Legislative Update: White House Renews Push for Deep EPA Cuts

White House Renews Push for Deep EPA Cuts

The White House has proposed a FY2027 budget for the Environmental Protection Agency (EPA) that would reduce funding by approximately 52 percent, requesting $4.2 billion—a $4.6 billion decrease from enacted fiscal year 2026 levels. The proposal largely mirrors the administration’s prior-year request, which Congress rejected, and centers on significant reductions to state revolving funds for water infrastructure and categorical grant programs. The administration argues that these responsibilities should be shifted to states, asserting that current programs are inefficient and overly influenced by congressional earmarking. Lawmakers, including Senate Appropriations leaders, have previously dismissed similar proposals as lacking seriousness, suggesting continued resistance on Capitol Hill.

The request includes a $2.5 billion reduction to state revolving funds, leaving $300 million in funding, alongside cuts exceeding $1 billion to categorical grants. The administration also proposes eliminating several programs tied to climate and environmental justice priorities, including the Atmospheric Protection Program and environmental justice initiatives, framing them as economically burdensome and misaligned with its policy agenda. Additionally, it seeks to scale back research and development funding, limiting grants to activities deemed statutorily required.

The budget proposal would reduce Toxic Substances Control Act (TSCA) program funding by approximately 15 percent, cutting the Chemical Risk Review and Reduction account from $87.5 million to $74.1 million while eliminating more than 60 full-time equivalent positions. The administration characterizes the reductions as a means of improving efficiency and eliminating duplicative or unnecessary work, while simultaneously maintaining expectations to accelerate new chemical reviews and meet existing statutory deadlines. The proposal also reflects a broader contraction in program capacity, including a reduction in total work-years, raising concerns about the agency’s ability to sustain its regulatory workload with diminished resources.

The FY27 budget proposal maintains or modestly increases funding for select areas aligned with the administration’s priorities. Superfund cleanup funding would rise slightly to $290 million, supplemented by anticipated revenue from industry taxes and litigation recoveries. The budget also includes targeted investments in permitting modernization, with $14 million allocated for digital tools to streamline project approvals and a one-year deadline to streamline NEPA permitting requirements.  It also allocates a $9.4 million increase to support the NEPA Implementation Program.  Other priorities include $122 million for drinking water programs to address contamination and infrastructure challenges.

Overall, the proposal reflects a broader effort to significantly reduce the federal role in environmental regulation and funding, while prioritizing energy development and regulatory streamlining. However, given Congress’s prior rejection of similar cuts and bipartisan support for core EPA programs, the proposal is likely to face substantial opposition during the appropriations process.

Meanwhile, the House will work on the FY27 appropriations this week with Office of Management and Budget (OMB) Director Russell Vought testifying before the House and Senate Budget Committees.  The House Energy-Water Appropriations Subcommittee will be reviewing the Army Corps of Engineers and the Bureau of Reclamation on April 16.

Industry and Water Sector Mobilize to Defend SRF Funding

Water utilities and industry groups are preparing a coordinated lobbying effort to preserve funding for the EPA’s clean and drinking water SRF programs, as current authorizations under the Bipartisan Infrastructure Law (BIL) are set to expire at the end of September and face further funding pressures in the coming budget process.  While there is broad bipartisan support in Congress for water infrastructure investment, lawmakers are expressing divergent views on the prospects for reauthorizing the State Revolving Fund (SRF) programs at levels established under the Bipartisan Infrastructure Law. Senator Jeff Merkley (D-OR) expressed optimism, noting a broad national need and limited visible political obstacles, though he acknowledged uncertainty about potential committee-level challenges. In contrast, House Republicans, led by Representative Gary Palmer (R-AL), are focusing on regulatory cost burdens tied to water policy, emphasizing the need to modernize the Safe Drinking Water Act and reduce compliance costs for smaller systems.

