Audit, Compliance and Risk Blog

The Trump Administration has issued its budget proposal for federal Fiscal Year (FY) 2026 (October 1, 2025 through September 30, 2026), including a 54% cut in the Environmental Protection Agency (EPA) budget, from $9.1 billion in FY 2025, to $4.16 billion for FY 2026. Many of the cuts apply to grant programs, and the proposal would cut staffing by 9%, from 14,130 full-time-equivalent employees (FTE) to 12,856. Readers should note that these cuts are comparable to those proposed by President Trump during his first term; EPA’s actual annual budget depends on that adopted by Congress (or a continuing resolution in lieu of an adopted budget). The remainder of this note summarizes EPA’s proposed FY2026 budget, including proposed reductions, drawn from EPA’s “Budget in Brief” (68 pages) and “Justification of Appropriation Estimates” (736 pages). 

Funding organized by Policy Pillars 

This year’s budget proposal is designed to reduce and realign EPA’s budget to match the new administration’s priorities. The Budget in Brief identifies the following “pillars”” 

The document provides for a focus on statutory obligations, and elimination of additional efforts. 

• Clean Air. EPA will continue to review National Ambient Air Quality Standards (NAAQS) and review state implementation plans (SIPs).  EPA will also review and revise Clean Air Act (CAA) programs such as revisions to the Exceptional Events Rule, the Good Neighbor Plan, and the Regional Haze Program, which it considers to be “unlawful overreach that hinder economic progress.” Climate change programs will be eliminated. 

• Clean and Safe Land. EPA will continue efforts under Superfund, hazardous waste and underground storage tank (RCRA), and brownfields programs. Enforcement expenditures will be reduced dramatically. 

• Clean and Safe Water. EPA will provide resources for Clean Water (CWSRF) and Drinking Water State Revolving Fund (DWSRF) Programs, at much lower levels. 

• Chemical Safety. EPA will revise assessment and licensing procedures to accelerate reviews of pesticides and chemicals. 
  
  

EPA will work to expand domestic energy production, including reductions in regulatory requirements deemed burdensome. It will reconsider the mandatory Greenhouse Gas Reporting Program. 

EPA will “realign[] resources to improve efficiency and effectiveness across EPA programs and regions through innovation and best practices to streamline permitting processes, reduce chemical review backlogs, and enhance workforce productivity that ensure cost-effective use of taxpayer dollars.” 

EPA will support government-wide efforts. 

EPA will continue the work begun in FY 2025 to reconsider and reevaluate three major on-road engine and vehicle regulations. This involves reconsideration of emission standards for nitrogen oxides and greenhouse gases. 

Major Funding Reductions

In addition to many procedural and analytical changes, EPA is proposing the following cuts, reductions and consolidations: 

• Clean and Drinking Water State Revolving Loan Funds – reduce by $2.46 billion 

• Categorical Grants – reduce by $1.006 billion 

• Hazardous Substance superfund – reduce by $254 million 

• Office of Research and Development – reduce by $235 million (“end to unrestrained research grants, radical environmental justice work, woke climate research, and skewed, overly-precautionary modeling that influences regulations — none of which are authorized by law”) 

• Environmental Justice – reduce by $100 million (eliminate) 

• Diesel Emissions Reduction Act (DERA) Grants – reduce by $90 million (eliminate) 

• Atmospheric Protection Program (i.e., climate change) – reduce by $100 million (eliminate) 

Now what? 

The Republicans narrowly control both houses of Congress, but the final form of EPA’s spending authorization (under an adopted budget, or a continuing budget resolution) cannot be predicted. However, I expect overall reductions. 

Self-Assessment Checklist 

Does the organization operate facilities subject to permits issued by EPA or the state, under direct or delegated authority of federal environmental laws (Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act (RCRA), etc.)? 

Does the organization manufacture, import or distribute chemical substances subject to TSCA? 

Is the organization subject to cleanup requirements under direct or delegated authority of federal environmental laws (CERCLA, RCRA, etc,)? 

Does the organization participate in EPA-sponsored voluntary programs subject to elimination? 

Where do I go for more information? 

Information available via the Internet includes: 

• “The President’s FY 2026 Discretionary Budget Request”

- “FY2026 EPA Budget in Brief"

- “FY2026 Justification of Appropriation Estimates for the Committee on Appropriations”

About the Author

Jon Elliott is President of Touchstone Environmental and has been a major contributor to STP’s product range for over 30 years. 

Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).

Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).

You may contact Mr. Elliott directly at: tei@ix.netcom.com