Legislative Update: EPA Pauses TSCA Litigation as Regulatory Overhaul Advances Amid Legal Uncertainty

EPA Pauses TSCA Litigation as Regulatory Overhaul Advances Amid Legal Uncertainty

The Environmental Protection Agency (EPA) has temporarily delayed multiple legal challenges to Biden-era chemical regulations under the Toxic Substances Control Act (TSCA) by securing court-approved pauses in several appellate cases. These pauses allow the agency to reconsider and potentially rewrite key rules governing chemical risk evaluations and restrictions on substances such as perchloroethylene and carbon tetrachloride. While this procedural move provides the Trump administration with additional time to reshape regulatory policy, legal experts emphasize that it does not ensure the agency will ultimately prevail in court.

At the same time, several TSCA-related cases continue to move forward, underscoring ongoing legal uncertainty. Litigation is active across multiple circuits, including disputes involving methylene chloride, trichloroethylene, asbestos, and flame retardants. These cases are among the first to interpret the 2016 amendments to TSCA and are further shaped by the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which shifted interpretive authority over ambiguous statutes from agencies to courts.

The EPA has begun signaling potential policy shifts that would mark a departure from prior regulatory approaches. These include reduced reliance on Integrated Risk Information System (IRIS) toxicity values, a narrower scope of risk evaluations that may exclude certain uses or exposure pathways, and greater deference to other regulatory frameworks, both within and outside the agency. Additionally, the EPA has indicated it may assume the use of personal protective equipment (PPE) in workplace settings when assessing chemical risks, a change that could lead to fewer “unreasonable risk” findings and, consequently, less stringent regulation.

Senate Advances Sweeping Housing Package as House Divisions Stall Final Passage

The Senate overwhelmingly passed the 21st Century ROAD to Housing Act (H.R. 6644) on March 12, 2026, by a vote of 89–10, marking a significant bipartisan effort to address housing affordability through a package of more than three dozen provisions aimed at increasing supply, reducing costs, and streamlining regulations. The legislation reflects a blend of previously advanced measures, combining elements of a Senate Banking Committee bill (S. 2651), approved unanimously in 2025, and a House-passed package that cleared the chamber with broad bipartisan support.

The Vinyl Institute has been advocating for the passage of housing legislation that would give a much-needed boost to housing supply and reduce regulatory barriers.   The legislation will drive higher demand for new residential construction, directly increasing demand for pipe, vinyl siding, flooring, and electrical conduit.  Passing this measure and removing regulatory barriers to affordable housing have also been top priorities of the White House.

Despite the rare example of a strong bipartisan Senate vote, the bill’s path forward remains uncertain amid emerging divisions in the House. House Financial Services Chairman French Hill (R-AR) signaled that the Senate version does not adequately reflect House priorities, raising the likelihood of further negotiations or a formal conference process. Key points of contention include the investor restrictions affecting build-to-rent housing and the temporary nature of the central bank digital currency prohibition, which House conservatives seek to make permanent.

FY2027 Budget Process Taking Shape as Republicans Continue to Eye Reconciliation 2.0 to Pass Priority Funding

The fiscal year (FY) 2027 federal budget process is beginning to take shape against a backdrop of compressed timelines, intra-party divisions, and broader fiscal and geopolitical pressures. The President Donald Trump is expected to release its FY2027 budget proposal during the week of March 30, significantly later than the statutory deadline of the first Monday in February, underscoring ongoing internal deliberations over topline spending and policy priorities. Early signals from the President indicate a substantial shift in federal spending priorities, particularly in national security, with a proposed defense budget of approximately $1.5 trillion, an increase of roughly 50 percent over current levels. However, key structural decisions remain unresolved as Republicans navigate how best to pursue new spending through the discretionary appropriations process versus alternative legislative vehicles, such as a possible budget reconciliation package in such a narrowly divided Congress.

At the center of these deliberations is the emerging concept of a “Reconciliation 2.0” package, which Republican leadership is actively evaluating as a mechanism to advance supplemental funding priorities, including support for U.S. military operations in the Middle East. The reconciliation process offers a procedural advantage in the Senate by allowing passage with a simple majority, thereby bypassing the filibuster. Nonetheless, its use remains under active debate within the Republican conference. Senate Majority Leader John Thune (R-SD) has signaled a preference for advancing funding through regular order, citing both institutional considerations and the complexities associated with meeting reconciliation’s budgetary requirements.

Chief among these challenges is the need to identify offsets for any new spending, which would likely necessitate reductions in politically sensitive domestic programs, including housing, infrastructure, environmental initiatives, and community development funding. These tradeoffs have contributed to internal divisions and have thus far prevented leadership from committing definitively to a reconciliation strategy.

