Senate GOP Reconciliation Bill Faces Procedural and Policy Hurdles

Senate Republicans continued efforts this week to finalize their budget reconciliation package ahead of a self-imposed July 4 deadline. For his part, Majority Leader John Thune (R-SD) has indicated that the Senate may remain in session through the weekend and potentially into the upcoming recess, if necessary, to complete the bill. Once finalized, the legislation must return to the House for a final vote.

Progress has been slowed by a series of rulings from the Senate parliamentarian, who recently determined that several key provisions violate the Byrd Rule – the procedural requirement that limits what can and cannot be included in reconciliation bills. Because the reconciliation process allows for passage with a simple majority, provisions that fail to meet Byrd Rule standards would be subject to the traditional 60-vote threshold. These rulings have forced GOP leaders back to the negotiating table just days before the deadline.

One provision that was struck would shift a portion of Supplemental Nutrition Assistance Program (SNAP/CalFresh) benefit costs to states based on payment error rates. While the original language was disqualified, a modified version of the provision appears to have passed procedural review and may still be included in the final bill.

Several immigration-related provisions were also removed for failing to comply with reconciliation rules. These included proposals allowing states to conduct and be reimbursed for immigration and border enforcement activities, language to block federal funding to so-called “sanctuary jurisdictions,” and a measure that would have created a federal fund to support local arrests of individuals suspected of being in the country unlawfully.

In another high-profile ruling, the parliamentarian rejected a controversial public lands proposal championed by Senate Energy and Natural Resources Chairman Mike Lee (R-UT). The original plan would have required the Bureau of Land Management (BLM) and the U.S. Forest Service (USFS) to sell off 0.5 percent to 0.75 percent of their respective land holdings in 11 western states. While the stated goal is to expand housing supply, the scope and structure of the proposal prompted bipartisan concern, particularly around federal overreach, the potential for poorly sited development, and a lack of safeguards to prevent unintended impacts on environmentally sensitive areas and local land use plans. In response to the ruling and the bipartisan pushback, Senator Lee is floating a narrower alternative focused solely on BLM parcels within five miles of established population centers. No legislative text has been released, and it remains unclear whether the revised proposal will meet procedural requirements.

Perhaps the most challenging rulings from the Senate parliamentarian, however, pertain to proposed changes to Medicaid (Medi-Cal). The parliamentarian has reportedly struck down several provisions, including the cap on provider taxes in expansion states and the reduction of the Federal Medicaid Assistance Percentage (FMAP) for the expansion population by 10 percentage points in states that use their own dollars to provide Medicaid coverage to undocumented immigrants. Senate Democrats estimate that their Republican counterparts must make up for $250 billion over 10 years in lost Medicaid savings due to these rulings. However, without information about the rationale behind the parliamentarian’s rulings, it is impossible to predict how difficult it will be for the GOP to rework the language accordingly. Regardless of the parliamentary process, significant disagreement remains between Republican lawmakers over how deeply to cut Medicaid, with some pushing for a small stabilization fund to offset the legislation’s impact on rural hospitals.  

With several cost-saving provisions struck from the bill, lawmakers are now scrambling to identify alternative offsets in order to meet the reconciliation package’s required deficit-reduction targets. Negotiations remain complicated by ongoing divisions between the House and Senate over a range of key issues, including Medicaid, SNAP, the Child Tax Credit, the State and Local Tax (SALT) deduction, and proposed rollbacks of energy tax credits included in the Inflation Reduction Act.

USDA Moves to Rescind Roadless Rule

This week, U.S. Department of Agriculture Secretary Brooke Rollins announced plans to rescind the 2001 Roadless Area Conservation Rule. Originally adopted during the final days of the Clinton administration, the Roadless Rule restricted road construction and timber harvesting on roughly 58.5 million acres of inventoried roadless areas nationwide, including 4.4 million acres across 21 national forests in California. While the policy was designed to protect undeveloped forestlands from large-scale resource extraction and preserve their ecological value, critics have long argued that it imposes overly rigid constraints that hinder wildfire mitigation, sustainable forest management, and economic activity in rural communities.

The U.S. Forest Service will now begin the formal rulemaking process to rescind the regulation, which is expected to include opportunities for public input. While full details have not yet been released, the announcement has already drawn strong reactions from environmental groups and is likely to prompt legal challenges once the proposed rollback is formally published in the Federal Register.

The long-term impact of rescinding the Roadless Rule will depend on the specifics of the final regulation and the outcome of any legal challenges. However, the announcement reflects a continued shift in federal land management priorities, one that emphasizes reducing regulatory barriers and expanding the use of active forest management tools, such as thinning and fuel reduction, to address forest health and wildfire risks on public lands.

