Federal Update: FY26 Appropriations Package Signed into Law; DHS Funding Talks Continue
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On February 2, the House narrowly approved a fiscal year 2026 spending package covering Defense, Financial Services, Labor-Health and Human Services-Education, National Security-State, and Transportation-Housing and Urban Development. The measure also included a two-week stopgap to keep the Department of Homeland Security (DHS) funded through February 13, buying negotiators additional time to work through immigration enforcement reforms. The funding bill was signed into law shortly thereafter, officially ending a four-day partial government shutdown that began on January 31.
It should be noted that Congress has already cleared fiscal year 2026 appropriations for the remaining departments and agencies, including Agriculture-Rural Development; the Legislative Branch; Military Construction-Veterans Affairs; Commerce-Justice-Science; Energy-Water Development; and Interior-Environment.
Beyond funding most federal agencies through September 30, the new law extends several expiring programs and authorities, including the National Flood Insurance Program (NFIP), the Temporary Assistance for Needy Families (TANF) program, and the State and Local Cybersecurity Grant Program, among others.
Attention now shifts to the DHS spending bill, where negotiations remain tense ahead of the February 13 deadline. Senate Republicans are largely dismissing an opening proposal from Democrats for new guardrails on immigration enforcement. However, GOP leaders have indicated there may still be limited room for compromise, suggesting a narrow path forward remains.
Democratic leaders are pressing for roughly 10 policy changes as part of the DHS talks, including proposals to require judicial warrants before agents enter private property and to bar immigration enforcement officers from wearing face coverings, measures Republicans have publicly pushed back on. With positions still far apart, lawmakers are racing the clock to strike a deal and avoid another funding lapse later this month.
Absent a deal, a partial shutdown would affect a broad range of DHS operations, including airport security managed by the Transportation Security Administration (TSA) and disaster response activities overseen by FEMA. On the other hand, Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) – agencies that received significant funding through last year’s budget reconciliation package – would likely see more limited near-term operational impacts.
House Slated to Vote on Bipartisan Housing Package
Next week, the House is scheduled to consider a bipartisan housing reform package – the Housing for the 21st Century Act (H.R. 6644) – that overwhelmingly advanced through the House Financial Services Committee in December. The measure is listed under the chamber’s suspension calendar, which is a fast-track process generally reserved for broadly supported, noncontroversial bills. The legislation, which is part of a broader effort to address the growing housing affordability crisis, includes 25 separate provisions aimed at boosting housing supply, modernizing local development and rural housing programs, expanding manufactured and affordable housing options, strengthening borrower protections, and improving oversight of housing providers.
Meanwhile, the Senate has advanced its own bipartisan proposal – the ROAD to Housing Act (ROAD Act; S. 2651) – which was recently included in the upper chamber’s version of the National Defense Authorization Act. However, the housing reforms were ultimately removed from the final conference agreement.
While both the ROAD Act and Housing for the 21st Century Act incorporate several overlapping provisions designed to increase the affordable housing supply, there are some key differences between the two measures. For instance, each chamber takes a unique approach to reauthorizing and modernizing the Community Development Block Grant (CDBG) and HOME Investment Partnerships Program. The Road Act includes additional funding for these programs but would also impose new financial penalties on local governments that fail to meet certain housing growth benchmarks. It also includes provisions related to federal homelessness programs and creates a $200 million annual innovation fund to provide flexible, competitive grants to local governments expanding housing supply.
If the House approves H.R. 6644 next week as expected, bipartisan leaders from the relevant House and Senate committees are expected to begin negotiations on a compromise package.
Lawmakers Revive Bipartisan Push to Simplify Federal Grant Applications
Last week, Senators Gary Peters (D-MI) and James Lankford (R-OK) reintroduced the Streamlining Federal Grants Act (S. 3709). The bipartisan measure, which cleared the Senate Homeland Security and Governmental Affairs Committee last Congress, would direct federal agencies and the White House Office of Management and Budget to simplify and standardize discretionary grant application processes.
Among other reforms, S. 3709 would require agencies to use plain language in grant notices, provide concise summaries of funding opportunities, adopt common data standards for grant reporting, and improve the quality and availability of technical assistance for applicants.
Looking ahead, the bill’s sponsors are working to build broader bipartisan support in the Senate, with a House companion measure expected to be introduced in the coming weeks.
Senate Democrats Push Back on EPA’s Proposed WOTUS Changes
Last week, a group of 15 Democratic senators – including Senators Alex Padilla (D-CA) and Adam Schiff (D-CA) – sent a letter to the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers urging them to abandon a newly proposed Waters of the United States (WOTUS) rule. The lawmakers argue the proposal would significantly weaken federal water pollution protections by narrowing the types of waterways and wetlands subject to Clean Water Act oversight, leaving many streams, wetlands, and seasonal waters more vulnerable to pollution and increasing risks to drinking water quality, flooding, and downstream communities.
The senators also contend the proposal goes beyond the Supreme Court’s 2023 Sackett decision. They warn that reduced federal oversight would shift cleanup, enforcement, and water treatment costs to states, local governments, and water utilities. The letter calls on EPA and the Army Corps to halt the rulemaking and refocus on policies that protect public health and the nation’s water resources.
FEMA Review Council Floats Major Overhaul
The White House FEMA Review Council is reportedly considering a major shift in how federal disaster assistance is delivered. The draft recommendations by the panel, which are not yet public, call for FEMA to move away from traditional damage-based assessments and toward a “parametric” disaster aid model, under which funding would be triggered automatically based on objective conditions such as wind speed, flood depth, acres burned, or earthquake magnitude. Aid amounts would reportedly be determined using pre-set triggers and modeled loss estimates, with the goal of providing faster and more predictable cash flow for response and recovery.
The framework would also reduce the federal minimum cost share from 75 percent to 50 percent, although states could qualify for higher reimbursement by demonstrating investments in mitigation and infrastructure resilience.
It should be noted that the report acknowledges tradeoffs, noting that while parametric triggers could significantly reduce delays, designing workable triggers across the full range of federally eligible disasters – including floods, wildfires, earthquakes, and droughts – would be complex and could leave some high-impact events underfunded.
Beyond disaster aid delivery, the report recommends cutting FEMA staffing, forgiving $20.5 billion in National Flood Insurance Program debt, and updating outdated flood maps.
Looking ahead, the future of these recommendations remains unclear. A planned December vote on the report was abruptly canceled, and although the council has been extended into March, no public action has yet been scheduled.
USDA Launches Portal to Track Foreign Ownership of U.S. Agricultural Land
The U.S. Department of Agriculture (USDA) has rolled out a new online portal to make it easier to report foreign ownership and transactions involving U.S. agricultural land. The portal is designed to simplify filing, improve compliance, and give USDA better visibility into foreign interests in American farmland.
The new system is part of USDA’s broader effort to tighten oversight of foreign land ownership through its National Farm Security Action Plan. The department also recently released a report which shows that foreign entities held about 46 million acres of U.S. agricultural land at the end of last year, including land tied to China, Russia, Iran, and North Korea. USDA believes the updated reporting process will help ensure more accurate data and stronger enforcement going forward.