Legislative Update: GOP Leaders Push for Pass Reconciliation Bill Before July 4

GOP Leaders Push for Pass Reconciliation Bill Before July 4 

The President and Republican congressional leaders are intensifying efforts to pass President Donald Trump’s sweeping budget reconciliation bill, aiming to meet the self-imposed July 4 deadline he set.  While the deadline does not carry legislative significance, it comes amid broader fiscal pressures, including the need to address the debt ceiling by the end of July. Speaker Mike Johnson (R-LA) told House Republicans to keep their calendars flexible despite the July 4 recess, indicating readiness to move quickly once the Senate acts.  Senate Majority Leader John Thune (R-SD) hopes to start considering the bill by the end of this week. However, several unresolved policy disagreements and pending procedural rulings from the Senate parliamentarian continue to delay completion of the bill.  Thune can’t lose more than three Senate Republicans on any vote.

Key areas of disagreement include the rollback of clean energy subsidies, the state and local tax (SALT) deduction cap, and Medicaid cuts.  Just as Senate Republicans were considering a delay to a Medicaid provider tax crackdown to win over moderate GOP senators and secure passage, the Senate parliamentarian on June 26 struck down the Senate Finance Committee’s provider tax framework, along with other health provisions during the ongoing “Byrd bath” process.  While the removal of the provider tax language may eliminate a key point of opposition, it simultaneously creates a substantial budgetary challenge. With the provision’s savings now off the table, the Committee must identify alternative offsets.

Despite the friction, Republican leaders remain committed to advancing the bill swiftly, hoping Trump’s direct engagement and the pressure of the upcoming recess will ultimately unify the party and get the legislation to his desk.

Senate GOP Finance Committee Makes Significant Changes Differing From the House Budget Bill

On June 16, the Senate Finance Committee released its version of President Donald Trump’s “big, beautiful bill,” after making several changes that will need to be reconciled if passed.   The Senate version outlines a more moderate approach to eliminating tax incentives from the Inflation Reduction Act (IRA).  The measure represents a significant rollback of renewable energy incentives while making carveouts for fossil fuels, hydro, geothermal, and nuclear energy.  It accelerates the phaseout of tax credits for wind and solar, beginning in 2026, while removing the strict 60-day construction start mandate for energy projects to claim the investment tax credit (ITC) and production tax credit (PTC) that was included in the House bill.

The Senate bill reinstates and makes permanent three key Tax Cuts and Jobs Act (TCJA) provisions that are phasing out or have lapsed: 100% bonus depreciation, immediate expensing of domestic R&D, and a modified business interest deduction limit calculation based on Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). The House bill limited these provisions to five years with no phaseout. It makes permanent but does not increase the Section 199A pass-through business income deduction. The House version increased the deduction from 20% to 23%. The Senate also did not include a House provision to expand eligibility to “qualified BDC interest dividends.”

It also shortens the proposed expansion of 100% bonus depreciation to qualified production property. It requires that those assets be placed in service by January 1, 2031, whereas the House placed in service deadline would run through January 1, 2033.

The legislation offers a smaller increase to the child tax credit than the House version and introduces capped deductions for tips, overtime, and car loan interest, all of which expire in 2028.

On Medicaid, the Senate version proposes deeper reforms than the House, including a phased cap on provider taxes for expansion states and cuts to state-directed hospital payments, raising concerns among moderate Republicans.

The Senate also retains the $10,000 SALT deduction cap, diverging from the House’s proposed $40,000 cap for middle-income households, prompting backlash from SALT Caucus members. Finally, the Senate bill would raise the federal debt ceiling by $5 trillion, one trillion more than the House proposal, drawing opposition from fiscal conservatives like Sen. Rand Paul (R-KY).

EPW Advance Trimmed Budget Bill with NEPA Fee Plan and IRA Fund Rescission  

Senate Republicans on the Environment and Public Works (EPW) Committee issued a revised draft of their portion of the reconciliation bill after the Senate Parliamentarian ruled that several provisions were outside the scope under the Byrd Rule.  The revised text significantly narrows previously proposed reforms to National Environmental Policy Act (NEPA) reviews. The new draft maintains a provision allowing project developers to pay a fee in exchange for expedited environmental reviews—six months for environmental assessments and one year for environmental impact statements—but removes earlier language shielding such reviews from judicial oversight, a provision struck by the Senate parliamentarian for violating reconciliation rules. The revised draft also omits a proposal to repeal the Biden administration’s multi-pollutant vehicle standards, leaving that rollback to the EPA’s forthcoming administrative process.

Other notable changes include eliminating provisions to cancel various Inflation Reduction Act (IRA) climate grants. While the new draft no longer repeals multiple grant programs, it does rescind any unobligated funds. However, it fully repeals the IRA-created Greenhouse Gas Reduction Fund, which remains a priority target for the Trump administration. Litigation is ongoing between the administration and grantees who received $20 billion from the program.  Notably, the parliamentarian also disallowed repeals of Biden-era tailpipe emissions standards and federal reorganization proposals.

Merkley and Capito Team Up on Legislation Targeting Plastic Waste and Reuse Systems

A bipartisan Senate bill introduced by Sen. Jeff Merkley (D-OR) and Environment and Public Works Committee Chair Sen. Shelley Moore Capito (R-WV) aims to advance solutions for reducing single-use plastic waste. The proposed legislation, titled the Research for Environmental Uses and Sustainable Economies (REUSE) Act, would require the EPA to conduct a two-year study on the feasibility of “reuse and refill systems” across various sectors. These systems include products and packaging that can be reused by consumers or returned into the production cycle by manufacturers.

