Legislative Update: Congress Faces Delays and Uncertainty in the Federal Appropriations Process

Congress Faces Delays and Uncertainty in the Federal Appropriations Process 

Congress is widely expected to miss the Oct. 1 deadline for completing fiscal year 2027 appropriations, continuing a long-running pattern of delayed spending bills and raising the possibility that the next Congress could inherit unfinished funding negotiations after the November midterm elections. Lawmakers have not completed all 12 appropriations bills on time since fiscal 1997, and the current appropriations cycle has already been marked by delays and partisan divisions.

The House has moved ahead with several fiscal 2027 spending bills, including Energy-Water, Interior-Environment, and Transportation-HUD measures, while Senate appropriators are only beginning their markup process and may soon take up the Interior-Environment bill. At the same time, lawmakers continue to scrutinize details of the Trump administration’s FY27 budget request through oversight hearings.

House Republicans on June 9 approved a $70 billion budget reconciliation package to fund Immigration and Customs Enforcement (ICE) and the Border Patrol for the remainder of President Donald Trump’s term, ending a prolonged partisan dispute over immigration enforcement funding. The bill (S. 2) passed the House on a narrow 214-212 party-line vote after previously clearing the Senate 52-47.

Senior Senate appropriators are also signaling a growing consensus that Congress is unlikely to pass a separate defense-focused “Reconciliation 3.0” package this year, casting doubt on a key component of President Donald Trump’s $1.5 trillion FY2027 defense funding strategy. During a Senate Defense Appropriations Subcommittee hearing, Chairman Mitch McConnell (R-KY) stated that “there will not be another reconciliation bill,” a view echoed by Senate Appropriations Committee Chair Susan Collins (R-ME) and several other senators from both parties. Senate Majority Leader John Thune (R-SD) remains noncommittal about whether the chamber will or should take up a reconciliation package, saying he is “not ruling it out,” but it would “depend on what is in it.”

Despite Senate resistance, House Budget Committee Chairman Jodey Arrington has said the House intends to continue developing a third reconciliation package focused on defense spending and anti-fraud measures, with committee instructions expected within days. However, without Senate support, the prospects for using reconciliation to secure a substantial portion of the administration’s defense priorities appear increasingly uncertain.

Congress and Industry Remain Optimistic On Permitting Reform 

Lawmakers and industry leaders continue to argue that a bipartisan permitting reform package remains achievable this year, despite mounting political and policy obstacles surrounding renewable energy projects and federal permitting policy. Speaking at a June 10 Politico energy summit, Senate Environment and Public Works (EPW) Committee Chairman Shelley Moore Capito (R-WV) said momentum for a deal remains strong because multiple sectors are experiencing the economic impacts of permitting delays. The Senate has spent the past month trying to better position itself as permitting reform remains stalled at the chamber level, even as both parties publicly insist some deal is necessary for infrastructure and energy build‑out. Capito emphasized that permitting reform is necessary while also acknowledging that Republicans may still need to persuade President Donald Trump and the White House to moderate their opposition toward some renewable energy projects. She warned that the administration’s continued efforts to “put its foot on the scale” against certain projects could jeopardize what she described as a major opportunity for a bipartisan legislative accomplishment.

Democrats, while still engaged in negotiations, expressed growing concern that the Trump administration’s handling of renewable energy approvals could undermine trust necessary to finalize a deal. Senate EPW Committee Ranking Member Sheldon Whitehouse (D-RI) said bipartisan discussions with Republicans remain constructive, but argued that ongoing delays involving offshore wind and other renewable projects at the Departments of Interior and Defense represent the largest threat to passing legislation. Whitehouse specifically criticized reports that the Defense Department has treated many wind projects as national security concerns and warned that Democrats would have difficulty supporting a permitting package if the administration continues blocking renewable development.

Whitehouse acknowledged some improvement, including progress on previously stalled offshore wind projects and recent intervention by Senate Armed Services Chairman Roger Wicker (R-MS).  Wicker, on June 3, said he is working with the Pentagon to resolve permitting delays in national security reviews for more than 100 wind energy projects. Whitehouse suggested negotiations are slipping past an earlier goal of producing draft legislation before the July 4 recess, with August now appearing more realistic.

House and industry participants also continued pressing for a broad “all-of-the-above” permitting package that would support both fossil fuel and renewable infrastructure. House Energy and Commerce Committee Chairman Brett Guthrie (R-KY) said Congress faces pressure to advance major permitting reforms in part due to competition with China, while acknowledging that electric transmission reforms will likely be necessary to secure Democratic support, even though many Republicans remain hesitant. However, White House National Energy Dominance Council Executive Director Jarrod Agen signaled that the administration remains focused primarily on natural gas pipelines and nuclear power, arguing that growing electricity demand from AI and data centers cannot be met by wind and solar energy alone.

House Appropriators Advance FY27 Interior-Environment Bill with EPA Cuts

The House Appropriations Committee approved its draft fiscal year 2027 Interior-Environment spending bill on a 35-27 vote, advancing legislation that would reduce EPA funding while increasing support for several Interior and wildfire-related programs. Rep. Marie Gluesenkamp Perez (D-WA) joined Republicans in supporting the measure to provide the EPA with $7.02 billion — an amount significantly above the Trump administration’s requested $4.2 billion, but still roughly 20 percent below FY26 enacted levels.

