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On March 3, bipartisan congressional leaders released their first six (of twelve) final funding bills for fiscal year (FY) 2024 lasting through September 30. If passed, these final-draft bills would refresh covered agencies to execute new federal contracts, offer new rounds of grants, and deliver congressionally-directed earmarks to select local projects. After months of partisan gridlock, <a href="https://protect-us.mimecast.com/s/sUUxCn5GqBc3MJ27i9L7OY?domain=r20.rs6.net" target="_blank" rel="noopener">Republicans argue they successfully slashed “wasteful</a>” spending while Democrats say they held off many of the GOP’s policy demands. The new package is now headed for votes in both chambers this week before a March 8 shutdown deadline. Congress must then immediately develop and pass another six-bill package funding the rest of the federal government before a second March 22 shutdown deadline. Also very soon, Congress must restart the entire process for FY 2025 as a new funding cycle begins this month.

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Important links and summaries to bills in the new package, plus highlights of each bill, are below:

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<a href="https://protect-us.mimecast.com/s/F2M7CpY9vEcOXjWnSYyjwU?domain=r20.rs6.net" target="_blank" rel="noopener">Full Community Project Funding List</a>

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Military Construction; Veterans Affairs: <a href="https://protect-us.mimecast.com/s/pFWTCqxA0GTkmp38CEYdXi?domain=r20.rs6.net" target="_blank" rel="noopener">Explanatory Statement</a>| <a href="https://protect-us.mimecast.com/s/bJN1CrkgxJhnL5Y8IjgKIq?domain=r20.rs6.net" target="_blank" rel="noopener">Republican Summary</a> | <a href="https://protect-us.mimecast.com/s/2qX1Cv2mBNhLMD57i5EayH?domain=r20.rs6.net" target="_blank" rel="noopener">Democratic Summary</a>

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This new bill provides a $2 billion military construction increase over the Department of Defense’s request to a total $18.7 billion for military construction between the services. The largest allocation is for the Navy and Marine Corps, which supports <a href="http://protect-us.mimecast.com/s/SULUCwpnDOsVYDmGhxc9BP?domain=r20.rs6.net" target="_blank" rel="noopener">r</a><a href="https://protect-us.mimecast.com/s/SULUCwpnDOsVYDmGhxc9BP?domain=r20.rs6.net" target="_blank" rel="noopener">ecent efforts</a> to invest $1 billion in updates to barracks alone. Appropriators provided about $100 million more than the Pentagon requested to continue cleanup of PFAS and other contaminants on closed military bases.

For the Department of Veterans Affairs (VA), the bill provides an increase of $48 million over current levels to $134.8 billion in discretionary funding, with $112.6 billion more provided in advance dollars to treat about 7.5 million patients at VA facilities.

Agriculture-FDA: <a href="https://protect-us.mimecast.com/s/QUUZCxkoEPhRr2V1sgrgfw?domain=r20.rs6.net" target="_blank" rel="noopener">Explanatory Statement</a> | <a href="https://protect-us.mimecast.com/s/bJN1CrkgxJhnL5Y8IjgKIq?domain=r20.rs6.net" target="_blank" rel="noopener">Republican Summary</a> | <a href="https://protect-us.mimecast.com/s/J-tcCyPpG0c29lwrix-cAp?domain=r20.rs6.net" target="_blank" rel="noopener">Democratic Summary</a>

The Ag-FDA funding bill derailed several times last year as House Republicans disagreed internally over proposed cuts to USDA farm programs. More recently, leaders also sparred over the details of re-upping food aid to low-income families under the Women, Infants and Children (WIC) program as it approached a crucial shortfall. The new bill settles the WIC issue with a proposed $7.03 billion funding level, an increase of $1.3 billion. The bill also funds the Supplemental Nutrition Assistance Program (SNAP) and does not include a GOP proposal to create a pilot program aimed at restricting SNAP food aid purchases.

The bill ramps up U.S. Department of Agriculture (USDA) funding by $383 million, rippling out to small increases to agencies such as the Food Safety and Inspection Service. The bill also adds the USDA to the multi-agency Committee on Foreign Investment in the United States (CFIUS) to review and alert purchases of U.S. farmland by China and other foreign entities of concern. House Republicans originally sought to bar these transactions entirely.

