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A recent press release states that the House T&I Committee is now “in the process of gathering information and input for developing and passing a Water Resources Development Act (WRDA) later this Congress.” The process will likely include something about WIFIA’s current FCRA Criteria.

That’s unfortunate. Because it shouldn’t be necessary.

I’ve spent a lot of time on the FCRA Non-Federal issue, but that doesn’t mean anyone in Congress should. The current Criteria have nothing to do with clarifying FCRA law or principles, achieving better WIFIA and CWIFP policy outcomes, or improving loan program risk management. Nothing.

Seen correctly, the current Criteria are the result of an unusual bureaucratic maneuver apparently designed to create confusion about a technical budgeting matter to further some petty agenda. The Federal Register publication itself is an illogical, jargon-filled word salad that does not withstand scrutiny. The mechanics of turning a Federal Register informational notice into an extra-statutory eligibility requirement by appropriation riders is not consistent with the spirit (and perhaps the letter?) of federal rule making. The net result is an arbitrary and pointless restriction on federal lending to non-federal cost-shares in much-needed US water infrastructure projects. In terms of US economic and social welfare, the issue is a pure deadweight loss that should be neutralized with the least effort possible.

Cleaning Up the Mess

Yes, Congress probably has to act to clean up the mess. But enacting an amendment to WIFIA law for this purpose should be the last resort, though the possibility of doing so (as actualized by current bills) is important to concentrate some minds on the pro-Criteria side.

A better immediate objective is to encourage (and facilitate, where necessary) a revision of the current Criteria that clarifies the valid FCRA treatment of federal loans for cost-shares in a way that’s acceptable to stakeholders and consistent with Congressional intent for loan programs. This shouldn’t be difficult, even if much of the form and content of the current Criteria were retained for face-saving purposes, e.g., all the blather about ‘federal projects‘ can remain if the operable parts of the revised Criteria are focused on cost-share assets.

• The critical ingredient in the revision path is OMB’s and CBO’s cooperation, however grudging. I don’t know how likely that is. It might make sense to begin with some low-key outreach to the relevant people at OMB and CBO to say that the game is up, the current Criteria will be shown to be an embarrassing mess if things proceed to an amendment, and it’d be better for all concerned to organize a path to revision as quickly and quietly as possible. After all, there are no principles at stake here and the parties need to work together in future. The issue can be characterized as an uncharacteristic bureaucratic faux pas that can be easily reversed and quickly forgotten.

• If that doesn’t work, pressure can be incrementally increased with an increasingly open discussion of why a new Congressional Directive might be needed and what revised Criteria might look like. That will highlight the shortcomings of the current set in a public forum, with the proposed amendments providing evidence of real-world stakeholder support. Asking GAO or CRS to examine the issue in the context of actual FCRA law and the original Directive would underscore the point. A public process in itself might concentrate relevant OMB and CBO minds wonderfully on a voluntary resolution.

• If the bureaucrats dig in for their own inexplicable reasons and resist cooperation, then the next escalation is a Directive that requires a revision. That’s a somewhat public rebuke, but still not the full Monty. Since the revision will be done off-stage, OMB and CBO will still have a chance to back down gracefully. The pro-eligibility side should facilitate that, e.g., by allowing as much of the current Criteria to remain as possible and revising only the operable language, as mentioned above.

• Finally, if no acceptable revision is produced within a stated period, then unfortunately, an amendment might be required. Full scale, no-holds-barred narrative. Fun in a way, but I’m hopeful that this ultimately ridiculous issue won’t get that far — there are more important things to do.

The process and practice of enacting legislation is way above my pay grade. But FWIW, this post outlines some ideas about how various aspects of fixing WIFIA’s FCRA issue might fit into the legislative calendar.

First, I’ve read in the political press that things might progress like this:

• A continuing resolution on or about November 17th. In the context of geopolitical developments, I’m guessing that there’ll be extra effort to avoid a shutdown.

