As we enter July, the Reconciliation Bill will most likely be behind us and the Energy and Water Development and Related Agencies appropriations (E&W) bill in the House will begin to move forward with the initial markup scheduled for Monday, July 7 at 6:00pm ET. The E&W bill includes funding for civil works activities of the U.S. Army Corps of Engineers (USACE) in the Department of Defense, in Title I; the Department of the Interior's Bureau of Reclamation (Reclamation) and Central Utah Project
(CUP), in Title II; the Department of Energy (DOE), in Title III; and a number of independent agencies, including the Nuclear Regulatory Commission (NRC) and the Appalachian Regional Commission (ARC), in Title IV.
President Donald J. Trump sent his initial FY2026 appropriations request to Congress on May 2, 2025. The initial submission issued by the White House Office of Management and Budget (OMB), sometimes referred to as the "skinny budget," includes broad budgetary outlines, reductions, additions, and initiatives.1
On May 30, 2025, OMB released the FY2026 Budget Appendix, which includes some additional details.2 Federal agencies are expected to release detailed congressional budget justifications as they are completed. Funding for E&W agencies could also be affected by actions of
the 119th Congress regarding supplemental appropriations and rescissions, as well as by mandatory funding provisions from past and contemplated budget reconciliation measures. Advance funding for E&W agencies in FY2026 has been appropriated by the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58). In addition, the budget reconciliation measure from the 117th Congress commonly referred to as the Inflation Reduction Act of 2022 (IRA; P.L. 117-169) included funding for some E&W agencies to remain available through as long as
FY2031.
In the 119th Congress, the budget resolution passed on April 4, 2025 (H.Con.Res. 14) started a budget reconciliation process that could result in rescissions of previous appropriations and
changes in mandatory spending. Pursuant to the budget resolution, the House passed a reconciliation bill (H.R. 1) on May 22, 2025. This bill includes provisions that would rescind funds for several programs established and/or funded by the IIJA and the IRA, as well as modify or eliminate certain
energy-related tax provisions in the IRA.
Potential issues for Congress in considering the FY2026 budget request include a proposed 84% reduction in funding for energy efficiency research and development (R&D), elimination of funding for R&D in solar and wind energy technologies, a 57% reduction for the Advanced Research Projects Agency – Energy (ARPA-E), and termination of all the federal regional authorities and
commissions except for the Appalachian Regional Commission. Proposed funding increases that could be of interest to Congress include $750 million to support nuclear reactor loan guarantees and a request for $4.8 billion in reconciliation funding for nuclear weapons activities. The interaction of reconciliation actions with regular annual appropriations could add complexity to congressional deliberations over the FY2026 budget.
Along with IRA and IIJA advance appropriations, FY2025 E&W funding is provided by the Full-Year Continuing Appropriations and Extensions Act, 2025, which was signed by President Trump on March 14, 2025 (Continuing Appropriations Act; P.L. 119-4). The Continuing
Appropriations Act provides annual appropriations for FY2025 at the FY2024 level for most E&W programs; that is, the act is a full-year continuing resolution. For details on E&W programs and FY2025 funding, see CRS Report R48097, Energy and Water Development: FY2025 Appropriations, by Mark
Holt and Anna E. Normand. For more information on continuing resolutions, see CRS Report R46595, Continuing Resolutions: Overview of Components and Practices, coordinated by James V. Saturno.
The following sections of this
report describe the funding requests for E&W agencies in the Administration's initial FY2026 budget submission to Congress on May 2, 2025, and subsequent budget documents.
Department of Energy
The Administration is requesting $45.1 billion for DOE in FY2026, a reduction of $5.1 billion (-10%) from the FY2025 enacted amount. Most of
the proposed funding reductions are for science and applied energy programs. An overall increase—including proposed mandatory spending—is requested for the National Nuclear Security Administration (NNSA), which is the largest element of the DOE budget. DOE released summary documents for its FY2026 congressional budget justification, including a "Budget in Brief," on May 30, 2025.8 Details from budget request documents
that were released by the date of this report are provided in the subsections below.
National Nuclear Security Administration
The Administration is requesting $30.0 billion for NNSA in FY2026, including $4.8 billion in mandatory funding to be provided through the congressional budget reconciliation process (which, as previously noted,
is part of ongoing congressional deliberations of the 119th Congress). The total of $30.0 billion would be an increase of $5.9 billion (24.5%) over the FY2025 enacted amount of $24.1 billion. The discretionary funding request of $25.3 billion would be an increase of $1.1 billion (4.7%) above the FY2025 enacted amount. The requested $4.8 billion in mandatory spending would be applied entirely to the Weapons Activities account, for a total of $24.9 billion, an increase of $5.6 billion (29%)
over the FY2025 enacted level.9 NNSA is a semiautonomous DOE agency responsible for nuclear warheads, naval reactors, and nuclear weapons
nonproliferation.