The bill also provides level funding ($3.5 billion) to the Food and Drug Administration (FDA), pooling with user fees the agency collects for a total of $6.7 billion. The bill provides $50 million to accelerate new medical technology under the 21st Century Cures Act.

Democrats touted the bill’s removal of earlier House Republican language to restrict the FDA’s regulation of cigarettes and cigars.

Interior-Environment: <a href="https://protect-us.mimecast.com/s/wrzXCzpqJRswJ0ZMS7n8Nd?domain=r20.rs6.net" target="_blank" rel="noopener">Explanatory Statement</a> | <a href="https://protect-us.mimecast.com/s/bJN1CrkgxJhnL5Y8IjgKIq?domain=r20.rs6.net" target="_blank" rel="noopener">Republican Summary</a> | <a href="https://protect-us.mimecast.com/s/53o7CAD8GwFl7vXNSw_CBW?domain=r20.rs6.net" target="_blank" rel="noopener">Democratic Summary</a>

This bill absorbed about $1.5 billion in cuts compared to FY 2023 levels. However, the cuts are not as severe as those House Republicans sought: at the Environmental Protection Agency (EPA), for example, a 40% proposed cut fell to about 9% in this near-final bill.

The bill arrives as the EPA prepares to implement many controversial regulations, including new drinking water limits for PFAS “forever chemicals” as well as lead and copper, new passenger and heavy-duty vehicle fuel economy standards, and several new nationwide air quality rules. The new bill drops GOP demands to block the EPA from implementing several of these rules. The bill also requires the EPA to detail to Congress its spending plan for PFAS mitigation.

Similarly, the new bill drops an earlier House GOP proposal to claw back Inflation Reduction Act funding from the White House’s Council on Environmental Quality (CEQ), which sets government-wide environmental policy. The CEQ aims this spring to update federal permitting rules under the National Environmental Policy Act (NEPA) to speed up reviews of federally funded infrastructure projects.

Meanwhile, Republicans touted that the bill rejected the Biden Administration’s request for extra environmental justice funds.

Energy-Water: <a href="https://protect-us.mimecast.com/s/gUq5CBB1JxsREgr7spuiVk?domain=r20.rs6.net" target="_blank" rel="noopener">Explanatory Statement</a> | <a href="https://protect-us.mimecast.com/s/bJN1CrkgxJhnL5Y8IjgKIq?domain=r20.rs6.net" target="_blank" rel="noopener">Republican Summary</a> | <a href="https://protect-us.mimecast.com/s/S25YCDkwLzhJgRz5I67ld6?domain=r20.rs6.net" target="_blank" rel="noopener">Democratic Summary</a>

The Energy-Water bill sends an extra $1.8 billion (to a total $50.2 billion) to the Department of Energy, with a funding boost to nuclear security activities and the DOE’s Office of Science. The Office of Energy Efficiency and Renewable Energy (EERE) escaped House Republicans’ desired cuts: this agency hosts many of the Biden Administration’s “green” initiatives including development of new low-emission power sources, vehicle and building efficiency technologies, as well as the DOE’s manufacturers’ liaison <a href="https://protect-us.mimecast.com/s/2fJ8CERKMAF0RQ23iJgDh_?domain=r20.rs6.net" target="_blank" rel="noopener">implementing several Inflation Reduction Act grant programs</a>.

The bill also specifies millions to “cross-cutting” initiatives across several DOE agencies: $380 million to speed development and procurement of critical minerals; $118 million for advancing carbon removal and storage; $396 million for development of hydrogen power, especially for heavy-duty industry; and $953 million to decarbonize high-emission industries such as construction.

Republicans touted that the new bill bars the Biden Administration from auctioning oil from the Strategic Petroleum Reserve (SPR) to companies in China and other foreign entities of concern.

For the Army Corps of Engineers’ water infrastructure projects, the bill includes a $1.3 billion increase spread across many activities including dams, levees, and harbor construction and maintenance.

