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House and Senate Action

The Senate is the only chamber in session this week.

Senate

The Senate convened this afternoon, a day later than planned due to the snow and ice storm affecting much of the region. Lawmakers will focus primarily on averting a partial government shutdown ahead of the end-of-week funding deadline (more on this below).

Shutdown Risk Grows as Senate Takes Up Funding Package

With the January 30 government funding deadline just days away, Congress enters a pivotal week as attention shifts to the Senate and the fate of a six-bill appropriations package advanced by the House late last week.

The House cleared its final round of FY 2026 spending bills, narrowly passing Department of Homeland Security (DHS) funding along party lines and overwhelmingly approving a broader, bipartisan package covering Defense, Labor-Health and Human Services-Education, and Transportation-Housing and Urban Development. These measures were then bundled with earlier House-passed funding for Treasury and State, setting up Senate consideration of six appropriations bills at once.

However, Senate action faces significant complications. Winter weather has already disrupted the chamber’s schedule, and another fatal shooting involving federal immigration agents in Minnesota has intensified Democratic opposition to the DHS funding bill. A number of Senate Democrats have indicated they will not support the package unless changes are made to DHS and ICE operations, while signaling openness to advancing the other five funding bills separately.

However, Republican leaders have signaled that they will move forward with the full package, arguing that removing DHS would require a unanimous consent agreement and additional procedural steps. Any changes would also necessitate further House action, and the chamber is not scheduled to return until next week.

As negotiations stall and positions harden, the risk of a partial government shutdown has certainly increased.

OMB Funding Review Targets Blue States

The Office of Management and Budget (OMB) recently directed federal agencies to conduct a review of federal funding provided to 14 states and Washington, D.C., pursuant to a January 20 memo. The review applies to all federal agencies except the Departments of Veterans Affairs and Defense. All but one of the affected states (Vermont) are led by Democratic governors.

According to OMB, the information will be used to assess the scope of federal funding in the identified states and localities and to support efforts to reduce improper or fraudulent use of federal funds through administrative actions or potential legislative proposals. OMB stated that the review is a data-gathering exercise and does not involve withholding funds. Agencies are required to submit responses to their resource management offices by January 28.

CEQ Clarifies NEPA Flexibilities for Emergency Actions

The Council on Environmental Quality (CEQ) - the White House office responsible for overseeing implementation of the National Environmental Policy Act (NEPA) across the federal government - has issued updated guidance replacing prior emergency review instructions. The guidance is intended to provide clarity to Federal agencies on how to comply with NEPA when responding to emergency situations (i.e. catastrophic wildfires, threats to species and their habitat, economic crises, infectious disease outbreaks, and states of emergency declared by the President).

Key updates and clarifications include:

• Clear direction not to delay urgent actions. Agencies are instructed that NEPA procedures should not prevent immediate action when there are imminent threats to life, property, or important natural, cultural, or historic resources. Environmental impacts should be considered where practicable, but agencies may proceed first and document impacts later.
• Streamlined determinations on NEPA Applicability. Agencies are directed to first assess whether an emergency action qualifies as a major federal action subject to NEPA. If it does not, agencies may proceed after documenting NEPA’s inapplicability.
• Greater flexibility in using categorical exclusions (CEs). Emergency actions covered by an existing CE may proceed even when extraordinary circumstances are present, provided the action does not result in significant impacts or is modified to avoid them. Agencies may also rely on categorical exclusions adopted by other federal agencies.
• Expanded use of alternative arrangements. When emergency conditions make standard NEPA review impracticable, agencies may use alternative arrangements for environmental assessments or environmental impact statements. Consultation with CEQ is required for actions with reasonably foreseeable significant effects and optional for lower-impact actions.
• Encouragement to formalize emergency procedures. Agencies are encouraged to build emergency-specific NEPA procedures into their regulations, including clear authority, documentation requirements, and coordination protocols, reducing the need for ad hoc approvals.
• Continued compliance with other environmental laws. The guidance reiterates that alternative NEPA arrangements do not waive other environmental requirements and encourages early coordination with resource agencies.

