes back to the Trump administration’s statements that say DEI programs are discriminatory, he adds.
“What I’ve been advising my clients is that you need to review your programs. You need to look at things and be ready and willing to explain how you comply with federal law,” says Meene.
That doesn’t necessarily mean shutting down a project or program that has a DEI component, he says. But clients need to be very intentional in showing the government that the project is not in conflict with the 1964 Civil Rights Act or other legislation at the state or federal level that prohibits discrimination in any way, he says.
The dramatic shift between the Trump and Biden administrations when it comes to applying policy to federal grant applications may prompt businesses to plan no more than four years out so as not to risk losing a grant mid-project, Meene says.
For those considering applying for grants under the Trump administration, he advises they show how their proposed project will have a broader economic benefit and be cost efficient with controls in place to eliminate fraud, waste and abuse.
“I think this situation is going to make businesses very intentional about how they can demonstrate a benefit for a project but remain nimble in the event that we see a change in administrations and a different focus,” Meene says.