Legislative Update: The Return of Earmarks and Federal Funding Opportunities | Cozen O’Connor

House Majority Leader Steny Hoyer, House Appropriations Committee Chairwoman Rosa DeLauro, and Senate Appropriations Chairman Patrick Leahy have indicated that the U.S. House and Senate are on the verge of reinstating federal earmarks for local governments and nonprofits. This would be a bipartisan effort to support community projects in legislators’ districts through a reformed process that includes additional oversight mechanisms.

If earmarks are restored, Congress would reclaim one of its most effective tools to support needed projects at the local level and help empower the post-pandemic economic recovery. This also reshapes the landscape for nonprofits whose work benefits their communities and local economies, yet have struggled to secure federal funding through the complexities of federal grant programs, or the absence of federal programs that fit their needs.

The new requirements around earmarks, also known as “member directed spending,” have not been fully hashed out, however, based on precedent and ongoing discussions in Washington, certain general criteria appear likely. First, there will be disclosure requirements regarding the member of Congress who requested the earmark and the earmark recipient, and members will be barred from requesting earmarks for entities with which they have financial ties. Second, earmarks will not be permitted for private companies and for-profit institutions. Third, earmarks will be limited to state and local governments and nonprofits. We anticipate additional requirements if and when earmarks are restored.

There are several considerations to keep in mind for eligible entities that are interested in pursuing earmark requests. The appropriations process is cyclical, and thoughtful timing is important to ensure that entities have a window to develop their proposals, garner support, and influence legislation at the correct points in the process.

Additionally, entities that do not qualify for earmarks (or if earmarks are not restored) should be aware of the myriad opportunities they have to influence federal policy through appropriations legislation. The appropriations process is the routinized, annual bill writing process involving 12 House and Senate appropriations subcommittees that fund the discretionary federal budget. It is one of the most powerful ways Congress sets policy and influences the executive branch, and directly impacts how programs and policies are implemented. While infrequent authorizing legislation creates federal programs, follow-on funding in annual appropriations bills is often necessary to implement these programs, and appropriations legislation invariably tailors how programs are carried out.

Because much of the media focus on Washington policy involves authorizing legislation, and the appropriations process can appear byzantine, many clients do not fully appreciate the opportunities inherent to federal appropriations to shape policy outcomes. With a strategic approach, the appropriations process can be an effective annual vehicle to pursue policy outcomes.