WIFIA-Collusion-Risk-Amendments-in-Five-Bullets-08242025-InRecap-Version-2.0

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Super-short summary: the collusion risk amendment approach will work even if OMB refuses to back down.

Plan A for the collusion risk amendment approach is that if OMB is offered a face-saving way to back down from the embarrassingly wrong FCRA Criteria, they’ll take it. Much good can come of that, most importantly as the basis of a broader rapprochement with CWIFP.

Okay — but what if OMB goes full Captain Ahab and rejects the approach by indicating that they will not revise the Criteria? Their justification for doing so might be incoherent, but that’s been the case for everything about the FCRA Criteria all along. Is the collusion risk amendment approach still worth developing?

The answer is yes. The potential effectiveness of the collusion risk approach is not contingent on OMB co-operation — in fact, I assumed their initial, and perhaps permanent, intransigence. The approach lays the groundwork to force a solution, if necessary.

Here are the operative factors for Plan B:

• The immediate tactical challenge for an amendment to fix the FCRA issue is CBO scoring, as most recently outlined here. Even if, for some inexplicable reason, CBO is also intransigent about the validity of the current Criteria, they can’t use them as the basis for a scoring analysis, as they did for prior amendments. A collusion risk amendment is only tangentially related to FCRA budgeting — how could CBO claim that requiring additional due diligence will suddenly raise the cost of a loan program? More likely, CBO will be only too happy to see a collusion risk amendment as consistent with their own ideas about federal sovereign power and simply conclude there’s no budget impact at all — they’ve got plenty else to deal with.

• Most substantively, the additional due diligence required to qualify as a ‘non-federal borrower’ demonstrates, beyond doubt, that the cost-share is a non-federal asset. The borrower is showing that, regardless of how complex, intangible or intertwined in a bigger project the cost share might be, they’re getting their own non-federal value from it, and decided to pay for it in accordance with their own non-federal procedures. With that explicit demonstration, the current FCRA Criteria (which treat cost-shares as ‘federal assets’) become even more glaringly incoherent and divorced from reality.

• On what possible basis could OMB oppose additional due diligence requirements at a federal loan program? It’s one thing for OMB to spin a narrative about mysterious budgetary standards, but the collusion risk amendments are about things in the real world that everyone is familiar with. What exclusive authority does OMB have to comment on that? None — if they oppose commonsense amendments, they’ll just look insane.

• If the collusion risk amendments are enacted, a qualified ‘non-federal borrower’ under WIFIA law is now also a ‘non-federal borrower’ under FCRA law. FCRA treatment is not optional — loans to non-federal borrowers must be recorded using FCRA methodology (recall that FCRA was enacted to prevent budget games). The current FCRA Criteria are not law — they’re not even federal rules, only the subject of a Federal Register Notice. Even without a Congressional directive to force a revision, how can a mere ‘Notice’ based (such as it was) on prior law override current law?

• Of course, a Congressional directive to require a revision of the FCRA Criteria simultaneously with enacting the amendments would be definitive. Here, a collusion risk amendment story is easier to sell politically — the directive doesn’t have to question OMB’s authority on technical budgeting matters or even imply that the current Criteria are wrong. The directive can simply note that WIFIA law is being changed with respect to due diligence in a way that might affect the applicability of the 2020 Criteria Notice. That benign rationale can be sold by also quietly making it clear that OMB was being offered face-saving solutions and exit ramps throughout the whole process — that while addressing collusion risk might be a good thing in itself, the amendments were designed from the start to make it easy for OMB to agree. If they continue to resist, well, what choice is there? The Criteria were created by a Congressional directive after all — they can be revised the same way.

Addressing-Collusion-Risk-in-Federally-Financed-Cost-Shares-0820205-InRecap-Version-2.0

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The above document pulls the whole New Narrative story together. The first page is effectively a one-pager that sketches out how:

• The issue can be defined in a way that makes an easily understandable, real-world concern (theoretical as it may be) the narrative driver of the amendments. That concern could (plausibly) also have been the basis of the FCRA Criteria, but ‘addressing collusion risk’ is in Congressional territory — not some technical budgeting matter.

• The solution is simply requiring some additional commonsense due diligence that honest applicants shouldn’t find difficult. Naturally, the FCRA Criteria should be revised to conform the new WIFIA law. Who can argue with any of that?

• There are also opportunities — add a useful economic amendment or two to the proposed language for stakeholders, and importantly make the Criteria revision process a venue for CWIFP and OMB ‘rapprochement’.