Some House Republicans remain hesitant to provide additional funding after viewing the Infrastructure Investment and Jobs Act (IIJA) as a one-time, transformative investment. This skepticism is compounded by alignment with the Trump administration’s fiscal year 2027 budget proposal, which seeks significant reductions to SRF programs. As a result, advocates anticipate a challenging legislative environment, with the expectation that the Senate may attempt to restore funding levels only after heavy negotiations.

Stakeholders, including state environmental officials and water utilities, are emphasizing the growing urgency of maintaining SRF funding amid rising infrastructure costs, regulatory pressures, and increased disaster risks. Industry representatives note that while appropriators have historically continued funding even during lapses in authorization, reauthorization provides greater long-term certainty for utilities that depend on these financing mechanisms. Advocates are expanding outreach efforts to include nontraditional partners, such as business groups, to underscore the economic and public health implications of underfunded water systems.

Industry advocates argue that these regulatory requirements—particularly those related to per- and polyfluoroalkyl substances (PFAS) and lead standards—underscore the need for increased funding rather than cuts, as utilities face significant compliance expenses under rules the administration continues to defend. At the same time, legislative pathways for reauthorization remain uncertain, with some stakeholders pointing to the Water Resources Development Act (WRDA) as a potential vehicle, though timing constraints and competing priorities, such as highway legislation, complicate prospects. If Congress is unable to act before the end of the year, stakeholders may face a delay until the next Congress, further heightening uncertainty for water infrastructure financing.

EPA Watchdog Flags Fraud Risks in State-Managed SRF Programs

On April 8, the EPA’s Office of Inspector General (OIG) identified significant procurement fraud risks within the Clean Water State Revolving Fund (CWSRF) program, particularly in construction bidding processes, but declined to issue recommendations due to statutory limitations. The audit found a lack of consistency in oversight of the bidding processes because the program is largely administered by states, and federal procurement standards do not apply to these pass-through loan arrangements. While EPA reviews certain technical aspects of projects, it does not evaluate bid selection processes, leaving states responsible for detecting and preventing collusion or anticompetitive behavior. As a result, the report says that federal funds provided through annual appropriations and the IIJA face elevated fraud risks, with no clear federal mechanism to address them.

House Targets Late April Vote on GOP Farm Bill

House leadership is preparing to bring the Republican-led farm bill (H.R. 7567) to the floor during the week of April 27, with the House Rules Committee setting an April 22 deadline for members to submit amendments for consideration. The timeline reflects an effort by House Agriculture Committee Chair Glenn “G.T.” Thompson (R-PA) and Republican leadership to advance the legislation, though competing priorities, such as ongoing funding negotiations and reconciliation efforts, could delay the vote.

EPA Proposes Regulating Microplastics in Water Supplies

On  April 2, the EPA proposed, for the first time, adding microplastics to its Contaminant Candidate List, signaling potential future regulation of these substances in drinking water. The draft list, which initiates a 60-day public comment period, is intended to guide research priorities and regulatory considerations under the Safe Drinking Water Act, though historically, few listed contaminants have ultimately resulted in enforceable standards. The move comes amid growing public and scientific concern about microplastics and pharmaceutical residues in water supplies, as well as political pressure from stakeholders, including allies of Health Secretary Robert F. Kennedy Jr., to strengthen oversight of emerging contaminants.  Industry groups have expressed support for further research and standardized monitoring. The proposal is part of a broader EPA agenda that includes addressing plastic pollution, PFAS, and drinking water safety, though its ultimate impact will depend on future regulatory decisions.

EPA Extends Comment Deadline on Chemical Safety Rule Revisions

The EPA extended the public comment deadline to May 11 for its proposed amendments to the Risk Management Program rule governing chemical facility safety, following stakeholder requests for additional time. The proposal would revise elements of the 2024 Safer Communities by Chemical Accident Prevention rule, including changes to requirements on safer technology analysis, training, employee participation, third-party audits, and information sharing with first responders and communities, while also scaling back certain authorities, such as stop-work provisions. EPA states the revisions aim to align the program more closely with existing OSHA standards and reduce redundant regulatory requirements, citing a decline in reported chemical incidents over the past decade.