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.