Senate S.3293’s Non-FCRA Provisos and HR. 6229’s FCRA Amendment — Good Faith Policy or End Run?

S.3293-EW-Appropriations-Act-2026-WIFIA-Account-Language-Related-to-CWIFP-Loans-to-Dams-and-Levees-InRecap-121725-v1.0

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The 12/1/2025 Senate E&W bill, S.3293, appears to be taking a non-FCRA path to ‘bulletproofing’ restrictions on the ability of CWIFP to make loans to non-federal cost shares in dams and levees that have any federal ‘ownership’. Presumably, this is a preemptive move against the possibility that HR. 6229‘s FCRA amendment (either with original language or variation thereof) is enacted and the FCRA Criteria are subsequently revised or superseded.

In one sense, this is a positive development — a non-FCRA approach to the issue seems an acknowledgement that the FCRA Criteria ploy was a too-clever-by-half gimmick. More importantly, now the debate is back in the real world, away from the mysteries of federal budgeting and FCRA law, and back to considering the actual pros and cons of CWIFP finance for genuinely non-federal cost shares in federally involved projects, including those which involve the Corps in a major role.

And S. 3293’s provisos might be seen as a good-faith invitation to have that debate. The restrictive language is focused on current federal ‘ownership’ of a project, not past ownership or the nebulous ‘involvement’ standard of the FCRA Criteria. There might be valid policy (or even ideological) reasons that dams and levees important enough for a local community that they’re looking to federally finance a big cost-share in them ought not to be permanently owned by the federal government. The subject is above my pay grade, but I can see why there might be equally well-intentioned, if differing, perspectives on it.

Still — the hint of a ‘white whale’ obsession lingers. Could it be that S. 3293’s provisos are simply an end run around the likelihood that a FCRA amendment will sooner or later be enacted, to prepare a new ‘front’ in the battle to severely restrict CWIFP eligibility to its most natural borrowers? Just to win the battle, not for a policy perspective, but for some unfathomable private reason or (at this point) no reason at all. The $5m funding for dams and levees, which CWIFP doesn’t need, looks suspiciously like a pretext to add provisos, some of which are retrospective to CWIFP’s carryover funding. The relentless repetition of lists and multiple ways to restrict federal ownership (including amending the definition of ‘project — really?) seem to go beyond lawyerly practice and into some sort of, well, ‘pounding’ on a hated object.

I really don’t know — it’ll be interesting to see how this develops.

WIFIA Reform: Now the Time Has Come

Serious, Perhaps Fatal, Issues

Here’s a summary of the serious issues facing the WIFIA Loan Program, as outlined in two recent WFM articles and various posts:

Explaining the Decline in WIFIA Loan Volume: Part 1

  • Dramatic 63% decline in loan volume 2022-2024, completely unrelated to Trump 2.0.
  • Decline is most likely the result of displacement by two other federally subsidized sources of water infrastructure finance.

Explaining the Decline in WIFIA Loan Volume: Part 2

  • WIFIA growth 2018-2021 was also likely due to displacement by the Program of the other two federally subsidized sources, with no apparent real-world impact on US water capex.
  • Overlap of WIFIA loan features with those of SRF loans and tax-exempt bonds, a concern when the Program was being developed in 2014, appears to have been confirmed by actual history 2018-2024.
  • Displacement and overlap are not consistent with OMB’s standard policy for federal credit programs as specified in Circular A-129.

WIFIA Mandatory Spending

  • WIFIA’s mandatory spending for FCRA interest rate re-estimates is now over $2 billion, or 9% of the Program’s current $22 billion portfolio. Another $600 million is likely to be required in 2026.
  • This amount is far in excess of WIFIA’s discretionary funding. Although FCRA re-estimates are highly technical, the cost to taxpayers is real and the scale could be the basis of a Solyndra-type narrative.
  • Large mandatory spending was a predictable result of the way WIFIA borrowers were using the Program’s interest rate management features, especially in 2019-2021.

The Time Has Come for Major Reform

After eight years of operational results, the time has come for WIFIA stakeholders and policymakers to recognize the reality of WIFIA’s position and begin a process of major reform. The Program has immense potential, not only for the US water sector but as a model for federal infrastructure credit in general. This potential, or perhaps even the Program’s continued existence, will not be realized without fundamental reform.

Reform is the context in which the recently re-introduced Water Infrastructure Finance and Innovation Act (WIFIA) Amendments of 2025 bill should be viewed. Major reform was not the intent, nor will this bill address many of WIFIA’s issues. But its enactment would be a recognition of the need for statutory improvement, a statement of broad stakeholder support and, perhaps most importantly, a visible first step in the process.

WIFIA Decline: Harder Questions

The first part of this WFM article raised awkward questions about WIFIA’s decline 2022-2024.

The second part goes further:

  • If WIFIA’s growth and subsequent decline was primarily the result of displacement of two other sources of federally supported finance, then what’s the additionality of the Program? Total capex trends don’t seem to reflect any.
  • WIFIA loan overlap with SRFs and tax-exempt bonds was recognized at the outset of the Program in 2014 — now that actual results 2018-2024 seem to confirm that overlap, what’s next? This is fine?
  • OMB Circular A-129 is pretty specific about additionality and non-overlap as requirements for federal credit programs. How was WIFIA in compliance with these requirements? Under the current administration, can non-compliance be ignored for the next three years?

Now add this to the mix — WIFIA Mandatory Spending — and an open-ended question must be asked: What, if anything, can be done?

Reform.

POSIWID: The Purpose of a System is What It Does

I came across the acronym ‘POSIWID’ in an article today, and out of curiosity looked it up. The below from Wikipedia, my emphasis — re my recent posts, why does it sound so familiar?

The purpose of a system is what it does (POSIWID) is a heuristic in systems thinking coined by the British management consultant Stafford Beer, who stated that there is “no point in claiming that the purpose of a system is to do what it constantly fails to do”. It is widely used by systems theorists and is generally invoked to counter the notion that the purpose of a system can be read from the intentions of those who design, operate or promote it. When a system’s side effects or unintended consequences reveal that its behaviour is poorly understood, then the POSIWID perspective can balance political understandings of system behaviour with a more straightforwardly descriptive view.

So, analogously, the purpose of a federal infrastructure loan program is what it does? Not what federal policymakers and administrators intended it to do, or spin it as having done? And the loan program’s side effects (um, I don’t know, like massive mandatory appropriations?) might reveal that its actual role, as a specialty component of a competitive capital market, is poorly understood by said policymakers and administrators?

Well, perhaps it’s time to consider balancing current ‘political understandings’ with straightforward descriptions and spin-free policy ideas. Just saying.