Background

Democrats won control of both chambers of Congress in the November 3, 2026 midterm elections. Early estimates put their national House popular-vote margin at about 13 percentage points, the largest for either party since 1976.

These dramatic congressional results dominate the national headlines. But for companies managing environmental compliance, the statehouse results may prove more immediately consequential.

Washington is headed for divided government, with President Trump retaining his veto authority and his administration continuing to direct federal agencies. In contrast, Democrats will enter 2027 with unified control of government in at least five additional states—Michigan, Minnesota, Nevada, Pennsylvania, and Wisconsin—now holding the governorships and both legislative chambers in those states. Separately, Democrats flipped Republican-held governorships in Georgia, Iowa, Ohio, and Texas (and potentially Alaska), in some of those cases for the first time in decades.

These state-level shifts could have more immediate consequences for environmental regulation, opening the door to new legislation and regulatory programs, as well as changes in agency rulemaking, permitting, and enforcement priorities.

Key Takeaways

• Federal oversight will intensify. Incoming Democratic committee chairs will have the tools to investigate private companies and federal agencies, posing risks even without changes to underlying environmental laws.
• Federal legislative changes for environmental law are possible but speculative. Trump's presidential veto is likely to constrain major environmental legislation, but bipartisan negotiations and must-pass bills could produce targeted environmental and permitting changes.
• New state-level Democratic trifectas are likely to produce new or expanded environmental laws. Newly unified control in Michigan, Minnesota, Nevada, Pennsylvania, and Wisconsin gives incoming officials the clearest opportunity to establish and expand regulatory programs that previously faced legislative obstacles. These new initiatives could encompass a wide range of issues, including data centers, regulation of chemicals like per- and polyfluoroalkyl substances (PFAS), and extended producer responsibility (EPR).
• Flipped governorships matter even under divided government. New Democratic governors in Georgia, Iowa, Ohio, and Texas (and potentially Alaska) can influence environmental agency leadership, rulemaking, permitting, enforcement, and other priorities within their existing authorities.
• Multistate companies should prepare for greater regulatory divergence. Companies operating across multiple jurisdictions may face increasingly different environmental requirements, permitting practices, and enforcement priorities. They should monitor state legislative and regulatory developments and assess their implications for existing operations and planned projects.

Washington: More Oversight, with Selective Legislative Opportunities for Environmental Policy

Congressional oversight could create direct risks for companies. When the new Congress convenes, Democratic committee chairs will have expanded opportunities to use hearings, document requests, and subpoenas to scrutinize the Trump administration’s environmental policies—and the companies affected by or benefiting from them. We expect congressional investigations to intensify, potentially extending to companies’ interactions with federal agencies and their reliance on administration policies or regulatory decisions.

Congressional investigators have signaled their intent to seek information directly from companies, particularly where efforts to obtain records or testimony from the administration encounter resistance. For companies, such inquiries can entail substantial response costs, reputational risks, potential litigation exposure, and increased scrutiny of underlying compliance decisions.

Legislative opportunities remain, but their scope is uncertain. President Trump has signaled that he will veto Democratic priority legislation. Democrats may nevertheless advance bills to draw political contrasts and force vetoes of measures they believe enjoy public support. At the same time, appropriations and other must-pass legislation will require negotiation. Permitting reform and targeted environmental provisions could offer opportunities for agreement between congressional Democrats and the administration. Bipartisan permitting-reform proposals introduced before the election illustrate one area where congressional Democrats and the Trump administration may still find opportunities for agreement. But divided government makes those opportunities speculative at this point.

Federal agencies will retain their regulatory authority, but Senate control could complicate appointments. The election, of course, does not alter the statutory authority of EPA or other executive branch environmental agencies, which we expect to continue pursuing the Trump administration’s regulatory and deregulatory priorities. Democratic control of the Senate, however, could complicate the administration’s efforts to fill senior agency positions (not to mention federal judgeships) by slowing or blocking confirmation of presidential nominees.

Flipped State Governments Have More Immediate Consequences for Environmental Compliance

Changes in state political control can have particularly significant consequences for environmental regulation. Many federal environmental statutes operate under a framework of “cooperative federalism,” in which the federal government establishes baseline requirements but states assume substantial responsibility for implementing and enforcing them. States also often retain authority to adopt more stringent environmental protections, subject to certain statutory limits and exceptions.
 
As a result, states handle much of the day-to-day regulation of businesses. State agencies issue permits, conduct inspections, administer regulatory programs, and enforce environmental requirements. Changes in gubernatorial leadership can shift those agencies’ priorities and practices, even without new legislation or changes in federal law.

The election of new Democratic majorities in several state legislatures creates opportunities for more substantial changes. Where Democrats now control both legislative chambers and the governor’s office (a political “trifecta”), they may be able to enact entirely new environmental laws, expand existing regulatory programs, and impose requirements beyond federal minimums. These changes could have lasting implications for companies operating across multiple jurisdictions.

In Five States, New Unified Democratic Government is Likely to Drive Changes to Environmental Legislation and Policies

Five states secured a Democratic trifecta on Tuesday, with Arizona potentially joining the list as outstanding ballots are counted. Unified Democratic control could create opportunities to advance new environmental legislation that had previously faced opposition in divided state governments.

