Legislative Update: Senate Impasse Drives Government Shutdown and Funding Uncertainty

Senate Impasse Drives Government Shutdown and Funding Uncertainty

The federal government shut down on October 1, after Senate Democrats blocked a Republican continuing resolution (CR) (H.R. 5371) to fund operations for seven additional weeks. This is the first shutdown since 2019, halting a range of services while allowing essential national security functions to continue without pay for many service members and law enforcement officers. Democrats refused to support a “clean” stopgap spending bill without major health care policy concessions, including restoration of cuts to Medicaid and an extension of enhanced Affordable Care Act (ACA) premium subsidies set to expire at year’s end. The vote failed 55-45, with three Democratic caucus members—Sens. Catherine Cortez Masto (D-NV), John Fetterman (D-PA), and Angus King (I-ME)—crossing the aisle.  Sen. Rand Paul (R-KY) voted against the resolution from the GOP side, causing the chamber to be five votes short of the 60 needed to overcome a filibuster.

Bipartisan conversations to end the government shutdown have begun in the Senate even as Democrats again blocked the House-passed stopgap funding bill to reopen the government through November 21. The same three Democrats voted in favor of the CR.  Republicans seek to capitalize on the fissures within the Democratic ranks as the shutdown’s effects intensify. At the same time, Vice President J.D. Vance stated that the administration will focus on flipping five more Democrats. The principal sticking point is how to handle the expiring Affordable Care Act premium tax credits at year’s end, along with demands to limit the White House’s ability to freeze or cancel previously agreed-upon funding. Some Democrats have floated very short-term CRs to allow continued negotiations, but Republicans have not yet signaled support for that approach. Senators Ruben Gallego (D-AZ) and Mike Rounds (R-SD) have both proposed ideas for temporarily extending the tax credits, but Republicans insist that no final deal will be negotiated until the government reopens.

At the same time, White House budget director Russ Vought has escalated pressure on Democrats by suspending or canceling infrastructure and clean-energy grants in Democratic-leaning states and previewing mass layoffs if the shutdown continues. Nevertheless, leaders from both parties, including Senate Majority Leader John Thune (R-SD) and Senate Minority Leader Charles E. Schumer (D-NY), have signaled that they will continue to discuss the issue in an effort to resolve the stalemate. The Senate adjourned for Yom Kippur and is scheduled to return Friday, leaving the timing and shape of any deal uncertain.

The Senate reconvened on Wednesday to vote again on the House-passed CR, but House lawmakers are not expected to return to Washington until next week, limiting prospects for a rapid resolution. White House budget director Russell Vought has directed agencies to execute “orderly shutdown” plans, acknowledging that the duration of the impasse is unclear. During a September 20 meeting with President Trump, Democratic leaders suggested they may be open to negotiating on expiring tax credits later, raising alarms among conservative Republicans who oppose the ACA. The two parties remain far apart, making it difficult to predict the shutdown’s length and its effects on federal employees, agencies, and public services.

Agency exposure to furloughs varies by funding source, with departments reliant solely on appropriations facing major disruptions while entities with mandatory funding retain greater operational continuity. The Office of Management and Budget (OMB) has considered reductions in force, but current plans focus on furloughs rather than permanent layoffs, and department heads appear to be resisting mass firings.  The Environmental Protection Agency (EPA) announced that the shutdown would halt research activities, civil enforcement inspections, and the issuance of new grants, while relying heavily on employee furloughs. Under its contingency plan, just over 1,700 employees would be deemed essential because their work is funded outside of annual appropriations, including activities supported by fees, taxes, and the 2021 bipartisan infrastructure law. Essential functions would include criminal investigations, emergency and disaster assistance, laboratory maintenance, Superfund cleanups where public health is at risk, and work on the President’s fiscal 2027 budget. Activities such as state permits and water quality standards would stop.   Inside TSCA reports that under the contingency plan,  reviews and risk evaluations under the Toxic Substances Control Act (TSCA) would stop even though much of its funding comes from user fees, but other sources are disputing this claim.

The plan largely mirrors one the agency issued in March, but it comes amid a reduced workforce and a major internal reorganization led by Administrator Lee Zeldin. There are conflicting figures showing that the EPA has between 12,500 and 15,100 employees after accounting for deferred resignations.  As part of an overhaul of the Office of Research and Development (ORD) announced earlier this year, about 1,000 employees—mostly scientists—are already facing layoffs and transfers. The restructuring disperses staff to other offices and creates a new Office of Applied Science and Environmental Solutions under the Administrator to integrate research more directly into policymaking. Zeldin has framed the changes as “organizational improvements” to make science more efficient in rulemaking, but has seen pushback from unions and bipartisan lawmakers.  Bipartisan Senate appropriators in July approved a spending bill that requires the EPA to maintain the ORD intact, cautioning that its closure would eliminate thousands of expert positions, shutter world-class laboratories, and jeopardize the agency’s capacity to address hazardous chemicals and disasters.

