The beginning of the Trump Administration has sent ripples of confusion and uncertainty to awardees of federal grants and loans. Funding freezes, cancelations, threats at cancelations and freezes, and the executive orders and court cases surrounding these federal actions have extended the horizon of confusion. Now, amid the process of budget reconciliation, federal agencies are facing additional cuts. This Spotlight Story investigates the status of various federal programs in the wake of these actions and attempts to provide a greater degree of certainty to those awaiting federal awards.

To begin, the Climate Program Portal has laid out several definitions for the types of threats to already awarded funding:

  1. Frozen funding: any inability for grantees to access funding, often without notification; not legally binding.
  2. Funding targeted for cancellation: instances where reporting or other indication points to Administration efforts to cancel a program, but without any formal action; not legally binding.
  3. Proposed canceled: funding where termination has been declared by the Agency, but is either being litigated or not yet confirmed; legally binding.
  4. Confirmed canceled: where there is agreement by all parties that a grant has been canceled; legally binding.

Additionally, funding appropriated by the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) that has not yet been obligated has been targeted by the House Budget Reconciliation Bill, otherwise known as the One Big Beautiful Bill Act. Here, the Water Program Portal builds upon the Climate Program Portal’s analysis with a focus on water funding, while also integrating commentary arising from the budget reconciliation process. The One Big Beautiful Bill takes aim at a slew of climate and justice funding, including billions from the Federal Emergency Management Agency (FEMA), the National Oceanic and Atmospheric Administration (NOAA), and the Environmental Protection Agency (EPA). The House Budget Reconciliation Bill passed the morning of May 22nd and is now in the Senate’s hands.

Frozen, and Unfrozen, Funding

Most of the water funding that has been impacted by freezing sits in the US Department of Agriculture (USDA). Specifically targeted are USDA’s climate-smart agriculture programs, namely the Environmental Quality Investment Program (EQIP), the Regional Conservation Partnership Program (RCPP), the Conservation Stewardship Program (CSP), and the Agricultural Conservation Easement Program (ACEP). All four are traditionally solely funded by the Farm Bill, which went into markups by the House’s Agriculture Committee the evening of May 13th. More details about these programs are provided in a Water Program Portal Spotlight Story from April 2024.

The Office of Management and Budget had previously communicated to agricultural producers that the programs that impacted them would not be affected by IRA funding freeze activities, which was not what farmers reported. As the funding freeze lapsed in late February, Agriculture Secretary Brooke Rollins announced that the first slate of agricultural funding was to be released by USDA. This tranche included $20 million in EQIP, CSP, and ACEP funding. Further releases of funding have not been communicated via USDA’s press releases. However, one published on April 14th detailed the cancelation of a “Biden Era Climate Slush Fund,” the Partnerships for Climate-Smart Commodities, signaling a learn away from supportive climate action from the agency — as further delineated by the changes to these conservation programs’ funding made by the House Committee on Agriculture during budget reconciliation.

Confirmed Canceled Funding

At the forefront of confirmed canceled funding is FEMA’s Building Resilient Infrastructure and Communities (BRIC) program. A press release published on April 4th details that all BRIC applications from fiscal years 2020 through 2023 have been canceled, and that any funds not already distributed to awardees would be clawed back. FEMA estimated that $882 million in IIJA funding would be returned, amounting to more than 88 percent of the program’s total funding.

Proposed Funding Cuts: Budget Reconciliation

As budget reconciliation has moved forward, several federal agencies and programs have found themselves on the chopping block.

Both FEMA and NOAA have been targeted. No FEMA programs are named in the bill. Instead, money is siphoned from the agency for other activities, including Presidential Residence Protection to the tune of $300 million and a State Homeland Security Grant Program funded at $2.575 billion. Four sub-programs are described within the State Homeland Security Grant Program, including $625 million for the 2026 FIFA World Cup’s security and planning and $1 billion for the 2028 Olympics’ security and planning. The other $950 million is proposed to be directed toward expanding state and local governments’ abilities to monitor unmanned aircraft systems and to fund the Operation Stonegarden Grant Program, which develops cross-jurisdictional law enforcement coordination. All of this funding is available through the end of fiscal year 2029. Turning to NOAA, two sections of the bill outline the rescission of funds from the agency. The sections are blunt, simply rescinding all unobligated funding from the $200 million Facilities of the National Oceanic and Atmospheric Administration and National Marine Sanctuaries program and the $2.6 billion Investing in Coastal Communities and Climate Resilience program.