• An omnibus funding bill at some point in the next few months. I’ve read there’s some resistance to a last-minute, must-pass “Christmas omnibus” and that the CR timeframe should extend to January/February 2024. It’s worth mentioning that the Congressional Directive for the 2020 WIFIA Criteria was dropped into such a Christmas omnibus bill in 2019.

• The Water Resources Development Act of 2022 was actually signed into law in December 2022, which was three months into federal FY 2023. I guess that’s not unusual, and WRDAs get enacted well into their biennial year. That’s consistent with what I’ve read for WRDA 2024: Development in late spring 2024 and finalized in the summer as a somewhat normal schedule.

Second, with respect to the various ways to fix the FCRA issue:

• The ways are not mutually exclusive and can be pursued in parallel.

• I presume a Congressional Directive to revise the current Criteria, like FCRA Plan C: Directive to Update the Criteria, could be added to the next omnibus. My impression is that adding such a technical, costless and commonsense directive shouldn’t be a big deal. Well, in theory anyway.

• Realistically, a WIFIA FCRA amendment belongs in a WRDA since it’s primarily a USACE/CWIFP issue. That means earliest timeframe of mid-2024, which is after the 90 or 120-day period for developing revised Criteria in a new Congressional Directive.

Finally, a possible sequence:

• Although I originally thought it to be “Plan C”, I now think a new Congressional Directive might be the correct near-term objective, if not necessarily the final one. In many ways, revised Criteria based on FCRA law and 1967 Report principles that are straightforward to understand and use would be the most efficient resolution. It would also make a FCRA amendment unnecessary. The question is whether OMB will cooperate, either in new-found good faith or simply because they fear embarrassing alternatives. Might as well find out as soon as possible, no?

• Even if there is a new Congressional Directive, development of a WIFIA FCRA amendment should continue. The revised Criteria might be unacceptable if OMB can jam down some result e.g., to comply with a deadline. I don’t know their abilities here, but I’m guessing they have a lot of bureaucratic power in general. The possibility of an amendment will keep this power in check to a certain extent.

• While the ‘Plan A’ current amendment in HR 5664 and HR 2671 can remain the public position in the meantime, I think something like the New Approach should be actual path for development and possible WRDA 2024 inclusion, for three reasons. First, the New Approach includes additional criteria that are demonstrably based on FCRA law and principles, in particular one that will dovetail to CBO’s focus on the use of federal sovereign power. As such, this approach inevitably involves a narrative on law and principles, which very much highlights the weakness and rabbit-hole quality of the current Criteria, something OMB would likely wish to avoid being public. Second, the New Approach amendment language is very different than the previously seen & scored Plan A version. This allows CBO to provide a new scoring analysis whether the current Criteria are revised or not. Finally, and perhaps most importantly, New Approach concepts can serve as common ground between CWIFP stakeholders and OMB, and as such the basis for revised Criteria.

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The EPA’s Environmental Financial Advisory Board (EFAB) is holding a public meeting on the 24-25 of October. Their meeting notice indicates that you can submit a written statement, which I’ve done.

The short statement seemed worth doing as a succinct summary of where WIFIA et al should be going and what might be required to get there. Another opportunity to practice the narrative, as it were.

Of course, I don’t really expect a statement or anything else about WIFIA to be considered or added to the meeting agenda by EFAB. Despite the Board’s name, the mechanics of federal loan programs, however impactful on EFAB’s stated policy priorities, just aren’t what they do. Instead, I assume the meeting will be consumed by the usual au courant topics and worthy initiatives. Many of which will soon be swept away by the hard reality of economic uncertainty and possible decline. The latter are the real issues impeding infrastructure renewal and improvement, with significant consequences for real-world environmental and social outcomes. The value of federal infrastructure loan programs designed to mitigate some of these challenges will likely be recognized soon enough by people that need to make decisions. The others can catch up later.

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