Improving-WIFIA-for-Dam-Safety-and-Flood-Control-Infrastructure-Act-Draft-08182025-v1.0-InRecap

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The New Approach to fixing the FCRA issue had a narrow purpose. It was designed to allow CBO to score new WIFIA amendment language in the context of a specific issue (the use of federal sovereign power in projects with non-federal participants) that in theory could impact FCRA treatment. That way, CBO would have a path to break with their prior scorings that relied on OMB’s embarrassingly erroneous Criteria — in effect, a face-saving off-ramp.

But now I’m thinking the New Approach could go further and support a new narrative about the whole topic — and add some real-world improvements to CWIFP financing as well.

Who Owns the ‘Issue’ — OMB or Congress?

What really is the ‘issue’ that OMB’s FCRA Criteria purport to address? Is it a matter of interpreting supposedly obscure FCRA law and principles applied to normal non-federal cost share situations? That was OMB’s approach. Notwithstanding their questionable motivation and incoherent work product, in such technical budgetary areas OMB has indisputable institutional standing — and can control the narrative. Hard to fight that, as CBO’s faulty past scorings show.

Or could the issue be seen, not as a budgeting issue per se, but as a concern about what happens in the real world when federal loan program applicants and federal agencies are involved in the same project? It might be completely theoretical, but if applicants and federal agencies collude — well, bad things will happen, one of which will be that FCRA treatment becomes invalid. In essence, collusion is the issue the amendment language of the New Approach actually addresses, even though my original intent was only to fix the FCRA Criteria problem.

Seize the Narrative Opportunity

Here’s the critical point — if the issue at hand is (or could be made to be) the possibility of collusion between federal loan program applicants and federal agencies in cost-share situations, that’s an area which fundamentally involves loan program design and eligibility — not mysterious budgetary law interpretation. It is squarely a legislative area — Congress, not OMB, has the last word on statutes that determine loan program policy and oversight. If Congress seeks to address the ‘collusion issue’ in a way that is indisputably consistent with FCRA treatment of program loans — well, so much the better. If OMB thinks otherwise, they can argue their meritless case. They’ll lose — because institutional standing is now with Congress.

Of course, I continue to believe that real-world collusion between federal program applicants and federal agencies is either vanishingly rare or already adequately covered by other laws and rules. Strictly speaking, an ‘anti-collusion’ WIFIA amendment is clearly not necessary. But that’s not the point. The point is that the risk of collusion (however remote) can be the basis for an easily understandable narrative about improving the WIFIA loan program’s statutory framework — who can argue with that? Clarifying FCRA treatment is just a technical side benefit, no longer the main event.

And if the bill with the anti-collusion amendments is all about an ‘improving WIFIA’ narrative, why not take the opportunity to actually include some real-world improvements? At the least, that’ll substantiate the ‘improvement’ story and further dilute the FCRA aspects. In the draft above, I’ve included the common-sense 55-year amendment for dam safety and (now) flood control infrastructure projects, which can be specifically named in the bill’s title — much catchier. There are other economic amendments that could be included, too, but my guess is that one or two economic amendments is enough for now.

I’ll probably keep developing this ‘New Narrative’ path, if only because it’s a way to connect a very technical issue with the real world. I’m sure there’ll be a lot more need for that type of connection for federal infrastructure loan program development in future.

Revised-2020-WIFIA-FCRA-Criteria-InRecap-07282025-Draft-1.0

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FWIW, here’s a draft of what the accursed FCRA Criteria could look like as a workable (if not pretty) revision. The red ink is the operative part. For face-saving purposes, I left as much of the original word salad as possible but cut out the harmful stuff and replaced it with straightforward ‘sovereign power’ criteria, as described in the New Approach. I also left revised versions of all the questions. These erstwhile ‘criteria’ are now actually directed to the two real criteria that are explicitly stated.

I continue to think it should be easy for applicants to show that they weren’t forced to finance a cost-share and that they were acting in their own, non-federal, self-interest. Of course, stakeholders will be a better judge of that.

I’m not 100% sure that OMB wouldn’t still use the revised Criteria (in whatever form they are) to slow-walk or reject applications. The hatred runs deep, as inexplicable as that might seem to normal people. But OMB approval is going to be necessary for any federal infrastructure loan program deal so the realistic goal is to try and establish as many clear, brightline rules as possible. That may at least reduce the overreach of this insane private agenda.

I used to think that if OMB was presented with a clear demonstration that the current Criteria are an embarrassing mess and offered a face-saving solution they might go for it. Now, after seeing their equally embarrassing disinformation efforts on CWIFP funding in the 2026 WH budget, I’m pretty doubtful. I think we’re in Captain Ahab territory on this one — insane, obsessive — and the OMB individual or group that’s dedicated to taking down CWIFP will never concede defeat. It will have to be forced on them. That’s not going to be easy.