Legislative Update: Senators Show Broad Bipartisan Support for Preserving SRFs Despite Administration’s Efforts To Cut Funding

Senators Show Broad Bipartisan Support for Preserving SRFs Despite Administration’s Efforts To Cut Funding

On May 13, EPA Administrator Lee Zeldin testified before the Senate Interior-Environment Appropriations Subcommittee in a hearing on EPA’s FY2027 budget request.  The hearing highlighted a familiar but increasingly sharpened divide between the Trump administration’s deregulatory and cost-cutting agenda and bipartisan Senate concerns over preserving core environmental infrastructure and public health programs, particularly the Clean Water and Drinking Water State Revolving Funds (SRFs).   EPA Administrator Lee Zeldin framed the administration’s approach as restoring “cooperative federalism,” reducing regulatory overreach, and refocusing EPA on statutory obligations rather than climate-driven initiatives. Throughout the hearing, Zeldin repeatedly defended the administration’s staffing reductions and agency reorganization as necessary efficiency measures while maintaining that EPA remained committed to “science-based” decision-making and core statutory missions.

Republican senators generally aligned with the administration’s efforts to revise or repeal Biden-era regulations on power plants, Waters of the United States (WOTUS), and emissions standards, while emphasizing regulatory certainty for agriculture, energy production, and industry. At the same time, Republican appropriators signaled discomfort with the scale of the proposed EPA reductions, especially to SRFs.

Chair Lisa Murkowski (R-AK) openly rejected the elimination of “virtually all funding” for the SRFs or related categorical grants and reiterated Congress’s intent to restore funding through appropriations, arguing that SRFs remain among the most bipartisan and effective tools for financing local water infrastructure projects.  Murkowski warned that such reductions would undermine public health and place unsustainable burdens on states and municipalities already struggling with aging infrastructure. Ranking Member Jeff Merkley (D-OR) and Democratic senators similarly described the funds as indispensable for small and rural communities facing expensive drinking water and wastewater upgrades.  The senators repeatedly stressed that local governments cannot bear the financial burden alone and argued that federal participation remains critical to complying with modern drinking water and wastewater standards.

Administrator Lee Zeldin defended the administration’s proposed reductions, arguing that EPA and states already hold substantial unspent balances in the revolving fund system. Zeldin stated that approximately $14.8 billion in SRF funding remained uncommitted, including roughly $5.7 billion that had allegedly sat unused for more than a year, preventing nearly 1,800 potential projects from moving forward. He argued that the EPA was reviewing options to redirect funding toward states that were more prepared to deploy the money efficiently. Lawmakers from both parties challenged that characterization, contending that infrastructure projects often require years of engineering, permitting, financing coordination, and local matching arrangements before construction can begin.

Senator Tammy Baldwin (D-WI) highlighted the importance of SRFs for accelerating lead service line replacement, noting that even with recent federal investments, Milwaukee still faces decades of work replacing tens of thousands of lead laterals. Senator Patty Murray (D-WA) criticized the proposed “90% cut” as unrealistic and warned that delays in distributing funds were being worsened by staffing reductions within EPA itself.

The panel’s Republican senators expressed strong support for the administration’s efforts to rewrite the WOTUS rule in line with the Supreme Court’s Sackett decision and repeatedly cited the Court’s rollback of Chevron deference as creating a new legal environment that requires narrower agency interpretations. Environment and Public Works (EPW) Chair Shelley Moore Capito (R-WV) emphasized industry frustration with constantly shifting WOTUS definitions and urged EPA to produce a durable rule that could survive future administrations. The administration also defended repeals or revisions of Biden-era power plant regulations, including mercury, wastewater discharge, and Clean Power Plan 2.0 rules, arguing they imposed economically unrealistic burdens on coal generation and energy reliability.

Senator Merkley devoted a significant portion of his questioning to the growing health and environmental concerns surrounding microplastics and broader plastics production, framing the issue as an emerging public health challenge that deserves substantially more federal research and regulatory attention.  Merkley welcomed EPA’s decision to add microplastics to the agency’s contaminant candidate list, describing it as an important “first step,” but emphasized that recent scientific findings have become increasingly alarming.  He referenced recent studies that detected microplastics not only in food and drinking water but also in human bodies, that the agency should go further by expanding research and examining whether continued growth in plastics production is sustainable.  He pressed Zeldin on whether the agency would consider stronger actions related to plastics production and permitting new plastics facilities, including examining opportunities to reduce exposure through product substitution or targeted restrictions where alternatives may exist.

