# GAO Finds OMB Rescission Violates Budget Law

On September 25–26, 2026, the Trump administration sought to withhold approximately $810 million—described in some reports as nearly $1 billion—in congressionally approved funding shortly before the September 30 fiscal-year end. GAO concluded that the pocket rescission violated the Impoundment Control Act if funds were held past their expiration rather than kept available for obligation while Congress considered the rescission. A lawsuit challenges the action, and the Senate did not advance Senator Jeff Merkley’s proposal to bar late-term funding freezes on September 30. The affected programs include health research, education, housing, immigration, diversity, and climate initiatives; no specific contracts or awards are identified. A proposed $10 million reduction to the Minority Business Development Agency could also affect minority-owned firms’ access to federal procurement support.

- Contractors, grantees, and subcontractors should identify exposure to affected programs and confirm funding and obligation status with their sponsoring agencies; the signals do not identify specific awards or contract actions.
- Because the fiscal year ended September 30, organizations with funding tied to these programs may face uncertainty about obligations, delays, or funding gaps as the legal and appropriations issues proceed.
- Maryland-based service providers and minority-owned firms may be particularly affected by the proposed MBDA reduction; organizations should assess reliance on MBDA procurement-support programs and related federal funding.

**Jurisdictions:** federal
**Industries:** Healthcare, Education
**Topics:** Grants & Funding, Policy
**Published:** October 01, 2026

### Government Entities
- Office of Management and Budget (OMB)
- Government Accountability Office (GAO)
- U.S. Congress (Congress)
- Minority Business Development Agency (MBDA)
- U.S. Department of Health and Human Services (HHS)

### Key Quotes
> The $10M cut to Minority Business Development Agency hurts minority owned firms’ access to federal procurement, which is a big part of Maryland businesses in my district.
> — Glenn Ivey, U.S. Representative for Maryland’s 4th District

> Maryland cannot simply replace every federal dollar that Washington chooses to withdraw.
> — Joseline Peña-Melnyk, Speaker of the Maryland House of Delegates

### Sources
- [
        OMB violated Congressional Budget and Impoundment Control Act with $1 billion rescission - Federal News Network](https://federalnewsnetwork.com/federal-newscast/2026/09/omb-violated-congressional-budget-and-impoundment-control-act-with-1-billion-rescission) - Federal News Network
- [Murray on GAO Concluding Trump’s Pocket Rescission is Illegal - Senator Patty Murray](https://www.murray.senate.gov/murray-on-gao-concluding-trumps-pocket-rescission-is-illegal/) - Murray Senate
- [Trump’s ‘pocket rescission’ threatens Maryland budgets - The Banner](https://www.thebanner.com/politics-power/national-politics/pocket-rescission-maryland-budget-DPFMWNV7AZE25KMYBOFDZNPD5Y) - The Baltimore Banner