It should be noted that the announcement follows the recent introduction of legislation in Congress to permanently enshrine the Roadless Rule into federal law. Earlier this month, a group of House and Senate Democrats introduced legislation – the Roadless Area Conservation Act (H.R. 3930; S. 2042) – that would make the 2001 rule permanent. Supporters of the bill emphasize that the original regulation was the product of extensive public engagement and has safeguarded some of the most ecologically valuable and undeveloped areas of the National Forest System.

House Appropriators Advance FY 2026 Spending Measures

Lawmakers made initial progress this week on their fiscal year (FY) 2026 spending measures, though a final budget agreement is likely still months away. The House Appropriations Committee advanced three of its twelve annual spending bills, including those covering Agriculture–Rural Development, the Legislative Branch, and the Department of Homeland Security. Despite this early momentum, Congress faces a tight deadline to enact full-year funding before the new fiscal year begins on October 1.

Homeland Security

One of the measures cleared for floor consideration was the FY 2026 Homeland Security appropriations bill, which funds the Department of Homeland Security and its sub-agencies, including the Federal Emergency Management Agency (FEMA), U.S. Customs and Border Protection (CBP), and U.S. Immigration and Customs Enforcement (ICE), among others. The legislation, which advanced on a party line vote, would provide over $66 billion in total discretionary spending – roughly $1.3 billion above current levels.

This includes $31.8 billion for FEMA, which would represent a $4.5 billion increase from FY 2025. Of that amount, $26.5 billion would be allocated to the Disaster Relief Fund, which supports response and recovery efforts following major disasters. An additional $3.7 billion is dedicated to preparedness grants, training, and exercises, including $720 million for firefighter staffing and equipment grants. The committee also adopted an amendment to restore funding for the Building Resilient Infrastructure and Communities (BRIC) program.

CBP would receive $19 billion under the bill, nearly $250 million below current funding levels. The measure also would eliminate the Shelter and Services Program, which provides support to local jurisdictions managing the needs of undocumented individuals. ICE would receive approximately $11 billion, an increase of nearly $1 billion. This includes $4.4 billion for custody operations, funding up to 50,000 detention beds, and $1 billion for transportation and removal efforts – a $309 million increase. The bill also would prohibit any reduction in participation in the 287(g) program, which allows local law enforcement to assist with immigration enforcement. Additionally, ICE would be required to report on jurisdictions that do not comply with detainer requests and assess potential congressional actions to strengthen cooperation.

The committee also approved an amendment to modify visa rules for seasonal workers. It would allow H-2A agricultural workers to remain for the full term of their job offer (up to one year) and permit H-2B employers to rehire the same number of workers annually, effectively bypassing existing visa caps and the lottery system.

Finally, the bill includes $170 million in Community Project Funding (earmarks), with more than $105 million for Pre-Disaster Mitigation grants and nearly $65 million for Emergency Operations Center upgrades. A table of Community Project Funding can be accessed here.

Agriculture-Rural Development

The committee also advanced its FY 2026 Agriculture–Rural Development appropriations bill, which funds the U.S. Department of Agriculture (excluding the Forest Service), the Food and Drug Administration (FDA), and other related agencies. The legislation would provide a total of $25.9 billion in discretionary funding, which is nearly $1.2 billion below FY 2025 enacted levels. Of that amount, $21.9 billion is allocated to USDA, representing an $800 million reduction from current levels.

The measure includes several administrative and policy changes. Among other things, it proposes the elimination of funding for diversity, equity, and inclusion (DEI) initiatives at USDA and would reduce overall staffing levels, with the stated goal of returning agency operations to pre-pandemic levels. The legislation also includes language to close a regulatory loophole in the hemp market created by the 2018 farm bill, in response to concerns about the sale of unregulated THC products. Additionally, it would reduce the amount of funding available for the purchase of fresh fruits and vegetables in the Special Supplemental Nutrition Program for Women, Infants and Children (WIC).

Finally, the measure provides $643 million in CPF funding for over 500 local initiatives. A full list of projects included in the bill can be accessed here.

 Outlook

Looking ahead, House Majority Leader Steve Scalise (R-LA) has laid out an ambitious plan to pass all 12 appropriations bills before the August recess. However, the inclusion of controversial policy riders and deep partisan divides will make that a challenging goal. Even if the House completes its work on schedule, final negotiations with the Senate and the White House are unlikely to begin in earnest until later this year. In the meantime, it is widely expected that lawmakers will enact a stopgap spending measure to keep the government funded beyond September 30.