Feb. 23 Federal Update: ACF Issues Sub-Regulatory Guidance Update

On Feb. 19, the Administration for Children and Families (ACF) announced the rescission of 35,781 pages of obsolete sub-regulatory guidance, representing 74% of ACF’s total sub-regulatory footprint.

All rescinded documents have been archived and remain publicly accessible for transparency and historical reference. Active ACF guidance is available at HHS.gov/guidance and through individual program offices’ webpages.

The decision is intended to mirror the agency’s commitment to regulatory efficiency, transparency, and accountability.

DHS Funding Expires, Creating a Partial Government Shutdown

The recent appropriations legislation, H.R. 7148, secured funding for the Departments of Health and Human Services, Education, Labor, Transportation, and Housing and Urban Development through the end of the fiscal year, Sept. 30.   

However, the bill temporarily funded the Department of Homeland Security through a continuing resolution, extending funding through Feb. 13. The funding has since lapsed, triggering a partial shutdown of key agencies, including the Federal Emergency Management Agency (FEMA), the Transportation Security Administration, and the Coast Guard. 

Disaster relief is now facing uncertainty after FEMA was ordered to suspend the deployment of hundreds of aid workers to disaster-torn areas across the US. 

SAMHSA and ACF Issue Dear Colleague Letter  

Following the establishment of the White House Faith Office and the Religious Liberty Commission, the Administration for Children and Families (ACF) and the Substance Abuse and Mental Health Services Administration (SAMHSA), as operating divisions of the Department of Health & Human Services, issued a Dear Colleague Letter. They jointly sought to underscore that both agencies welcome full participation by faith-based organizations in their programs and activities. 

House Committee on Agriculture Chairman Releases the Farm, Food, and National Security Act of 2026 

The House Committee on Agriculture Chairman Glenn Thompson (R-PA) released a statement announcing the Farm, Food, and National Security Act of 2026, colloquially known as the Farm Bill. 

The comprehensive bill provides aid to farmers to mitigate market uncertainty and to navigate the aftermath of natural disasters. The bill supports rural development by strengthening broadband connectivity, protecting access to health care, enhancing efforts to meet childcare needs, addressing workforce challenges, and strengthening rural water infrastructure. It also advances policies to expand the reach of critical nutrition programs, increase accountability, and prioritize innovation.  

Additionally, the proposed Farm Bill requires the Department of Agriculture to include all identified SNAP payment errors in a supplemental annual report. It requires the Government Accountability Office to investigate state SNAP administrative costs. It also reauthorizes the Gus Schumacher Nutrition Incentive Program and waives the federal cost-share match for persistent poverty counties and expanding produce access. 

The House Committee on Agriculture has published a summary with further information. 

HUD Proposes Rule to Require Citizenship and Legal Status Verifications

The Department of Housing and Urban Development (HUD) recently proposed a rule requiring citizenship verification requirements for all individuals residing within HUD-assisted housing. If a family no longer qualifies for continued assistance, they may become eligible for a temporary deferral, ensuring continued access to affordable housing.

The proposed rule would affect individuals in a covered program, including the Public Housing program, the Housing Choice Voucher program, and certain other community development programs.

Once published within the Federal Register, comments will be due in 60 days.

House Ways and Means Committee Holds Hearing to Examine Foreign Influence in American Nonprofits 

On Feb. 10, the House Committee on Ways and Means held a hearing to examine how foreign influence may exploit tax-exempt status to interfere with America’s political and regulatory climate. 

Witnesses discussed the danger of donor-advised funds, fiscal sponsorships, and public grants being used to obscure the origin, destination, and use of funds. They also highlighted issues with separation between 501(c)(3) charities and 501(c)(4) political organizations. 

Witnesses spoke to the need for transparency and accountability. Recommendations included revising Form 990 to include standardized questions focused on fiscal sponsorships, donor-advised funds, foreign operations, and pass-through funding structures.    

