Legislative Update: Senate Adjourns Until After Midterm Elections

Senate Adjourns Until After Midterm Elections

The Senate adjourned on September 30 for a month of campaigning after completing one final nomination but leaving several politically salient measures unresolved. Including addressing data center energy costs or congressional stock trading.  When Congress returns November 9, the political environment and lame-duck agenda will be shaped heavily by the election results. Thune has identified government funding, the farm bill, a possible third reconciliation effort, another nominations package and bipartisan permitting reform as potential priorities.

If Republicans retain congressional control, GOP leaders could have greater incentive to defer controversial or complex measures until the new Congress, while using the lame duck to clear must-pass legislation, nominations, and bipartisan measures already close to completion. If Democrats win control of one or both chambers for 2027, Republicans would instead face pressure to use their remaining weeks of unified or partial control to complete outstanding priorities before losing committee gavels, floor control or both.  Democrats, conversely, would have less incentive to facilitate measures they believe they could reshape once they assume power. Regardless of the outcome, government funding will impose a hard deadline, while the farm bill, permitting reform and other unfinished legislation will compete for limited floor time in a politically charged post-election session.

Coalition Calls For Science-Based and Practical TSCA Regulations

The American Chemistry Council (ACC) and the American Alliance for Innovation (AAI) submitted five Principles of TSCA Risk Management to EPA Office of Chemical Safety and Pollution Prevention Assistant Administrator Doug Troutman, intended to guide the agency’s development of future risk-management regulations under the Toxic Substances Control Act (TSCA). The Vinyl Institute, a member of a coalition of more than 100 organizations, signed the September 18 letter that argues that TSCA regulations should be transparent, predictable, science-based, and narrowly tailored to address identified unreasonable risks, while recognizing the importance of chemicals and chemical-based products to manufacturing, infrastructure, energy, healthcare, and other sectors.

Specifically, the coalition members presented principles organized around five core concepts:

• Apply a transparent and consistent regulatory framework
• Regulate only to the extent necessary to address unreasonable risk
• Rely on the weight of the evidence and best available science
• Develop targeted, flexible and tailored risk-management measures
• Avoid overlapping regulatory requirements while seeking balanced outcomes.

The coalition contends that applying these principles would allow EPA to protect human health and the environment while providing greater regulatory certainty and supporting innovation, U.S. competitiveness and resilient supply chains. The letter and submission follow the recent Fifth Circuit Court of Appeals’ decision to vacate and remand the EPA’s 2024 methylene chloride rule, where the court agreed with the American Chemistry Council and other industry challengers that the EPA had inflated the chemical’s health risks and applied an interpretation of “unreasonable risk” under the Toxic Substances Control Act (TSCA) that was more stringent than the law requires. As a result, the ruling removes the rule’s immediate burden and sends the EPA back to reconsider its analysis, giving companies greater regulatory certainty, lower compliance costs, and a clearer legal standard that requires EPA risk assessments to be grounded in the statute rather than a zero-risk or precautionary approach. The decision could also influence pending challenges to other EPA chemical risk management regulations, potentially creating a more balanced regulatory environment for industries that rely on chemicals in production and manufacturing.

Regulators Advance Review Of Union Pacific-Norfolk Southern Merger

Federal regulators have allowed the proposed merger of Union Pacific and Norfolk Southern to proceed to formal review, marking an important procedural step for a transaction that would create what the companies describe as the nation’s first coast-to-coast railroad. The Surface Transportation Board (STB) unanimously rejected petitions seeking to dismiss the railroads’ revised merger application, meaning the agency will now continue its substantive examination of the transaction. The decision does not approve the merger, which remains subject to full STB review and, if approved, subsequent regulatory oversight.

The Vinyl Institute and the Stop the Railroad Merger Coalition continue to engage directly with policymakers and continue to make the case for competition, choice, and a strong American freight rail system.  The regulatory process will likely conclude during the second half of 2027, although the ultimate timing and outcome will depend on the STB’s review.