• Michigan. Democrats regained the state House on Tuesday. Governor-elect Jocelyn Benson has proposed tighter conditions on data center development, including safeguards for water and electricity use, transparency, and public engagement. Her environmental agenda also emphasizes renewable energy and protection of the Great Lakes. Democratic lawmakers in Michigan previously introduced a series of bills that would strengthen requirements for environmental cleanups of contaminated sites and impose additional rules on PFAS, including reporting, labeling, and other restrictions.
• Minnesota. Democrats regained a House majority, producing a trifecta under Governor-elect Amy Klobuchar. Her campaign priorities included water quality, conservation, and climate resilience. With control of the statehouse in St. Paul, her priorities could shape new legislative proposals.
• Nevada. Governor-elect Aaron Ford’s victory gives Democrats control of the executive branch alongside their legislative majorities. Ford committed to investing in clean energy and requiring data centers to supply their own clean energy and to support the electrical infrastructure and water resources their operations require. Nevada legislators previously advanced a bill that would restrict polystyrene foam containers in certain food establishments, but the outgoing Republican Governor vetoed it.
• Pennsylvania. Democrats flipped the state Senate, potentially clearing the way for Governor Shapiro to advance environmental and energy legislation that previously faced legislative obstacles. On August 18, 2026, Governor Shapiro signed an executive order removing data centers from the state’s expedited permitting program and directing the Pennsylvania Department of Environmental Protection to secure certain enforceable commitments with data centers before issuing permits. Governor Shapiro has also proposed legislation establishing a Pennsylvania carbon cap-and-trade program and revising the state’s energy portfolio requirements. Legislation restricting PFAS in products also passed the Pennsylvania House in June 2026 and could move forward in the coming year.
• Wisconsin. Democrats flipped both legislative chambers while retaining the governorship. Governor-elect David Crowley pledged to require new data centers to use 100% renewable energy and pay for other infrastructure upgrades in communities. His administration will also oversee implementation of the state’s newly approved PFAS groundwater standards. Democratic legislators had previously introduced legislation to establish an EPR program for packaging and place restrictions on products containing PFAS, both of which could receive renewed consideration under unified Democratic control.
• Others to watch: Democrats still have a chance to gain unified control of Arizona, but results are still being tabulated. Governor Katie Hobbs has previously supported stronger groundwater protection in rural areas.

In Four Other States, Flipped Governorships Can Shift Environmental Priorities Even Without Legislative Control

Democrats also won Republican-held governorships in Georgia, Iowa, Ohio, and Texas, in some cases bringing governorships under Democratic control for the first time in decades. Republicans will retain control of at least one legislative chamber in each state, limiting the prospects for some statutory changes. Even without legislative majorities, incoming governors may have substantial authority to redirect environmental policy through agency appointments, executive orders, regulatory rulemakings, and changes in permitting and enforcement priorities. The extent of that authority will vary by state, but these administrative changes may affect regulated companies even independent of any new legislation.

The incoming governors have identified several environmental priorities:

• Georgia. Keisha Lance Bottoms will become Georgia’s first Democratic governor in 24 years. Democrats also gained control of the state House, but Republicans retained control of the state Senate. Governor-elect Bottoms has called for a slowdown of new data center development and has prioritized flood mitigation, brownfield redevelopment, and water infrastructure.
• Iowa. Rob Sand will be Iowa’s first Democratic governor in 16 years. Although Republicans retained both legislative chambers, they lost their veto-proof supermajority in the state House. Governor-elect Sand has proposed increased water-quality monitoring, greater transparency in agricultural manure management, incentives for nutrient conservation and methane capture through anaerobic digesters, and opposition to legislation limiting pesticide manufacturers’ liability.
• Ohio. Amy Acton will become Ohio’s first Democratic governor in 16 years. Republicans retained both legislative chambers but lost their veto-proof supermajority in the state House. Governor-elect Acton has supported a “conditional moratorium” on data center development if certain environmental standards and other criteria are not met and a three-year moratorium on certain permits for drilling wastewater injection wells in Washington County.
• Texas. Gina Hinojosa will become Texas’s first Democratic governor in 32 years. Democrats also gained control of the state House, while Republicans retained the Senate. Governor-elect Gina Hinojosa has proposed restricting industrial water consumption during shortages and has also called for additional water and electricity requirements for data centers. B&D recently published a more detailed analysis of the potential implications for environmental regulation in Texas, including those arising from changes in other statewide offices and key elected positions.
• Others to watch: Although results haven’t been called in Alaska, as of this writing, the Democrats are favored to flip that governorship too. Jonathan Kreiss-Tomkins would be the first Democratic governor of Alaska in 24 years and has proposed a moratorium on new data centers and expedited permitting for renewable energy projects.

Looking Ahead: What Companies Should Watch in 2027

The 2026 midterms could accelerate the growing divergence between federal and state environmental regulation. As the Trump administration continues pursuing its deregulatory agenda, newly elected Democratic governors and legislative majorities may move in the opposite direction, adopting more stringent requirements or expanding existing state regulatory programs.

For companies operating across multiple jurisdictions, these changes could take several forms. States with new Democratic trifectas may enact legislation establishing new emissions limits, climate programs, permitting requirements, or reporting obligations. Even in states with divided legislatures, incoming governors may redirect environmental policy through agency appointments, rulemaking, permitting decisions, and enforcement priorities, without new legislation.

The result could be an increasingly complex patchwork of state environmental requirements, with companies facing different compliance obligations and regulatory expectations across their operations. Novel State laws have led to litigation in many instances, further increasing uncertainty as companies seek to comply with State requirements that may themselves have been enjoined. Companies should closely monitor legislative proposals and agency priorities as new state governments take office in 2027 and assess the potential implications for existing permits, compliance programs, and planned investments. Beveridge & Diamond stands ready to work with clients in assessing these implications and represent them in court where necessary.