Day 56: Trump Calls Off Iran at the Last Minute, Oil Crashes, and Congress Still Cannot Fund DHS

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Dhs Shutdown And Fema

Day 56. Congress left for a two-week recess with no deal. The Senate returns April 13; the House returns April 14. Neither chamber has scheduled a vote on DHS funding.

The two-track strategy outlined before recess remains the baseline: pass the bipartisan Senate DHS bill (excluding ICE and CBP) through regular order with Democratic votes, then fund ICE separately via reconciliation by June 1. Speaker Johnson has not committed to bringing the Senate bill to the House floor. Senate Democrats continue to demand ICE reforms (body cameras, warrant requirements, no enforcement at schools and hospitals) as a condition of any deal.

Secretary Markwayne Mullin was confirmed 54-45 on March 23, replacing Kristi Noem. He inherits a department that has been shuttered since February 14. Over 500 TSA officers have quit. Callout rates peaked above 30% at major hubs (JFK, Atlanta, Houston). ICE agents have been deployed to 14 airports for document checks, not screening. The FIFA World Cup begins in less than three months; new hires take four to six months to train. Acting administrator Ha Nguyen McNeill told Congress replacements will not be on checkpoints in time.

TSA back pay continues flowing from the $10 billion OBBBA reconciliation fund with no underlying appropriation. The mechanism is untested and faces no legal challenge yet, but it has no statutory basis as an ongoing payroll vehicle.

FEMA's $1 billion BRIC NOFO remains open (applications due July 23). Project cap reduced from $50 million to $20 million; construction readiness weighted at 30 of 90 points. The DRF remains below $5 billion under INF restrictions.

Iran Ceasefire And Energy Markets

On April 8, Trump announced a 14-day ceasefire with Iran, two hours before his own deadline to strike Iranian power plants and bridges. The deal was brokered by Pakistan. Iran presented a 10-point framework the U.S. called a "workable basis for negotiations." Oil crashed within hours: WTI fell 14.3% to $96 per barrel; Brent fell 13.1% to roughly $94.

The relief lasted less than 24 hours. By April 9, WTI had rebounded above $100 as the ceasefire began to unravel. Iran accused the U.S. of violating three clauses. Israel escalated strikes on Lebanon (the heaviest since the war began), which Iran considered part of the ceasefire but Israel and the U.S. did not. Iran's Fars news agency reported that after allowing two tankers through the Strait of Hormuz on the morning of April 8, Tehran suspended all further transit. The White House denied reports the Strait was closed; ADNOC's CEO called it "coercion, not freedom of navigation."

Spot Brent for near-term delivery remained above $120 per barrel on April 9, nearly $30 above the June futures contract. Analysts estimate it could take five months to restore pre-war production capacity even if the ceasefire holds. Gas at the pump exceeded $4.00 per gallon before the ceasefire; the structural damage to energy supply chains has not reversed.

Build America Bureau And Usdot

Gateway's legal trajectory has clarified but not stabilized. The 2nd Circuit denied DOT's stay on March 12, affirming the TRO requiring continued federal disbursements. The Court of Federal Claims dismissed six of eight GDC claims as moot (DOT had already paid the $205 million in withheld funds) but left open two claims seeking damages from the construction pause. GDC resumed construction but has delayed awarding two major contracts (including TBM tunnel boring) pending access to the full $15 billion commitment. The project operates on a two-to-three-month financial runway using court-ordered funds.

IIJA reauthorization remains materially stalled. No committee has produced text. Nine insiders told Politico the bill is "way behind" and likely pushed to spring 2027. A short-term extension is now the baseline. The BAB pipeline stands at approximately $40.5 billion, with Brightline West's $6 billion RRIF loan still unapproved.

FTA apportioned $20.6 billion in FY2026 transit formula funding on March 31. USDOT announced $999.5 million in SS4A grants on March 27.

Usda And Rural Development

REAP grants remain frozen indefinitely. USDA halted all new awards on March 31 citing Executive Order 14315 on renewable energy subsidies. Regulations at 7 CFR 4280 Subpart B must be rewritten before any new grants are made. All applicants without a fully executed Financial Assistance Agreement must reapply. No timeline has been provided. REAP guaranteed loans continue to be accepted.

The Farm Bill (H.R. 7567) cleared the House Agriculture Committee 34-17 on March 5 but missed its pre-Easter floor vote. No floor date has been scheduled. Boozman has not released Senate text. The September 30 extension of the 2018 Farm Bill stands as the hard deadline, the same expiration date as IIJA.

