Capitol to Capitol | Feb. 3, 2026

Capitol to Capitol | Feb. 3, 2026

Questions? Please use the email icon at left to contact NCSL's State-Federal Affairs Division.

NCSL Updates

'Big Beautiful' Education Regulations Now in the Works

Federal agencies are developing rules for the education provisions in the One Big Beautiful Bill Act, including the Workforce Pell Grant program, a scholarship tax credit and graduate student loan limits. NCSL state-federal affairs staff describe the proposed rules and potential state implications in this State Legislatures News article.

NCSL Opposes Escrow Preemption Proposal

NCSL opposes a Comptroller of the Currency proposal that would preempt state laws requiring banks to pay interest on escrow accounts. NCSL argues that the proposed rule conflicts with core constitutional federalism principles and exceeds the statutory limits Congress has placed on federal preemption. NCSL also emphasizes the importance of preserving state authority in consumer protection and financial regulation within the federal system. Read the full letter.

NCSL Urges Congress to Reauthorize Drinking Water and Clean Water Funds

NCSL calls on lawmakers to reauthorize the revolving fund programs "at no less than current levels." The state revolving funds are essential for maintaining reliable access to affordable financing and providing clean and safe water for residents and businesses. Access to the revolving funds and direct federal grants lets communities provide safe, reliable infrastructure at an affordable rate. Read the full letter.

NCSL Urges Action on Unregulated Sports Betting Through Prediction Markets

In a letter to leaders of the Senate Agriculture and Banking committees, NCSL urges Congress to address the rapid growth of unregulated sports betting through prediction markets. The letter, signed by the co-chairs and vice chairs of NCSL's Banking, Financial Service and Insurance Committee, asks Congress to include language in cryptocurrency market legislation and related bills that reaffirms existing law and ensures unregulated sports betting cannot operate under the guise of "event contracts." Read the full letter.

Administration Updates

Trump Order Preempts State Wildfire Relief Efforts

The administration issued an executive order preempting state and local permitting processes for the reconstruction of wildfire-damaged structures in Los Angeles that have been pre-approved for federal emergency funds. The order, issued on Jan. 27, states it is the policy of the administration "that federal assistance not be frustrated by unnecessary, duplicative or obstructive permitting requirements that prevent families and businesses from rebuilding." Read the executive order here.

Judicial Order Temporarily Blocks Social Services Funding Freeze in Five States

A federal court temporarily blocked the Trump administration from withholding $10 billion in funding for social services programs in five Democratic-led states. The funding freeze applies to the Child Care and Development Fund, Temporary Assistance for Needy Families and the Social Services Block Grant in California, Colorado, Illinois, Minnesota and New York. Read the temporary restraining order here.

Congressional Updates

Partial Government Shutdown

The federal government began a partial government shutdown on Jan. 30 due to Congress' failure to agree on funding for the Department of Homeland Security, which has come under increased scrutiny due to recent shootings involving agents of Immigration and Customs Enforcement and Customs and Border Protection. The Senate passed an agreement to fund DHS through Feb. 13, but the House also needs to pass the provision, which has administration approval. The partial shutdown affects the Departments of Homeland Security; Defense; Labor, Health and Human Services; Education; Transportation; Housing and Urban Development; State; Financial Services and General Government; and National Security.

Second Chance Act Funding Signed Into Law

The Senate reauthorized a bill to reduce recidivism and improve reentry outcomes for formerly incarcerated people. The Second Chance Act received $111 million for fiscal year 2026 as part of a larger appropriations bill. NCSL joined a coalition of state and local stakeholders to advocate for the act's reauthorization. Read NCSL's letter of support for Second Chance Act reauthorization.

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