As we move into 2026, the environmental, health, and safety (EHS) landscape is entering a period of heightened complexity and contradiction. Significant federal budget cuts and deregulation are reducing oversight from agencies like the Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OSHA), while state enforcement, investor expectations, global regulations, and public scrutiny continue to intensify. At the same time, emerging risks and opportunities (e.g., PFAS, water scarcity, AI-driven systems, data center projects) are reshaping how organizations must think about compliance, risk, and resilience. Here’s what KTL currently has on our radar for 2026.

EPA Budget Cuts

The EPA’s FY2026 budget is a 54% reduction from the FY2025 budget and its lowest in approximately 50 years. Not unexpectedly, this lack of funding is sharply reducing EPA’s planned enforcement capacity in 2026 across all major statutes, focusing enforcement efforts on “clear and substantial violations.” Major funding cuts include criminal enforcement (- 49%), civil enforcement (- 30%), compliance monitoring and inspections (- 35%), and Environmental Justice (EJ) enforcement (100% eliminated).

Despite federal inspections and enforcement sharply declining in 2026, organizations remain fully liable under the Clean Air Act, Clean Water Act, RCRA, TSCA, EPCRA, and CERCLA, and major incidents will draw intense scrutiny. While it may be tempting to let internal environmental programs and systems slide due to less federal oversight, dismantling internal EHS and Environmental Social Governance (ESG) systems may create higher long‑term risks, particularly as many states expand enforcement to fill the federal gap.

Tip: Treat proactive environmental management as an asset protection tool, not a regulatory cost. Preserve internal audit, monitoring, and corrective action programs; keep permit tracking, compliance calendars, and incident response processes intact; and maintain clear records and documents.

EPA Deregulation

Consistent with its budget cuts, the EPA has significant deregulation planned for 2026 focused largely on rolling back key climate‑related rules, including Vehicle Emission Rules and the Clean Power Plan 2.0, which regulates fossil fuel-fired power plants. In addition, the following rules are all on the proverbial chopping block:

Federal Greenhouse Gas (GHG) Reporting

The EPA is proposing to largely end mandatory federal GHG reporting beginning in 2026. If finalized as proposed, most industries would no longer be required to report GHG emissions under the GHG Reporting Program (GHGRP), and oil and gas industry reporting under Subpart W would be paused until 2034, with limited exceptions. Though federal reporting may disappear (unless tied to a clear statutory mandate), many state programs still rely on GHGRP‑style data; SEC, investor, and customer pressure for emissions disclosure is expected to continue; and lenders and insurers continue requiring verified emissions data.

Tip: Organizations that stop internal tracking may increase long‑term risk, particularly if future administrations reinstate reporting. Maintain internal GHG inventories and related transparency processes, and archive methodologies so reporting can restart without rebuilding systems.

Risk Management Program (RMP) Rule

Although the EPA has not yet issued a final rule, the Agency is reconsidering the Risk Management Program (RMP) requirements related to cross-agency coordination in the chemical transportation industry. This may include narrowing coordination requirements to onsite emergencies only, no longer requiring facilities to report accidents occurring off site during transport, eliminating mandatory sharing of RMP data with transportation regulators, and removing implied responsibility for transporter training verification, carrier safety management practices, and emergency preparedness beyond the facility.

Core RMP applicability remains and onsite transfer operations (loading/unloading) will still fall under RMP. Importantly, Emergency Planning and Community Right-to-Know Act (EPCRA) emergency planning obligations remain unchanged, state RMP programs are unaffected, and related OSHA Process Safety Management (PSM) and Department of Transportation (DOT) HazMat rules still apply independently.

Tip: Refine your chemical transportation risk management approach, as necessary, by remapping regulatory responsibility to the correct agency. Maintain strong DOT, OSHA, EPCRA, and contractual controls; preserve emergency preparedness; and continue sharing site‑specific emergency data with responders. Track state rulemaking, especially if operating across multiple jurisdictions.

OSHA Budget Cuts

The FY 2026 Department of Labor budget reflects reduced funding for OSHA, with cuts affecting staffing and compliance assistance programs, while pushing the agency to streamline enforcement activities rather than expand them. The result is a leaner OSHA that is prioritizing high-impact enforcement for Severe Injuries and Fatalities (SIFs) vs. routine inspections and prevention-first support. With reduced OSHA staff who are focused largely on high-profile case work, day‑to‑day guidance from OSHA will become harder to obtain, and there will be less capacity for outreach, training, and informal guidance.

Budget cuts reduce OSHA capacity, but not an organization’s liability. Standards, citation authority, and penalty structures remain intact, and enforcement still applies after incidents. SIFs will require prompt response from companies and appropriate documentation and records.