Zeldin acknowledged that the issue is receiving increased attention within EPA and the Department of Health and Human Services (HHS), but cautioned that plastics remain deeply integrated in the U.S. economy and modern life, and described it as “a pretty radical idea” to suggest broadly separating society from plastics. Zeldin instead pointed to “advanced recycling” technologies as a potential solution to reduce landfill waste and plastic pollution, although Merkley expressed skepticism about its effectiveness and the environmental trade-offs.

House Republicans Seek Changes to Senate Housing Package Before Floor Vote

The House and Senate remain in delicate negotiations over the future of the bipartisan 21st Century ROAD to Housing Act (H.R. 6644), following Senate passage in March. House Republican leadership is moving ahead with plans to amend the Senate bill and bring it to the floor next week under suspension rules, despite direct pressure from President Donald Trump and the White House to pass the Senate version without changes. Speaker Mike Johnson (R-LA) and House GOP leaders believe the bill cannot secure the necessary bipartisan support in the House unless several provisions are revised, particularly language dealing with institutional investors’ ownership of single-family homes and restrictions tied to a potential central bank digital currency.

On May 14, House Financial Services Committee Chairman French Hill (R-AR) and Ranking Member Maxine Waters (D-CA) released compromise language intended to preserve bipartisan backing while addressing concerns from conservatives, industry groups, and housing stakeholders.   The central dispute involves a Senate-added provision, backed by the White House, that would significantly restrict large institutional investors from holding single-family homes long term, including requiring some build-to-rent properties to be sold after seven years. House Republicans and housing industry groups argue the language contains legal drafting problems and could discourage capital investment in housing supply at a time of persistent affordability pressures. The new text would narrow definitions, adjust exemptions, and removes the seven-year divestiture requirement. The legislation additionally preserves a five-year prohibition on the Federal Reserve issuing a central bank digital currency, addressing objections from House Freedom Caucus conservatives who opposed the Senate bill’s temporary restriction.

If the House adopts an amended version, the legislation would need to return to the Senate, potentially complicating leadership’s effort to finalize a bipartisan housing package before the Memorial Day recess and before the political calendar becomes increasingly dominated by appropriations, reconciliation, and election-year disputes.

EPA Dismantles IRIS Program as Trump Administration Reshapes Federal Risk Assessments

EPA is undertaking a sweeping restructuring of how the agency conducts chemical and environmental risk assessments as the Trump administration formally moves to shut down the Integrated Risk Information System (IRIS), a long-standing scientific program that has provided hazard assessments used across federal and state environmental regulations. In an April 27 memo, Deputy Administrator David Fotouhi directed EPA offices to review and potentially reconsider regulatory actions that relied on IRIS findings, arguing the program relied on overly conservative methodologies and did not sufficiently incorporate broader scientific information. The administration says the overhaul is intended to improve “timeliness, consistency, and scientific quality” while aligning with President Donald Trump’s executive order promoting “gold standard science.”

Under the new approach, EPA’s individual program offices would take primary responsibility for conducting risk assessments rather than a centralized scientific office.  The changes coincide with the dismantling of EPA’s Office of Research and Development (ORD), where IRIS had been housed, and the creation of a smaller Office of Applied Science and Environmental Solutions (OASES), which will oversee aspects of future scientific coordination.

In early 2025, the Vinyl Institute and more than 80 industry organizations called on the Trump administration to eliminate the IRIS program and prohibit regulators from relying on its assessments, while congressional Republicans introduced similar legislative proposals to restrict the use of IRIS-derived data in federal rulemaking.  The restructuring could significantly affect how EPA regulates chemicals, air pollutants, drinking water contaminants, and hazardous waste for years beyond the Trump administration.

EPA officials have already signaled interest in reconsidering Biden-era rules that relied on IRIS findings. State environmental agencies are already preparing to assume greater independent risk-assessment responsibilities as federal scientific capacity declines, particularly in programs involving drinking water, Superfund cleanups, and children’s health protections.