Pertaining to the EPA, the Energy & Commerce Committee (E&C) intends to end the Environmental and Climate Justice Block Grants and the many funding streams within the $3 billion program, taking back unobligated funding. These include grants stemming from the Environmental Justice (EJ) Collaborative Problem-Solving Cooperative Agreement Program (with $50.7 million in tracked canceled grants), the EJ Community Change Grants in unobligated funding), the EJ Government-to-Government program ($57.6 million in tracked canceled grants), and the EJ Thriving Communities Grantmaking program ($660 million in tracked canceled grants); note however that only the Community Change Grants’ funding remains unobligated and is at risk of recission. As stated in a recent Atlas Buildings Hub digest, the loss of these community-led programs via the recission of unobligated funding will be felt acutely, especially for the historically disadvantaged communities many of these projects are sited in. And as described in a Water Program Portal digest from March 2025, a substantive amount of funding from the EJ Community Change Grants were meant to flow toward residential water and wastewater systems.

Another large funding pot at risk at E&C is the Climate Pollution Reduction Grants (CPRG) program, funded at $5 billion. Its subprograms include $4.6 billion for climate plan implementation, $250 million for climate plan creation, and $150 for technical assistance and program management for both general applicants and Tribal Nations and U.S. territories. Nearly all of this funding has been obligated to states, but about $90 million dollars in unobligated CPRG funding is at risk amid the reconciliation process. This recission could kneecap EPA’s implementation of the program, as the remaining funding is meant to support program management. The program has awarded $931 million state, local, and Tribal governments and $35 million to Tribal Nations and U.S. Territories for agricultural, natural, and working lands-based projects, resulting in the planting of up to 289,000 trees; conservation, protection, or restoration of up to 252,800 acres of forests, coastal areas, wetlands, and grasslands; and climate-smart and precision agricultural practices on over two million acres.

Additionally, the Agriculture Committee’s markups concluded on May 14th, resulting in changes to USDA’s climate-smart agriculture and conservation funding. The reconciliation bill will initiate recission of all unobligated conservation-related funds stemming from the Inflation Reduction Act. That funding will then be redirected toward the baseline funding for ACEP, CSP, EQIP, and RCPP to extend their lives beyond fiscal year 2031, IRA’s authorization end date. As a result, the boost each program was intended to receive annually from the IRA each fiscal year will instead be diluted, with the funding stretched out though fiscal year 2035. All in all, the amount of funding is retained. However, note that this funding will no longer be dedicated to climate-smart agriculture activities.

Out of the Ways & Means Committee came cuts to the clean energy tax credits, including 45Y and 48E. The 45Y Production Tax Credit and the 48E Investment Tax Credit now both expire within 60 days of the reconciliation bill’s enactment. This means only projects that begin construction within that 60-day window, that are also completed and serviceable by 2028, will have access to the credits after its passage. Many clean energy tax credits are relevant in the water world given how Direct Pay allows public water and wastewater entities to use them for projects like on-site clean energy generation. While the House’s version of the bill retains Direct Pay, gutting the tax credits means there is less for non-tax-paying entities to access.

Proposed Funding Cuts: Trump’s Budget Proposal

While not currently integrated into budget reconciliation, President Trump’s May 2nd budget request proposed a dramatic cut to funding for the SRFs. In total, his requested budget indicates a $2.46 billion cut in funding from the Clean and Drinking Water SRFs for fiscal year 2026, to about $305 million. Given that states have become accustomed to the much-increased volumes of SRF funding as a result of IIJA’s passage — for instance, about $9.2 billion was projected to come out of the SRFs to states and territories in fiscal year 2026 — program management and implementation would likely sharply be affected if such a cut was made. However, the One Big Beautiful Bill Act did not contain cuts to the SRFs.

Conclusion

Despite the many congressional reports, advocacy newsletters, and journalistic pieces being published about budget reconciliation, the process remains relatively opaque and convoluted. The volatility of the political landscape, especially surrounding climate issues, only casts darker shadows over public understanding of the legislative process. Reports such as EPA Administrator Lee Zeldin’s statement that the agency will likely restore many of the grants that have already been canceled after they are “more closely examined” only adds to the overarching murkiness.

The Water Program Portal will continue to track budget reconciliation as it progresses. As of now, a final budget is expected by the end of June, healthily spaced before the new fiscal year begins in September.