Bipartisan Senate Permitting Deal Sets Up Lame-Duck Vote on Sweeping Permitting Reforms

On September 30, Senate Environment and Public Works (EPW) Committee Chairman Shelley Moore Capito (R-WV), Ranking Member Sheldon Whitehouse (D-RI), Senate Energy and Natural Resources (SENR) Committee Chairman Mike Lee (R-UT) and Ranking Member Martin Heinrich (D-NM) released a heavily negotiated, bipartisan, 417-page permitting reform proposal aimed at accelerating federal reviews for energy, infrastructure and other major projects, positioning the measure for consideration when Congress returns after the November elections. The Bipartisan American Affordability and Jobs Act of 2026 reaches across the National Environmental Policy Act (NEPA), Clean Water Act (CWA), Endangered Species Act (ESA), and National Historic Preservation Act (NHPA), while also making significant changes to electric transmission planning, grid interconnection, geothermal development, and the allocation of grid costs associated with data centers.

A central component of the draft legislation is reforming environmental reviews and litigation. The bill sets a two-year deadline for environmental impact statements and a one-year deadline for environmental assessments, with consequences when agencies fail to meet them. It creates a new NHPA consultation process designed to operate concurrently with NEPA reviews, while retaining a statutory role for Tribal consultation over historic and cultural resources. The legislation also narrows the impacts for which project developers must provide mitigation.

For lawsuits involving NEPA, the CWA, ESA, and NHPA, it generally establishes a 150-day deadline for filing challenges, limits standing primarily to parties that participated in the relevant public-comment or Tribal consultation process, and restricts circumstances in which courts may temporarily halt projects.  The legislation also encourages agencies to conduct reviews concurrently rather than sequentially, with supporters arguing that the changes could substantially shorten approval timelines without eliminating underlying environmental requirements.

The bill also makes important changes to water and endangered-species permitting. States with sufficient staffing, expertise, and resources could assume responsibility for certain ESA consultations. Under Clean Water Act Section 401, state certification reviews for gas pipelines and transmission projects would generally be confined to water pollution directly caused by the project rather than being used to address unrelated environmental issues. The legislation would also prevent EPA from using its CWA authority to preemptively or retroactively remove certain wetlands or waterways from the federal permitting process. More broadly, the legislation seeks to make already-issued permits more durable across presidential administrations, allowing permitted projects to generally retain their authorizations absent extraordinary circumstances, violations of law or a court order, and an administration could not broadly delay or block an entire category of energy projects without potential legal consequences.

Another major portion of the bill addresses electric transmission and grid expansion. It strengthens the Federal Energy Regulatory Commission’s (FERC)  federal “backstop” authority to approve major interstate transmission lines and allows federal transmission applications to proceed simultaneously with state reviews. The legislation also requires data centers to bear the costs of grid upgrades needed to accommodate their electricity demand and would direct the FERC to undertake related rulemaking.

The permitting reform proposal is heading into an intensive lobbying period after lawmakers postponed floor consideration until after the election, creating uncertainty over whether its current coalition can survive the lame-duck session. Capito said the group hopes a procedural vote on the legislation will be among the Senate’s first actions when it reconvenes after the elections. The negotiators have also consulted House lawmakers, including House Natural Resources Committee Chairman Bruce Westerman (R-AR), and incorporated some House input into the draft. Senate Environment and Public Works Committee Ranking Member Sheldon Whitehouse (D-RI) plans to develop a manager’s amendment, giving lawmakers and stakeholders an opportunity to seek changes before a floor vote. Democrats are also negotiating a side agreement with the White House concerning the Trump administration’s restrictions on wind and solar projects.

The major unresolved issue is offshore wind permitting. Negotiations had previously stalled after Trump administration actions blocking offshore wind projects prompted Whitehouse and Heinrich to suspend their participation. The senators are now negotiating with the administration over a potential compromise, and Whitehouse described the administration’s initial proposal as a good-faith offer that provides a basis for continued discussions.