Renewable Energy Disputes Fuel Uncertainty in Bipartisan Permitting Reform Talks

Efforts to negotiate a bipartisan permitting reform package in Congress are facing growing strain as Democrats increasingly accuse the Trump administration of using federal agencies to disadvantage renewable energy projects while simultaneously easing regulatory burdens on fossil fuel production. Recent Interior Department actions to buy out offshore wind leases have intensified Democratic skepticism that the administration would implement any future permitting agreement fairly across energy sectors. Martin Heinrich (D-NM), ranking member of the Senate Energy and Natural Resources Committee, argued that Democrats cannot support permitting reform unless there is confidence that the approval process is being administered neutrally.  House Democrats led by House Natural Resources Committee Ranking Member Jared Huffman (D-CA) and Judiciary Committee Ranking Member Jamie Raskin (D-MD) recently launched investigations into whether the offshore wind settlement agreements improperly insulated the administration from judicial review. Senate EPW Ranking Member, Sheldon Whitehouse (D-RI), is also questioning whether the administration had legal authority to use federal settlement funds to finance the lease buyouts.

The disputes are complicating already difficult bipartisan negotiations in the Senate over broader permitting reforms tied to the National Environmental Policy Act (NEPA), energy infrastructure, and federal environmental reviews. Senate talks resumed earlier this year after the administration backed away from certain stop-work orders targeting offshore wind projects, but recent renewable energy actions have revived concerns among Democrats.   The best opportunity for a bipartisan permitting agreement may not come until a lame-duck session after the midterm elections, particularly given the compressed legislative calendar and continued partisan tensions. Meanwhile, Republicans continue advancing sector-specific permitting proposals, and the Trump administration continues to move forward through executive and regulatory actions designed to support domestic fossil fuel production.  Administration officials maintain they are working with lawmakers on permitting modernization and claim the White House is encouraging Congress to reach at least a framework agreement by Memorial Day.

Appeals Court Temporarily Preserves Trump Section 122 Tariffs During Legal Fight

A federal appeals court on May 12 temporarily paused enforcement of the Court of International Trade’s May 7 ruling that struck down President Donald Trump’s 10 percent Section 122 tariffs, giving the administration short-term relief while broader legal arguments proceed. The U.S. Court of Appeals for the Federal Circuit issued an administrative stay blocking the lower court’s order from taking effect immediately, but stopped short of granting the Justice Department’s request for a full stay lasting through the entire appeals process. The dispute centers on whether the Trump administration lawfully imposed the Section 122 tariffs under the Trade Act of 1974 after the Supreme Court invalidated earlier tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The appellate court established an expedited briefing schedule requiring challengers, including Democratic-led states and private importers, to respond by May 19, with DOJ replies due May 22.

The Justice Department argued that allowing the CIT ruling to take effect would disrupt ongoing international trade negotiations where the tariffs are being used as leverage and would create significant administrative burdens for U.S. Customs and Border Protection, which is already processing large-scale refunds tied to the invalidated IEEPA tariffs. DOJ also warned that without a stay, numerous additional importers would likely file similar lawsuits seeking exemptions and refunds. The administration has indicated that if lower courts refuse to maintain the tariffs during the appeal, it is prepared to seek emergency intervention from the Supreme Court. The litigation is expected to continue for months and could become a major test of executive authority to impose tariffs under emergency and balance-of-payments statutes.

EPA Delays Reopen Path for State Chemical Regulations Under TSCA

The EPA’s failure to meet statutory deadlines for chemical risk evaluations under the amended Toxic Substances Control Act (TSCA) has reopened the possibility that states can independently regulate a growing number of commercial chemicals, raising concerns about regulatory fragmentation and the effectiveness of the federal chemical oversight system. Under the 2016 TSCA amendments, EPA’s designation of chemicals as “high priority” temporarily blocked states from regulating those uses while EPA conducted risk evaluations, a process known as “pause preemption.” However, the law required EPA to complete those reviews within 3.5 years, and the agency missed that deadline for approximately 20 chemicals. Legal and industry experts warned that because the preemption period has now expired, states are once again free to impose their own rules, potentially creating the patchwork regulatory environment that chemical manufacturers sought to avoid when supporting TSCA reform a decade ago.  EPA’s chemical review priorities have not closely aligned with the substances receiving the greatest attention from states, especially PFAS, where many states have moved aggressively, while EPA has not yet initiated comprehensive TSCA risk evaluations. Industry representatives emphasize that a strong federal system remains essential to avoid inconsistent state-by-state standards that complicate manufacturing and global supply chains.