The EPA’s study would evaluate reuse systems in food service, consumer products, transportation, shipping, and public educational institutions. The legislation also directs the agency to assess the economic implications for businesses, including the potential for job creation, the required government support, and an overall cost-benefit analysis of transitioning to reuse systems. Capito emphasized the bill’s role in enabling Congress to make informed decisions that support sustainable systems benefiting consumers and businesses alike.

While both senators have supported recycling initiatives, their approaches differ. Capito is generally more favorable in her policies to manufacturing and the promotion of innovation in environmental solutions. Merkley, in contrast, is an outspoken critic of the fossil fuel industry’s role in plastic production and previously sponsored more aggressive legislation targeting single-use plastics.  Nonetheless, their joint sponsorship of the REUSE Act signals a rare instance of bipartisan cooperation on a policy focused on reducing plastic waste and promoting practical recycling alternatives.

Baldwin and Marshall Seek to Clarify Rail Obligations as STB Scrutiny Intensifies

Senators Tammy Baldwin (D-WI) and Roger Marshall (R-KS) reintroduced the bipartisan Reliable Rail Service Act (S. 2071) to address persistent freight rail service failures impacting U.S. businesses. Congressional frustration continues to grow with service lapses across the rail sector, despite industry assertions that conditions are stabilizing.

The legislation clarifies the longstanding but poorly defined “common carrier obligation,” which requires railroads to provide service upon reasonable request. Citing service disruptions, high shipping costs, and reduced rail capacity stemming from industry consolidation and Wall Street-driven operational practices, the bill establishes specific criteria for the Surface Transportation Board (STB) to assess whether rail carriers are meeting their service obligations. These criteria include impacts from staffing reductions, service frequency, equipment levels, and responsiveness to customer needs.

Supporters, including the American Chemistry Council, argue the bill would restore accountability and ensure reliable rail service for manufacturers, farmers, and energy producers. They view the measure as essential for strengthening U.S. supply chains, reducing consumer costs, and revitalizing American industry. Baldwin and Marshall contend that increased transparency and enforcement authority for the STB will help address systemic issues within the rail network while encouraging economic growth.

EPA Moves to Clarify WOTUS Definition in Line with Supreme Court Ruling

The EPA and U.S. Army Corps of Engineers have concluded a series of stakeholder listening sessions as they prepare a new rule redefining “waters of the United States” (WOTUS). This forthcoming rule will aim to clarify jurisdictional standards in alignment with the Supreme Court’s Sackett v. EPA decision, which narrowed federal authority to wetlands with a “relatively permanent” surface connection to navigable waters. EPA Administrator Lee Zeldin emphasized that the revision will strike a balance between environmental protection and regulatory clarity, thereby supporting economic growth. Key stakeholders, particularly from agriculture, homebuilding, and state governments, expressed frustration with prior regulatory uncertainty and urged the agency to exclude ditches, stock ponds, and other intermittent water features from the WOTUS definition. Industry groups strongly advocated for preserving broad exemptions granted under the Trump administration’s Navigable Waters Protection Rule, particularly for upland and agricultural features. The agency’s final proposal is expected to incorporate this feedback in an effort to reduce confusion and regulatory instability.

Chemical Review Hurdles Remain as EPA Eyes Reorganization and AI Tools

At a June 25 conference on the Toxic Substances Control Act (TSCA), EPA Acting Chemicals Chief Nancy Beck stated that the agency will need more than nine years to fully implement the 2016 TSCA amendments due to litigation, stakeholder input, and regulatory revisions. She noted that aggressive consent decree deadlines and staffing changes are complicating the rollout and acknowledged that more challenges lie ahead. Despite these difficulties, Beck praised the Trump administration’s reorganization of EPA and renewed focus on expediting new chemical reviews, citing the administration’s efforts to support innovation while maintaining environmental and human health protections.

Beck emphasized the role of the proposed EPA reorganization, which would transfer over 130 staff from the Office of Research and Development to the Chemicals Office, including senior scientists and IT personnel. She highlighted plans to create an IT center of excellence and explore the use of artificial intelligence to modernize the review process. Additional reforms aim to address industry concerns, such as expediting Significant New Use Rules and reducing duplicative risk assessment work. Beck downplayed concerns over recent staff departures, expressing confidence in the agency’s ability to backfill positions and strengthen the chemicals program.

 USGS Raises Oil and Gas Estimates on Federal Lands in Major New Assessment

The U.S. Geological Survey (USGS) released its most comprehensive estimate in decades of oil and gas resources beneath federally managed lands, projecting significantly larger volumes than previous assessments. The new assessment was ordered by Interior Secretary Doug Burgum, who emphasized the role of public lands in achieving “American energy dominance” and improving economic returns from what he called the nation’s underutilized “national assets.” The Trump administration highlighted the report as a critical tool for strategic energy planning.

According to the updated analysis, onshore federal lands contain an estimated 29.4 billion barrels of oil, 391.6 trillion cubic feet of natural gas, and 8.4 billion barrels of natural gas liquids. These resources, if fully extracted, could meet U.S. energy needs for approximately four years for oil and twelve years for natural gas. The figures encompass lands managed by agencies such as the National Park Service, Department of Defense, and Tennessee Valley Authority, although not all areas are open to drilling, and not all resources are economically recoverable.