Editor’s Note: Today’s post is by Hilary Craiglow. Hilary leads library consulting at Attain Partners, a higher education consulting firm. For those interested in a full summary of the proposed changes to federal funding guidance, we recommend this analysis by former NIH Program Official Elizabeth Ginexi.

The proposed revisions to Federal Financial Assistance, by the Office of Management and Budget (OMB) last week, are sweeping in scope. If finalized as written, they would reshape the infrastructure and economics of research in ways that threaten American science. The repercussions wouldn’t just fall on researchers, institutions, and the public whose tax dollars fund this work; they would also impact the broader enterprise that exists to improve our understanding of the world and the human condition, and our global leadership in innovation.

With so much to unpack in the proposed revisions, this post focuses on two provisions that would directly harm financial mechanisms supporting scholarly communications, journal subscriptions and article processing charges, and what that could mean for libraries and publishers.

Part of the OMB’s revisions include changes to Uniform Guidance (UG) — the Code of Federal Regulations, 2 CFR Part 200, which governs how institutions recover the costs of federally sponsored research. For academic libraries and scholarly publishers, the proposed provisions require urgent attention because they would make publishing and journal subscription costs unallowable against federal awards, directly and indirectly.

These are proposed rule revisions and there is an opportunity to shape the outcome.

What Did Not Change

There is a small bright spot worth noting.

There is no change in the indirect cost (IDC) rate-setting process and no cap on IDC rates. The composition of IDC components, including the library component within an institution’s rate, remains intact. After a year of uncertainty and speculation following the NIH indirect cost cap controversy, the rate structure is status quo. If the galvanizing of the research community and the advocacy work of groups like the Joint Advisory Group (JAG) for the FAIR model had any effect, it shows. And it reminds us that collective response can be effective.

Two Provisions That Demand Library and Publisher Attention

Many funding agencies’ FY2027 budget proposals gave us an early warning. Skinny budgets from DOE, NSF, NASA, and USDA contained nearly identical language prohibiting federal funds for “expensive” journal subscriptions and publishing costs, with NSF explicitly labeling it “new government-wide grants guidance.” That guidance is now revealed. The specific proposed language related to publishing and subscriptions appears on pages 257–258 of the public inspection document for the UG rule-making process. (The 412-page document reflects the requirement that all funding agencies will follow the rulemaking simultaneously; the document has roughly 41 pages for signatures and 151 pages for agency exceptions. The substantive policy changes run pages 1–115 for the preamble and 178–260 for the proposed regulatory text.)

These revisions reflect multiple executive orders directing agencies to reduce costs and increase accountability in federal financial assistance. The first provision of particular interest to librarians and publishers is:

• 200.454 Memberships, subscriptions, and professional activity costs.

(a) Costs of the recipient’s or subrecipient’s membership in professional, civic, business, and technical organizations are allowable if necessary to fulfill the award requirements. Such costs must receive prior written approval of the Federal agency.

(b) Costs of the recipient’s or subrecipient’s subscriptions to business, professional, academic, and technical periodicals are unallowable.

Journal subscriptions, which can represent 50 percent or more of a research library’s materials budget, have historically been considered in indirect cost rate-setting, and through that process have been recovered, at least in part, through IDC.

Under the proposed rule-making language, they cannot be included in IDC rate-setting proposals going forward, affecting new proposals and future rate negotiations. For some institutions, this could mean millions of dollars no longer recovered through their IDC going forward. Current, already-negotiated IDC rates would not be changed retroactively.

The other section of particular interest is:

• 200.461 Publication and printing costs.

(a) In general. Except as provided in paragraph (b) of this section, publication costs (including page charges, article processing charges (APCs), or similar fees such as open access fees for professional journal publications and other peer-reviewed publications) are unallowable under Federal awards. Printing costs (including distribution and general handling) are allowable.

(b) Exceptions. The only exceptions to paragraph (a) of this section are for publication costs that are specifically required by Federal statute or approved in advance by the Federal agency on a case-by-case basis. A general requirement to make results publicly available must not be construed as authorizing publication costs.

(c) Requirements. (1) Allowable publication costs included in the terms and conditions of a Federal award must meet the following requirements:

     (i) The publications report work supported by the Federal Government; and

     (ii) The charges are levied impartially on all items published by the journal, whether or not under a Federal award.

(2) The recipient or subrecipient may charge the Federal award during closeout for the costs of publication or sharing of research results if the costs were not incurred during the period of performance of the Federal award. These costs must be charged to the final budget period of the award unless otherwise specified by the Federal agency

APCs, currently chargeable directly to federal grants, would no longer be directly chargeable for awards issued on or after October 1, 2026. It is not yet clear whether already-approved direct cost charges for APCs would be reimbursed under existing awards. This section also contains language implying that publication charges for work written under a federal award cannot differ from charges levied on publications not written under a federal award, a provision that is not entirely clear and that warrants close attention. If the OMB receives enough comments requesting clarification on this point, it would be obliged to provide a more detailed explanation.

Eliminating the Funding Does Not Eliminate the Costs

The proposed rule-making would remove a primary funding mechanism that institutions have used to meet federal open-access mandates. Mandates that, as of today, remain fully in place. However, OSTP’s open-access policy is regulatory; this revision, if finalized, would be statute. And, statute wins over regulation. The administration appears not to have reconciled this tension (yet?) or has chosen not to.

The “triple-charging” argument by the government, that taxpayers pay for research, then publication, and then access, has a certain populist logic. It is a reasonable position if you assume that publication is a costless, essentially automatic step between research and public access. As Scholarly Kitchen readers know, it is not.

Academic publishing, whatever one thinks of its economics or market structure, performs functions that do not disappear if the funding does: peer-review coordination, editorial judgment, copyediting, metadata creation, discoverability infrastructure, digital preservation, retraction, and the currency those publications provide for promotion and tenure decisions. These are features of a knowledge system built over decades. The publishing ecosystem that many in this community have spent years trying to reform and strengthen through innovation, advocacy, and market drivers will not become cheaper or more sustainable if the primary levers supporting these models are removed without a viable alternative in place.

For libraries, removing subscription costs from the allowable indirect cost base does not make subscriptions free. Instead, it shifts those costs onto already-pressured institutional operating budgets or forces cuts, further limiting researcher access to the literature. That pressure on library budgets flows directly into pressure on publishers’ business models.

The NSF’s FY27 budget gestures toward alternatives, funding what it calls “Publication Fee Alternative Exploration” to develop new models and “alternative measures of researchers’ academic achievement that do not rely on counting the number of academic papers published or where they are published.” This is a long-standing conversation worth having. Alison Mudditt’s post just last week, Beyond the Article, Beyond the APC: What We Learned from 18 Months of R&D, offers a detailed look at what it takes to build those alternatives. The work is serious and necessary, yet it is not ready to replace what exists. Defunding current infrastructure while a replacement is still in R&D is not a plan for a stable transition.

The Rule-Making Process Includes Comment Before July 13

These are proposed rule changes, subject to the Administrative Procedure Act. Public comments are part of the official record. If OMB receives sufficient comments, including comments requesting clarification of ambiguous provisions, it is under obligation to respond with more detailed reasoning before issuing a final rule.

Comments are to be submitted at regulations.gov, docket OMB-2026-0034. Begin each comment with the relevant section in brackets, e.g., [200.454] for subscriptions and [200.461] for publication costs. Be specific about what you are asking OMB to clarify, reconsider, or reject. Comments can be submitted by individuals and groups. The comment period closes July 13, 2026. The rules would take effect October 1, 2026.