Commerce-Justice Science: <a href="https://protect-us.mimecast.com/s/p9ExCG6wODhOjVR1SEj5b2?domain=r20.rs6.net" target="_blank" rel="noopener">Explanatory Statement</a> | <a href="https://protect-us.mimecast.com/s/bJN1CrkgxJhnL5Y8IjgKIq?domain=r20.rs6.net" target="_blank" rel="noopener">Republican Summary</a> | <a href="https://protect-us.mimecast.com/s/eQRFCJ6EgJhA07vqH5rwuR?domain=r20.rs6.net" target="_blank" rel="noopener">Democratic Summary</a>

The new bill provides the Commerce Department a total of $10.8 billion, a $380.1 million cut from current levels. These spending cuts ripple out to several agencies, including $58 million from the U.S. Patent and Trademark Office ($4.19 billion total), $100 million from the Census Bureau ($1.3 billon total), and $167 million from the National Institute of Standards and Technology leading CHIPS Act expansion of semiconductors (NIST, $1.4 billion total). Agencies with steady funding include the Economic Development Administration (EDA) offering year-round economic development grants; the National Telecommunications and Information Administration (NTIA); and the International Trade Administration (ITA).

The bill also provides $74 million, near-level funding, for the Office of the U.S. Trade Representative (USTR), directing the agency to “increase transparency and consistency” in its section 301 exclusion process to “make the process less cumbersome” for small and medium businesses. The bill also provides level funding of $122 million to the International Trade Commission, along with $15 million to the Trade Enforcement Trust Fund to enforce free trade agreements. Not less than $16.4 million must be used for China antidumping, and countervailing duty enforcement and compliance. Additionally, the International Trade Administration is directed to identify strategies to increase U.S. business and investment in the Indo-Pacific as well as Ukraine.

The bill cuts about $1 billion combined from science agencies including NASA, the National Science Foundation, and the White House’s Office of Science and Technology Policy. Notably, NASA is directed to place an increased focus on awarding Small Business Innovation Research (SBIR) awards to firms with fewer than 50 employees.

The bill cuts $1.2 billion from the Justice Department to $37.5 billion total, with $600 million cut from the FBI. Republican appropriators argued the move would force the FBI to focus on drug enforcement.

Transportation-HUD: <a href="https://protect-us.mimecast.com/s/Vio7CKrAj0IM3jN2i7pG5O?domain=r20.rs6.net" target="_blank" rel="noopener">Explanatory Statement</a> | <a href="https://protect-us.mimecast.com/s/bJN1CrkgxJhnL5Y8IjgKIq?domain=r20.rs6.net" target="_blank" rel="noopener">Republican Summary</a> | <a href="https://protect-us.mimecast.com/s/y3-zCL9AkLIwEJrRSoqit7?domain=r20.rs6.net" target="_blank" rel="noopener">Democratic Summary</a>

The bill funds the Department of Transportation at $106.4 billion, $15 million more than 2023. Democrats noted that this funding pairs with $36.8 billion previously set aside for this year in the Bipartisan Infrastructure Law passed in 2021. However, Republicans claimed victory in cutting $3.2 billion across 19 different transportation and housing programs including $455 million from the RAISE regional infrastructure grant and $405 million from rail infrastructure safety.

Other DOT highlights include a $1 billion increase to the Federal Aviation Administration (FAA). The bill appropriates $10,000,000 to support counter-UAS research, development, testing and evaluation. However, unlike the House bill that was introduced by the House Appropriations e Committee, this agreement does not establish a "program" to carry out these activities.

An additional $49 million is appropriated for departmental cyber security initiatives. This funding reflects concern with cyberattacks from adversaries such as China on the United States’ energy grid and transportation infrastructure.

What’s Ahead:

Bipartisan leaders are urging their members to quickly pass this package and move to a second package to fund the rest of the government. The second package will be stickier, touching on national defense and foreign operations, homeland security, financial regulation and taxation, as well as domestic health, labor, and education policy. Because of the likely difficulty in crafting a final deal, the Michael Best team expects that this any will emerge at the last minute shortly before the March 22 shutdown deadline.

Meanwhile, Congress is already looking ahead to FY 2025, which starts next October. President Biden will likely discuss his priorities for FY 2025 on the State of the Union address on March 7. The Biden Administration will then release its full FY 2025 budget request to the public on March 11, kicking off yet another negotiation likely to last for most of the calendar year.

The Michael Best team will continue to report on FY 2024 and FY 2025 budget and appropriations development as news breaks. To learn more about the effects on your business, contact your Michael Best servicing team.

Two people reviewing information on a tablet with printed financial documents on a desk.

Congress Releases First Group of FY 2024 Final Funding Bills

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