Energy Efficiency and Renewable Energy (EERE)
The Administration is requesting $888 million for EERE in FY2026, a reduction of $2.572 billion (-74%) from FY2025. The budget would focus on early-stage research and development to "support technologies that promote firm baseload power and other priorities established in
relevant Executive Orders, such as bioenergy," according to the request.10 The DOE Budget in Brief says that no funding is requested in
FY2026 for solar and wind energy R&D.11
Office of
Science
The Administration is requesting $7.092 billion for Science in FY2026, a reduction of $1.148 billion (-14%) from FY2025. According to the DOE Budget in Brief, the Biological and Environmental Research program (BER) would see the largest percentage reduction, from $900 million in FY2024 to $395 million (-56%) in FY2026. Specifically, no FY2026 funding is requested for BER research in environmental system
sciences, atmospheric system research, earth system modeling, or data management, and the Atmospheric Radiation Measurement User Facility would be terminated in FY2026. According to the Budget in Brief, BER would instead focus on "transformative science and scientific user facilities to harness the genomic potential found in nature, achieve a predictive understanding of complex systems, and provide the fundamental research leading to solutions for the Nation's energy and national security
challenges." Increases are requested in FY2026 for "artificial intelligence (AI) and machine learning (ML), Quantum Information Sciences (QIS), basic research on critical minerals/materials, microelectronics, and accelerating fusion development to close key science and technology gaps."12
The Science program could be affected by recently issued DOE grant policies. On April 11, 2025,
DOE announced "updated policies, procedures, and general decision-making criteria for establishing indirect cost rates when awarding grants to IHEs [Institutions of Higher Education]."13 According to the policy, DOE will no longer use the negotiated indirect cost rate for grants awarded to IHEs; instead, DOE is setting a standardized 15% indirect cost rate for all grant awards to IHEs.14 A federal lawsuit filed by several affected IHEs cited previously negotiated indirect cost rates ranging up to 62%.15 While lower indirect cost rates may reduce the total federal cost of a research grant, lower indirect cost rates may affect institutions' assessment of conducting research for the Office of Science and may change their willingness to apply for grants in the future.16
Separately, policies were issued on May 8, 2025, that also changed the indirect cost rates DOE would pay to
state and local governments, nonprofit organizations, and for-profit organizations.17
Environmental Management
The Administration is requesting $8.093 billion for Environmental Management (EM), which handles cleanup of radioactive facilities and waste management, in FY2026, a reduction of $389 million (-5%) from the program's FY2025 enacted amount of $8.482 billion. According to the request, about $178 million of the reduction results from a transfer of management
responsibilities for the Savannah River Site in South Carolina from EM to NNSA. The request says EM funding for the Hanford Site in Washington State—the most extensively contaminated DOE site—would remain unchanged; other site reductions include the WIPP site in New Mexico; the additional reductions would be spread among other EM sites.
Advanced Research Projects Agency ‒ Energy (ARPA-E)
The Administration is requesting $200 million for the Advanced Research Projects Agency ‒ Energy (ARPA-E), which supports research on high-risk but potentially transformative technology, in FY2026. This would be a reduction of $260 million (-57%) for ARPA-E from $460 million enacted for FY2025.18 According to OMB, funding for ARPA-E would be reduced "to a fiscally responsible level for high risk, high reward research advancing reliable energy technologies and other
critical and emerging technologies. Green New Scam technologies are not supported."19 As discussed above, ARPA-E's research program may
be affected by DOE's recent changes to indirect cost rates for IHE grants.
Nuclear Energy
The Administration is requesting $1.370 billion for Nuclear Energy in FY2026, a reduction of $315 million (-19%) from the FY2025 enacted total of $1.685 billion. According to the request, the budget would reduce "non-essential research" to focus
on "developing innovative concepts for nuclear reactors, researching advanced nuclear fuels, and maintaining the capabilities of the Idaho National Laboratory," which is DOE's lead nuclear laboratory.20
Loan Programs
For the Title 17 loan guarantee program, the request includes $750 million to pay the credit subsidy cost (to cover potential losses to the federal government) for loan guarantees for small modular nuclear reactors, which DOE describes as "an immediate
priority."22 The budget request cancels previous loan authority but would provide an additional $30 billion in lending authority for
geothermal, hydropower, or bioenergy projects, transmission and distribution projects, advanced fossil energy projects, advanced nuclear energy facilities, refineries, and critical minerals supply projects.23
Cancellation of IIJA and IRA Appropriations
The Administration request calls for cancellation of $15.247 billion of IIJA advance appropriations for renewable energy, carbon capture from the air, electric vehicles and batteries, "and other costly technologies
burdensome to ratepayers and consumers."24 It also would cancel funding for carbon dioxide sequestration pipelines and related
transportation projects under the Carbon Dioxide Transportation Infrastructure Finance and Innovation Program established by IIJA Section 40304.
Separately, if enacted, Section 41001 of H.R. 1, as passed by the House,
would rescind all unobligated balances of IRA appropriations for several DOE programs, including loan programs, power line grants, offshore wind planning, and advanced industrial facility deployment.
NRC
The Nuclear Regulatory Commission, the largest of the E&W independent agencies, would receive $971 million under the FY2026
request, an increase of $27 million (3%) over the FY2025 enacted amount. NRC licenses and regulates nuclear reactors and radioactive materials. NRC's FY2026 funding request would be offset by fees paid by the nuclear industry, estimated at $819 million for FY2026.34
ECA will continue to provide updates as the Energy and Water appropriations bill makes its way through the
Congressional process.