Compounding these fiscal and procedural challenges is the ongoing partial shutdown of the Department of Homeland Security (DHS), which continues to exert operational and political pressure on both Congress and the Administration. The lapse in FY2026 DHS funding has resulted in unpaid federal employees and increasing disruptions to frontline services, most notably within the Transportation Security Administration (TSA). As the shutdown persists, its visibility and public impact are intensifying, raising the stakes for a negotiated resolution. Despite continued engagement, negotiations between the White House and congressional Democrats remain at an impasse, consuming legislative bandwidth and heightening partisan tensions at a critical juncture in the FY2027 process. The Senate is concurrently considering the nomination of Senator Markwayne Mullin (R-OK) to serve as Secretary of Homeland Security following President Trump’s dismissal of Secretary Kristi Noem on March 5, adding yet another layer of complexity to the issue.

U.S.-Mexico USMCA Talks Advance as July Review Approaches 

This week, bilateral discussions between the U.S. and Mexico on the future of the U.S.-Mexico-Canada Agreement (USMCA) are advancing ahead of the agreement’s scheduled joint review on July 1. U.S. Trade Representative (USTR) Jamieson Greer and Mexican Secretary of Economy Marcelo Ebrard have directed their respective technical teams to intensify engagement, with a focus on strengthening North American manufacturing capacity and employment. Central to these discussions is an effort to reduce reliance on non-market inputs and to reinforce regional supply chain resilience.  Both sides have also committed to establishing a structured meeting cadence to develop concrete deliverables in advance of the formal review process.

At the same time, 21 Democratic senators are seeking to use the USMCA review to pursue more robust environmental provisions. In a letter to USTR Greer, led by Sen. Sheldon Whitehouse (D-RI),  Ranking Member of the Senate Environment and Public Works (EPW) Committee and a senior member of the Finance Committee, called for significant upgrades to the agreement’s environmental chapter, arguing that current provisions are insufficiently enforced and create incentives for environmental arbitrage. Among their proposals are stronger commitments to address plastic pollution by expanding language to include inadequate waste management systems and plastic pollution throughout the lifecycle of plastics, not only “marine litter.” They also propose creating a rapid-response environmental enforcement mechanism modeled on the agreement’s labor provisions and eliminating Investor-State Dispute Settlement (ISDS). Furthermore, they are advocating for harmonized emissions reporting standards, binding environmental obligations, and enhanced compliance with multilateral environmental agreements.

These proposals would likely require revisions to both the USMCA text and its implementing legislation, necessitating congressional approval and potentially complicating the review process. The senators emphasized the need for close consultation with Congress and framed the reforms as beneficial to U.S. competitiveness, environmental protection, and worker outcomes.

Mexico’s approach to the negotiations is more cautious, prioritizing continuity of the agreement and resisting major structural changes. Mexican officials are seeking greater flexibility in sourcing inputs from outside North America, stronger dispute resolution mechanisms, and assurances of stability amid concerns about U.S. tariff policy.  The United States–Mexico–Canada Agreement (USMCA) underpins more than $4 billion in daily cross-border trade and approximately $1.6 trillion in annual goods exchange among the three countries.

White House Steps Up Role in Bipartisan Permitting Reform After Democratic Leaders Return to the Negotiations Table  

The White House has increased its involvement in bipartisan negotiations over permitting reform, signaling a renewed push to advance legislation that has stalled for several years. Officials from President Donald Trump’s legislative affairs team and the National Energy Dominance Council are now more actively engaged with congressional leaders, including Senate Environment and Public Works Chair Shelley Moore Capito (R-WV). This heightened engagement comes as concerns about energy affordability and rising electricity demand become more prominent in national debates.

Negotiations had been disrupted after Senate Democrats, including EPW Ranking Member Sheldon Whitehouse and Energy and Natural Resources Ranking Member Martin Heinrich (D-NM), withdrew in response to the administration’s halt on offshore wind projects. However, talks resumed after the Interior Department signaled progress on permitting for solar and onshore wind projects, and court rulings challenged the offshore wind restrictions. Democrats emphasized that continued permitting activity is essential to sustaining negotiations, warning that further disruptions could jeopardize progress.

The administration has framed legislative reform as necessary to complement its executive actions to streamline permitting.  Still, the approaching midterm elections and competing legislative priorities can continue to complicate the path forward.  Observers suggest that even if a bipartisan framework emerges in the coming weeks, the compressed legislative schedule could force Congress to attach permitting provisions to a broader must-pass legislative package rather than advancing a stand-alone bill.

At the same time, broader political and economic pressures and a growing alignment across parties on the importance of project certainty are increasing interest in a bipartisan deal.  Rising energy prices, heightened geopolitical tensions in the Middle East, and growing concerns about infrastructure delays have intensified calls from industry groups and policymakers to streamline the federal permitting processes.  While negotiations around the SPEED Act (H.R. 4776) and related reforms remain fluid, lawmakers in both parties increasingly view permitting reform as a potential bipartisan policy area that could advance later this year.  Majority Leader Thune (R-SD) also continues to suggest that energy permitting reform could be on the chamber’s agenda this year if negotiators can resolve the remaining disputes.  If not, it could be taken up as part of a larger legislative vehicle or pushed for consideration during the lame-duck session following the midterm elections.