FEMA Review Council Extended Through March 2026

President Trump recently issued an executive order extending the FEMA Review Council through March 25, 2026. The extension is notable because its charter specified that it would terminate on January 24, 2026, absent presidential action. The Council was originally established in January 2025 to evaluate FEMA’s disaster response, recovery programs, and long-term resilience efforts, and to recommend potential reforms.

The extension comes as the Council’s work remains unfinished. Its most recent scheduled meeting in December was cancelled, making the additional time an important signal that the Administration intends for the review process to continue into 2026. NSDA is closely monitoring the Council’s work given its potential implications for disaster assistance programs, cost shares, mitigation funding, and FEMA’s future role in emergency management.

House Panel Advances Clean Air Act Reforms

Last week, the House Energy and Commerce Committee advanced a package of seven bills along party lines that would make significant changes to the Clean Air Act (CAA). It should be noted that the markup comes as Congress continues to explore bipartisan permitting reform legislation. However, these CAA bills are not expected to be included in any negotiated bipartisan permitting package.

Instead, the measures reflect a parallel track being pursued by House Republicans, who argue that existing CAA requirements, particularly air permitting timelines and regulatory uncertainty, are constraining infrastructure development, energy production, and domestic manufacturing. For their part, Democrats on the panel opposed the bills, contending they would weaken air quality standards, limit federal oversight, and undermine public health protections.

While bipartisan permitting talks remain ongoing, GOP leaders are expected to bring some or all of these CAA bills to the House floor later this year, either as standalone measures or as part of a broader messaging effort on regulatory reform and economic competitiveness.

Below is a brief summary of the CAA bills that were considered:

• CLEAR Act (H.R. 4218) – Extends the review cycle for National Ambient Air Quality Standards (NAAQS) from five years to ten years, allows consideration of likely attainability when setting standards, and gives states additional time to revise state implementation plans before a federal plan is imposed. The bill also authorizes states to consider technological achievability and economic feasibility when developing plans.
• FENCES Act (H.R. 6409) - Makes it easier for states to exclude pollution from foreign sources, both human-caused and natural, when determining compliance with national air quality standards.
• Air Permitting Improvements to Protect National Security Act (H.R. 6373) – Allows the president to exempt certain advanced manufacturing and critical minerals facilities from emissions offset requirements and permits states to use alternative emissions reduction programs for these facilities.
• New Source Review Permitting Improvement Act (H.R. 161) –Clarifies that certain facility upgrades or operational changes do not constitute modifications that would trigger New Source Review permitting requirements under the Clean Air Act.
• FIRE Act (H.R. 6387) – Limits how emissions from wildfires and prescribed burns are factored into air quality attainment determinations and requires greater coordination between states and the Environmental Protection Agency on excluding emissions related to exceptional events.
• Clean Air and Building Infrastructure Improvement Act (H.R. 4214) – Requires EPA to publish implementation rules and guidance at the same time revised air quality standards are finalized and restricts application of new standards to certain preconstruction permits until guidance is issued.
• RED Tape Act (H.R. 6398) – Eliminates the requirement for EPA to comment on federal construction projects that are already subject to environmental review under NEPA.

Relevant Hearings

Senate Environment and Public Works

Wednesday, January 28 | 10:00 a.m. ET | The full committee will hold a hearing to examine federal environmental review and permitting processes.

Hearing Details

Senate Homeland Security & Governmental Affairs

Tuesday, January 27 | 3 p.m. ET | The Subcommittee on Disaster Management will hold a hearing entitled, "Examining Fraud in State and Federal Programs."

Wednesday, January 28 | 2 p.m. ET | The Subcommittee on Investigations will hold a hearing entitled, "One Year After Disaster: Experts Weigh in on the Palisades Fire." The panel will receive testimony from the International Association of Emergency Managers, the Los Angeles Fire Department, and the Redondo Beach Fire Department.

Hearing Details

Senate Veterans' Affairs

Wednesday, January 28 | 3:30 p.m. ET | The panel will hold a hearing entitled, "Building a 21st Century VA Health Care System: Assessing Efforts to Restructure the Veterans Health Administration.

Hearing Details