Senate GOP Confirms Trump Nominees and Announces Troutman Nomination Hearing

After changing chamber rules to expedite the confirmation of President Trump’s lower-level nominees, the Senate confirmed a backlog of 48 sub-cabinet nominees, including Jessica Kramer to serve as assistant administrator of the EPA’s Office of Water and Katherine Scarlett to lead the White House Council on Environmental Quality (CEQ). Both nominees previously served on the Senate Committee on Environment and Public Works (EPW).  The EPW also scheduled a hearing on the nomination of Douglas Troutman to be Assistant EPA Administrator for Toxic Substances for October 8.

EPA proposes shift from whole-substance to use-specific chemical risk evaluations

The EPA is seeking public comments on a proposed rule that would revise its evaluation of chemical risks to workers under the Toxic Substances Control Act (TSCA). Published on September 23, the proposal would replace the current “whole substance” approach, adopted in May 2024, with a system of separate risk determinations for each condition of use within the scope of an evaluation. Under the change, the EPA would weigh existing workplace protections and consider additional risk-related factors, such as hazard severity, exposure duration and intensity, population affected, and the reliability of the underlying data. The proposed rule would apply to any risk evaluations already underway but not yet finalized as of the rule’s effective date.

The “whole substance” approach introduced last year broadened EPA’s chemical review policies by expanding exposure pathway considerations, clarifying that worker risks must be evaluated, and eliminating assumptions about risk reduction based on the use of personal protective equipment.  Industry groups criticized the 2024 rule as overly complex and confusing. The new proposal better accounts for relevant exposures and conditions of use. The comment period on EPA’s proposed rule is open until November 7.

Trump Administration Moves to Narrow EPA Chemical Safety Reviews of High-Priority Substances

The Trump administration has proposed a rule that would change the EPA’s TSCA framework for reviewing chemicals and narrow the scope of its safety reviews of chemicals already on the market.  Announced on September 22, the plan would roll back the Biden-era “whole chemical” requirements, which require the EPA to examine every use of a chemical and every route of exposure. Instead, it assumes workers will use appropriate personal protective equipment—an approach critics warn could underestimate occupational risks. It would also eliminate references to “overburdened communities” as especially vulnerable populations in chemical risk reviews. Importantly, the new framework would apply only to evaluations still in process and not yet finalized, signaling that Biden-era reviews will remain intact.

EPA Administrator Lee Zeldin framed the change as a balance between environmental protection and support for manufacturing and industrial growth, describing it as part of the administration’s “Make America Healthy Again” agenda, which is skeptical of broad restrictions on chemical exposure.  He said the proposal is intended to offer a “clear, predictable, commonsense approach” grounded in law and science, which restores confidence in the EPA’s chemical safety reviews.

The proposal applies to a set of high-priority chemicals designated by the EPA because of their potential health risks. The framework underpins major regulations such as the asbestos ban and restrictions on methylene chloride and trichloroethylene, which Trump officials have indicated they may revisit once the new review process is in place. Industry groups praised the move, saying it would reduce complexity and ensure risk evaluations incorporate the best and most current science while adequately considering relevant exposures and conditions of use.

EPA Draft WOTUS Rule Defines Key Terms to Address State and Industry Concerns

The EPA is preparing a revised “waters of the United States” (WOTUS) rule aimed at addressing long-standing concerns from industry groups and states about the scope of federal water regulations under the Biden-era definition. The rule aligns with calls to return to the more expansive definitions in the first Trump administration’s 2020 Navigable Waters Protection Rule.  According to reports, internal slides of the draft plan—now at OMB—broaden certain existing exclusions and add regional flexibility by explicitly defining contentious terms, such as “continuous surface connection” and “relatively permanent.” These definitions reflect the Supreme Court’s 2023 Sackett v. EPA decision, which limited jurisdiction to wetlands “indistinguishable” from adjacent waters based on a relatively permanent surface connection. For instance, EPA now defines a “continuous surface connection” as surface water present at least during the wet season and abutting a jurisdictional water, and “relatively permanent” as standing or flowing water year-round or at least during the wet season.

By anchoring its definitions to “wet seasons,” EPA seeks to regionalize implementation and give states flexibility to address their own hydrology and flow conditions. State regulators and groups, such as the National Association of Wetland Managers and the Association of State Floodplain Managers, had pressed the EPA to avoid rigid numeric flow standards, arguing that such requirements could limit state authority to regulate waters and wetlands that might otherwise lose federal protection. The proposed approach signals an effort to balance clearer national standards with state-specific conditions, providing predictability for regulated entities while preserving state discretion over water protection.