Water infrastructure and contamination issues remained central to the legislation, particularly regarding drinking water systems, PFAS contamination, and federal financing programs that often support pipe replacement and water infrastructure upgrades. The bill provides $1.2 billion for the Clean Water State Revolving Fund (CWSRF) and $910 million for the Drinking Water State Revolving Fund (DWSRF), both below FY26 levels but substantially higher than the administration’s proposed reductions. Subcommittee Ranking Member Chellie Pingree (D-ME) said the funding levels for most parts of the bill are insufficient, including funding SRFs, particularly as utilities lose access to supplemental funding provided under the 2021 bipartisan infrastructure law. Pingree warned that Congress risks undermining the momentum generated by recent federal infrastructure investments to modernize water systems and support local utilities.

Rep. Bonnie Watson Coleman (D-NJ) offered an amendment to restore SRF funding to fiscal year 2026 levels, but the proposal was rejected after Interior-Environment Appropriations Subcommittee Chairman Mike Simpson (R-ID) argued it lacked an offset to pay for the additional spending. House Appropriations Committee Ranking Member Rosa DeLauro (D-WA) said the objection reflected broader concerns that the bill’s overall funding allocation was insufficient and that the majority is choosing to cut SRFs.

Appropriators also highlighted EPA’s water reuse initiatives tied to growing data center demand, directing the agency to report on the implementation of its Water Reuse Action Plan (WRAP) 2.0, including technologies for water-efficient cooling systems. In addition, the report emphasized continued federal support for communities dealing with PFAS contamination in drinking water supplies, encouraging the EPA to continue providing technical assistance, research support, and cost-effective remediation efforts for affected water systems.

The Committee approved report language that strongly supports the Trump administration’s efforts to roll back several Biden-era EPA regulations on air toxics, water quality, and emissions standards, while also backing reduced regulatory requirements for pyrolysis and other advanced recycling and combustion technologies. The committee additionally adopted an amendment from Chairman Mike Simpson (R-ID) prohibiting EPA from using appropriated funds to develop, finalize, or issue hazard assessments through the Integrated Risk Information System (IRIS) program. The amendment reinforced existing report language stating that IRIS assessments should not be used as the basis for regulatory, permitting, or enforcement actions, and praised EPA’s efforts to move away from relying on the program in agency decision-making.

Senate and House Negotiate Final Housing Bill Compromise Over NEPA Reforms

The Senate and House continue to negotiate the final revisions to the bipartisan “21st Century Road to Housing Act” (H.R. 6644), with one of the primary areas of disagreement centered on environmental permitting reforms under the National Environmental Policy Act (NEPA). The legislation represents one of Congress’s most significant bipartisan efforts this session to streamline federal permitting for housing development. The House approved its amended version in May by a 396-13 vote, while the Senate passed its version in March by an 89-10 vote.

Although both chambers included similar provisions to accelerate housing development and reduce regulatory delays, House negotiators are seeking to preserve broader exemptions for rural infill housing projects omitted from the Senate bill. Another major issue in the negotiations remains differing approaches to restrictions on institutional investors in the housing market, though lawmakers are also closely focused on whether the final compromise can deliver meaningful bipartisan NEPA reforms.

Bipartisan Concerns Emerge Over EPA Science Overhaul and Research Capacity

A House Science, Space, and Technology Environment Subcommittee hearing on EPA’s new Office of Applied Science and Environmental Solutions (OASES) revealed bipartisan concerns over the Trump administration’s dismantling of EPA’s long-standing Office of Research and Development (ORD) and the broader restructuring of agency science operations. During the June 4 hearing, Lawmakers from both parties questioned whether the EPA retains sufficient scientific capacity after losing roughly one-third of its scientists and a quarter of its total workforce through reorganization and staff reductions. Subcommittee Chairman Rep. Scott Franklin (R-FL) and Committee Chairman Rep. Brian Babin (R-TX) generally supported the administration’s goal of integrating scientists more directly into regulatory offices rather than maintaining research “silos,” but they raised concerns about whether program offices can absorb expanded technical responsibilities.

Republicans also emphasized the importance of preserving long-term research capabilities to address emerging environmental and technological challenges, warning that EPA’s new structure could undermine the agency’s ability to anticipate future risks involving issues such as PFAS and other emerging contaminants.

The hearing’s sole witness, Dr. Maureen Gwinn, the top career official leading OASES, faced repeated questions about whether the new office is focused too heavily on short-term technical assistance at the expense of independent, forward-looking scientific research. Chairman Babin warned that maintaining long-term scientific research is essential to EPA’s credibility and its ability to identify emerging environmental threats before they become regulatory crises. These concerns echoed criticisms previously raised by former EPA research officials and some Senate appropriators, who argued that ORD’s elimination weakens EPA’s foundational scientific expertise. Republican lawmakers also questioned whether regulatory offices now tasked with additional scientific responsibilities have the staffing and resources needed to manage increasingly complex environmental and data-intensive challenges.  Under questioning, Gwinn acknowledged that some research projects had been delayed due to executive-order-related reviews and confirmed that the policies were developed in consultation with senior EPA leadership.