For now, the proposal has attracted broad support from clean-energy, oil and gas, and manufacturing interests because it would accelerate permitting across energy technologies while retaining opportunities for community participation.  Still, utilities and environmental organizations are expected to challenge many of the bill’s provisions, and the election outcome is expected to further shape the negotiations on the legislation. Any significant changes made through the Senate manager’s amendment could also prompt House lawmakers to demand their own revisions, complicating efforts to complete the legislation during a compressed lame-duck session.

Congress Advances Manufacturing Bill to Reduce Reliance on Critical Imports

The Senate unanimously passed the Critical Infrastructure Manufacturing Feasibility Act (H.R. 1721) on September 23, sending the bipartisan legislation to President Donald Trump after the House approved it in April. The bill directs the Commerce Department to identify critical goods the United States relies on for imports and examine opportunities to expand domestic production, particularly in rural communities and industrial parks. The broader objective is to identify supply-chain vulnerabilities, reduce dependence on foreign sources for strategically important products, and encourage additional U.S. manufacturing capacity.

Senator Joni Ernst (R-IA), a sponsor of the legislation, said the measure would help identify weaknesses in U.S. supply chains while creating opportunities to bring manufacturing investment and jobs to rural areas. A previous version of the legislation passed the House in 2024, and Ernst said she expects President Trump to sign the current bill into law.

Trump’s Section 301 Global Tariffs Face Trade Court Challenge

A three-judge panel of the U.S. Court of International Trade (USCIT) heard arguments on September 30 challenging the Trump administration’s latest global tariffs, imposed under Section 301 of the Trade Act of 1974. The 10 percent or 12.5 percent duties apply to goods from 86 countries covering 99.4 percent of U.S. imports, and the administration justified them as a response to inadequate foreign enforcement against goods produced with forced labor. Small businesses and Democratic-led states challenging the tariffs argue that the forced-labor rationale was a pretext for effectively restoring the administration’s earlier worldwide tariff regime. Their attorney argued that Section 301 requires country-specific findings that a trading partner’s practices are unreasonable and burden U.S. commerce and that the administration’s abbreviated investigation did not satisfy those statutory requirements. Justice Department attorney Eric Hamilton countered that USTR conducted country-by-country assessments using economic data, case studies, public comments, hearing testimony, and other evidence, even though the determinations shared a common analytical basis.

The case represents the third major legal challenge to President Trump’s efforts to impose broad tariffs in less than two years. In February 2026, the Supreme Court struck down the administration’s earlier “reciprocal” tariffs, triggering refunds of more than $100 billion. The administration then imposed a temporary 10 percent worldwide tariff under Section 122, which the trade court challenged but which remained in effect during an appeal until the statutory 150-day authority expired in July. The central question now before the trade court is whether USTR satisfied Section 301’s statutory requirements for each covered trading partner or instead used the provision as a vehicle for another near-global tariff program. The judges indicated that they intend to issue a decision as quickly as possible.

Administration Implements Ban on Canadian Imports 

In other trade news, the U.S. has implemented a ban on approximately $967 million in Canadian imports, including alcoholic beverages, certain dairy products and motorcycles, further escalating trade tensions between the two countries. The action follows President Donald Trump’s imposition of 50 percent tariffs on roughly $20 billion in Canadian goods over alleged discrimination against U.S. dairy, auto and alcohol producers and Canada’s subsequent retaliatory tariffs of 15 to 50 percent.  Although analysts expect the immediate economic impact to be relatively limited because many affected goods were already effectively priced out of the U.S. market by the 50 percent tariffs, the escalation could prompt additional Canadian retaliation and further complicate the ongoing USMCA review.  Prime Minister Mark Carney’s government is simultaneously seeking to reduce Canada’s dependence on the U.S. market by expanding trade with the European Union, India and China, while President Trump has indicated that he expects Canada ultimately to negotiate an agreement with Washington.