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Yes and no, it's not a black and white issue. I didn't really want to go all in on the topic because it's Googleable. My grandpa recently passed and it's very expensive, we were looking for alternatives. On a federal level natural burial is allowed. The states take matters into their own hands. Some require burial vaults, some require embalming, some require that natural burials only happen in very specific places, and some require a mix of those things. It's doable but if they can squeeze money out of you through laws or extreme inconvenience, they will. It's not as easy and just picking a spot and burying a loved one, in a lot of cases.
First of all, sorry to hear what you're going through.
In regards to natural burial, my understanding is that it's more legal than not, just that there's regulations depending on where you live. It's very rare that embalming is required by law. Burial vaults are typically required when embalming fluids are used to slow the spread of the fluids to waterways. Neither of these are considered part of a natural burial.
There's a lot smoke and mirrors in the funeral industry that has led to wide misconceptions and outright misinformation. I asked if you were sure because the points you made are generally what a traditional burial funeral home would tell a client to steer them more towards their products. It's awful that it's become common for funeral homes to prey on those that are grieving. Absolutely despicable.
I hope y'all find a way that honors your grandpa without causing additional stress.