On January 23, 2026, President Trump signed H.R. 6938 into law—a sweeping appropriations package that combines funding for Commerce, Justice, Science; Energy and Water Development; and Interior and Environment. For those of us working in the energy sector, this legislation represents one of the most consequential federal funding packages in recent memory. Read the press release here.
The Energy and Water Development portion alone allocates $58.039 billion in discretionary spending, with $34.226 billion dedicated to defense and $23.813 billion to non-defense priorities. But the numbers only tell part of the story. The policy signals embedded in this legislation reveal a federal government fully committed to reshaping the American energy landscape—and practitioners should take note.
Nuclear Takes Center Stage
The legislation's most striking feature is its aggressive investment in nuclear energy. The National Nuclear Security Administration (NNSA) receives $25.404 billion—an increase of $1.269 billion over FY25 levels. Within this allocation, $20.38 billion goes to Weapons Activities, $2.13 billion supports the U.S. Navy's nuclear fleet (including Columbia-class submarine reactor development), and $2.37 billion targets Defense Nuclear Nonproliferation efforts.
Beyond defense applications, civilian nuclear energy receives substantial attention. The bill provides $1.785 billion for Nuclear Energy programs—$100 million above FY25—with continued funding for the Advanced Nuclear Fuel Availability program to advance production of high-assay low-enriched uranium (HALEU). Perhaps more significantly, the legislation repurposes previously appropriated funds to accelerate advanced reactor and small modular reactor demonstration projects.
The Nuclear Regulatory Commission receives $971.5 million, with explicit direction to expand capacity for reviewing, licensing, and overseeing new nuclear reactors. This funding aligns with the Administration's stated goal of expanding nuclear energy capacity to 400 gigawatts by 2050—an ambitious target that will require unprecedented regulatory efficiency and private sector mobilization.
Critical Minerals and Domestic Supply Chains
Congress has signaled its intent to reduce American dependence on foreign sources for critical minerals. The Fossil Energy account receives $720 million in total resources, with increased funding specifically earmarked for research and development on critical minerals production technologies, including separation and extraction processes.
The Interior portion of the legislation reinforces this priority. The Bureau of Land Management receives $1.34 billion, with increased funding for onshore oil and gas development ($7.4 million above FY25) and explicit direction to prioritize reviews of domestic mining claims. The Bureau of Ocean Energy Management receives $133.13 million, including an $11.2 million increase for conventional energy development—offset by a $21.1 million decrease for renewable energy development.
Grid Security and Modernization
Cybersecurity and grid resilience receive robust support. The bill allocates $190 million for Cybersecurity, Energy Security, and Emergency Response to ensure the electric grid can withstand cyberattacks, physical attacks, and other disruptions. An additional $235 million goes to Electricity programs for research and development on energy storage technologies, transformer manufacturing, and integration of new transmission and generation technologies.
Grid Deployment receives $25 million for transmission and distribution system improvements—a modest figure that underscores the Administration's preference for private sector leadership in grid expansion.
Water Infrastructure and the Corps of Engineers
The Army Corps of Engineers receives $10.435 billion for water resources development, including $3.473 billion from the Harbor Maintenance Trust Fund and $396.8 million for inland waterways construction. Approximately $2.2 billion is allocated for flood and storm damage reduction activities.
The Bureau of Reclamation receives $1.47 billion for its Water and Related Resources account, with priority given to projects that increase water supply and support drought response. This includes $117.1 million for rural water projects and $127.9 million for Water Conservation and Delivery.
Community Project Funding totals $1.075 billion for 102 Army Corps and Bureau of Reclamation projects requested by 78 House Members—a reminder that earmarks remain alive and well in the appropriations process.
What's Out: Clean Energy Demonstrations and Environmental Justice
The legislation eliminates the Biden-era Office of Clean Energy Demonstrations entirely. The Department of Energy's Office of Energy Justice and Equity receives zero funding, as does the EPA's Environmental Justice program. Energy Efficiency and Renewable Energy (EERE) is funded at $1.95 billion—$1.5 billion below FY25 levels. The Advanced Research Projects Agency–Energy (ARPA-E) receives $350 million, down $110 million from FY25.
The EPA overall sees a $320 million reduction (nearly 4%) below FY25 levels, receiving $8.816 billion total. The Council on Environmental Quality—recently stripped of its NEPA implementing regulations—receives just $4.63 million.
Policy Riders and Restrictions
Several policy provisions merit attention. The legislation prohibits the sale of crude oil from the Strategic Petroleum Reserve to the Chinese Communist Party. Citizens of China and Russia are barred from U.S. nuclear weapons production facilities. The Department of Energy is prohibited from providing financial assistance to any foreign entity of concern.
On the Interior side, farmers and livestock producers are exempted from greenhouse gas permitting and reporting requirements. The legislation prevents an Endangered Species Act listing of sage-grouse—a move designed to facilitate continued energy and mineral development across the Western states.
Implications for Developers and Investors
For energy project developers, the message from Congress is unmistakable: nuclear and fossil fuel projects will find a receptive federal partner, while renewable energy developers face a more challenging funding environment at the federal level.
The critical minerals provisions create potential opportunities for mining operations and processing facilities, particularly those that can demonstrate reduced reliance on foreign supply chains. Grid modernization investments, while modest, may benefit companies positioned in energy storage and transmission technologies.
Water infrastructure funding remains substantial, and projects that can align with drought response and water supply expansion will find federal support.
The elimination of the Office of Clean Energy Demonstrations removes a significant federal funding pathway for innovative clean energy projects. Developers in this space will need to look toward state-level incentives, private capital, and—where applicable—remaining federal tax credits that survived the legislative process.
Looking Ahead
This appropriations package reflects a fundamental reorientation of federal energy policy. The emphasis on nuclear expansion, critical minerals independence, and fossil fuel development—combined with reductions to renewable energy programs and environmental oversight—will shape the regulatory and funding landscape for years to come.
For energy practitioners, the key is understanding not just what this legislation funds, but what policy direction it signals. Federal priorities have shifted, and project planning should account for this new reality.
Maceira Zayas' energy and government affairs teams continue to monitor these developments. For guidance on how these appropriations may affect your projects or investment strategies, please contact the author, Anthony Maceira.