The hearing raises a serious concern about diminishing trust in the nonprofit sector and follows a trend of increased scrutiny and allegations of fraud. The hearing also arrives as the nonprofit sector faces immense uncertainty surrounding federal appropriations and the timely continuation of federal grants.  

Congressional Hearing Discusses Restoring Trust and Transparency in Public Housing Agencies 

On Feb. 10, the House Committee on Financial Services held a hearing to examine how the Department of Housing and Urban Development (HUD) funds and oversees public housing authorities (PHAs). PHAs serve approximately 9 million Americans nationwide by administering HUD’s public housing programs.  

Chairman Meuser (R-PA) of the Subcommittee on Oversight and Investigations stressed the need to prioritize oversight and enforcement of PHAs, including through enhanced data analytics and AI-enabled tracking systems. He also encouraged reviewing high-performing housing authorities to identify replicable best practices.  

Witnesses highlighted the importance of strengthened auditing requirements and the use of performance-based funding metrics, while also noting the challenges HUD faces due to funding and staffing shortages. 

House Committee on Education & Workforce Discusses Disability Labor Law 

On Feb. 13, the House Committee on Education and Workforce held a hearing to examine the benefits, opportunities, and impact that section 14(c) of the Fair Labor Standards Act provides to workers with disabilities.  

Section 14(c) allows businesses and nonprofit organizations to employ workers who would otherwise be unable to find employment, often due to a severe disability, with wages commensurate with productivity. Approximately 93% of organizations with a 14(c) certificate are community rehabilitation programs (CRPs), organizations that provide employment, rehabilitation services, training, skill development, and social engagement. 

Witnesses stressed the importance of the program for individuals with severe and profound disabilities, as it offers safe and meaningful pathways to community engagement. They also expressed concern about the program’s elimination, the resulting job losses, and the potential for physical, social, and emotional regression, as well as disconnection from community members. 

However, other witnesses raised concerns, detailing legacies of research that demonstrate that subminimum wage settings reduce the likelihood that individuals will enter competitive integrated employment. Certain states have eliminated the option because wages are set by productivity rather than minimum wage standards. In the policy’s absence, meaningful employment gains have continued to grow.  

Senate Committee Examines Preventing Fraud in Child Care Assistance Programs 

On Feb. 12, the Senate Committee on Health, Education, Labor and Pensions held a hearing to discuss fraud in child care assistance programs. Witnesses and senators stressed the need for high-quality child care. They shared their profound impact in offering children early education and enabling parents to reenter the workforce confidently. 

Witnesses also detailed the barriers child care providers face, especially in light of recent funding freezes. Complex regulations, staffing shortages, and rising costs have led providers to close, reducing family choice, deepening child care deserts, and disproportionately harming rural and underserved communities. 

Witnesses emphasized the care child care facilities take to steward federal funds through oversight and safeguards, ensuring they are used appropriately and transparently. They recommended strengthening investment to increase families’ access to affordable and high-quality child care. Witnesses advocated for common-sense measures utilizing existing structures and data to identify and eradicate fraud.  

Sector Updates from the Judiciary 

Federal Court Pauses the Cancellation of Public Health Grants 

The US District Court for the Northern District of Illinois granted an emergency temporary restraining order to prevent the cancellation of $600 million in public health grants across California, Colorado, Illinois, and Minnesota. As a result of the order, the Trump administration cannot issue guidance or directives to cancel public health grants to the states through Feb. 26 as litigation continues. 

The Department of Health and Human Services stated the grants were to be terminated because they do not reflect the priorities of the Centers for Disease Control. 

Federal Court Orders Reimbursements for Migrant Support Services Before Grant Terminations 

The US District Court for the Northern District of Illinois recently found that the Department of Homeland Security failed to comply with a court order directing it to unfreeze grants totaling approximately $55 million. The grants were issued to Chicago, Illinois; Denver, Colorado; and Pima County, Arizona, to offer support to migrants. 

As a result, the court ordered that the federal government process reimbursement requests submitted before the grants in question were formally terminated in April by Feb. 23.  

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