Tip: Strengthen internal investigations, recordkeeping practices and systems, and incident response readiness. Leverage relationships with third parties to fill in the gaps for safety support, training, and guidance.

OSHA Streamlined Rulemaking

Despite budget pressure, OSHA will continue to work on streamlined rulemaking to promote the following:

Heat Illness Prevention

Heat Stress legislation is anticipated in 2026, which will require employers to develop and implement a formal, written program that explains how heat hazards are identified, controlled, and managed.

Tip: Develop or update a Heat Illness and Injury Prevention Plan (HIIPP) to meet proposed regulatory requirements, including hazard assessments, high exposure tasks/locations, controls, acclimatization procedures, roles and responsibilities, training, incident response, and recordkeeping.

Workplace Violence Prevention

While no federal legislation is anticipated, civil unrest in areas around the country is causing many states to consider creating their own requirements for employers to help prevent workplace violence and protect workers from inside or outside attackers.

Tip: Evaluate your Emergency Action Plan and update it to reflect expectations for workers when dealing with workplace violence incidents. Include leadership commitment, clear policies and procedures, training, and continuous improvement.

Recordkeeping and Transparency

There is talk of more stringent data collection and public availability of that data for incidents. This is currently a big unknown given OSHA’s limited resources; however, there are indications of AI-enabled systems being introduced to support incident reporting, data analysis, and public data availability. 

Tip: Data accuracy matters more than ever, as reporting errors themselves may become enforcement triggers. Implement and maintain systems to accurately collect, manage, and report incident data.

Others to Watch

PFAS “Forever Chemicals”. Per- and polyfluoroalkyl substances (PFAS) remain a focal point, as does the uncertainty surrounding, their regulation. There is currently a patchwork of federal requirements and state-level regulations and product bans in the U.S. The Federal government is on the path to making U.S. rules less stringent, while global restrictions are accelerating. Currently, the reporting period for manufacturers and importers of PFAS under the Toxic Substances Control Act (TSCA) will begin on April 13, 2026, with a final deadline for most by October 13, 2026.  The EPA also has a pending rule to designate nine specific PFAS compounds as hazardous constituents under the Resource Conservation and Recovery Act (RCRA), requiring corrective action for their release. Federal PFAS legislation is unlikely; however, keep an eye on state regulations and other bills for any provisions associated with PFAS, particularly in industries such as textiles, cleaning products, cosmetics, and cookware. 

Water Use. Water use is becoming a more significant EHS concern, particularly in western states, due to rising demand, increasing scarcity, and the environmental impacts associated with over-extraction (see Data Centers below). Desalinization plants and using non-potable water for industrial use, golf courses, etc. can create potentially very negative environmental impacts on entire ecosystems. Make sure your environmental audits every consider things like energy and water conservation. Monitor state regulations, particularly where scarcity is a concern. Incorporate water conservation into ESG strategies to elevate its importance.

Artificial Intelligence (AI). AI is everywhere, and EHS is not excluded. EPA and OSHA staffing shortages are accelerating interest in using AI for automation. And organizations are testing the limits on what AI can—and can’t—do effectively and correctly. The assumption that AI can be used to automate and manage EHS programs is a slippery slope. While AI can be leveraged as a tool for things like data aggregation and draft report development, using AI must be done thoughtfully, as it cannot replace EHS programs and human involvement. In fact, over‑automation without expert oversight can significantly increase error and legal exposure. Use caution exploring where you can use AI for more basic tasks that can be automated, as not all processes lend themselves to AI.

Data Centers. There has been an explosion of growth in data centers. This expansion is rapidly increasing demand for energy, driving more fossil fuel pollution, straining water resources, using agricultural land, creating noise pollution, and raising electricity prices across the country. This is of particular concern in parts of the Midwest, Texas, and Western states. At the federal level, there is currently limited direct regulation specific to data centers. Oversight typically occurs through state water withdrawal permits, air permits for generators, and local zoning and land‑use approvals. It is important to understand how the increase in data centers may impact ESG goals, particularly related to water, power, noise, and land use.

Looking Ahead

Organizations that treat 2026 as a moment to scale back EHS efforts risk being caught unprepared. Reduced federal activity does not equate to reduced liability. In fact, given the uncertainty, proactive, well-integrated EHS programs will be increasingly critical for protecting people, assets, and long-term enterprise value. Now is the time to:

• Reassess regulatory exposure, strengthen internal systems, and ensure EHS programs are resilient, auditable, and aligned with broader business and ESG objectives.
• Implement proactive planning, disciplined data management, and thoughtful use of technology to turn uncertainty into a competitive advantage.
• Leverage partnerships with consulting partners with deep regulatory insight and practical implementation experience to help navigate the evolving regulatory landscape, protect against emerging risks, and position your organization to sustain whatever the next regulatory cycle brings.