September volume puts 2024 on pace to break issuance…

Falling Across the Finish Line

Can The Markets Determine Debate Winner?

USDA raised B&I guaranteed loan coverage from 80% to 85% for projects under $5 million. The bipartisan Middle Mile for Rural America Act (Slotkin/Hyde-Smith) proposes a five-year reauthorization (2026 to 2031) of the USDA middle-mile broadband program, though it remains in committee.

P3 And Infrastructure Finance

The private activity bond federal cap remains at $0 with zero dollars available for new allocations. The entire managed lane pipeline depends on Congress raising or removing the $30 billion ceiling. The House Transportation Committee markup is expected in April per Chairman Graves.

Georgia's SR-400 ($3.32 billion PAB issuance) consumed the remaining capacity. I-285 East ($7.6 billion, $2.5 billion TIFIA, $1.1 billion PAB request pending) is in the RFP phase with preferred bidder selection targeted for late summer. I-77 South Charlotte ($3.2 billion) issued its RFP on March 13; four teams were shortlisted in February. PennDOT continues evaluating Cintra's $5 billion I-76 managed lanes proposal. I-24 Southeast (Tennessee, $2 billion PAB request pending) and Brightline West ($3 billion additional PAB request pending) are also blocked.

Construction tariffs continue to compress margins. Steel, aluminum, and copper items face 50% tariffs. Derivatives at 25%. Industrial and electrical grid equipment at 15%. Nonresidential construction input prices surged at a 12.6% annualized rate in the first two months of 2026. Aluminum mill shapes jumped 33% year over year through January. The ENR Building Cost Index is up 4.2% year over year.

Doe And Energy Infrastructure

Constellation filed at FERC on April 2 to transfer capacity injection rights from its Eddystone gas plant to the Crane Clean Energy Center (formerly Three Mile Island Unit 1). PJM informed Constellation that grid interconnection could be delayed to 2031 due to stalled transmission projects. The FERC filing is a workaround to maintain the 2027 restart timeline. Crane holds a $1 billion DOE loan and a Microsoft PPA.

The NRC's Palisades welding review was targeting April 8 but faces continued uncertainty. Holtec cannot locate certified material test reports for welds on the pressurizer and safety nozzle flanges. If the NRC denies relief, replacing the reactor pressure vessel head could cost $750 million and set back the restart by years. The $1.52 billion DOE loan remains in place. Holtec also submitted Part 1 of a construction permit application for two SMR-300 reactors at the Palisades site; NRC accepted the application for review in February.

SPARK full applications are due May 20, with selections expected in August and awards between October 2026 and January 2027. Three topic areas: Grid Resilience ($427 million), Smart Grid ($614 million), Grid Innovation ($862 million).

EDF retains $289 billion in authority. Southern Company's $26.5 billion loan package (5 GW new gas, 6 GW nuclear uprates, 1,300 miles of transmission) remains the benchmark. DOE announced plans to cancel or restructure more than $80 billion in Biden-era loans, with $30 billion in de-obligation including $9.5 billion in wind and solar projects replaced by gas and nuclear investments. The new EDF Director is Greg Beard.

What This Means For Borrowers

1. The DHS shutdown will not end before April 14 at the earliest, and likely not before May. The two-track strategy requires Johnson to bring the Senate bill to the floor, assemble a bipartisan majority, and then pass a separate reconciliation bill for ICE by June 1. TSA damage is structural: 500+ officers gone, no replacements before the World Cup, and the back-pay mechanism rests on a reconciliation fund with no appropriation. Bridge capital against documented federal receivables remains the only reliable liquidity path for DHS contractors and municipalities.
2. The Iran ceasefire is a headline, not a resolution. Oil crashed and rebounded in the same news cycle. The Strait of Hormuz is conditionally open at best; Iran still controls transit and suspended tanker traffic within hours of the ceasefire announcement. Spot Brent above $120 signals physical supply remains constrained regardless of futures pricing. Infrastructure borrowers with energy-intensive projects should lock in supply agreements now and build tariff escalation clauses into every contract.
3. The PAB cap at zero blocks every major P3 in the pipeline. I-285 East, I-77 South, I-76, I-24 Southeast, and Brightline West all need PAB allocations that do not exist. The April markup is the next chance. ABC provides interim capital to P3 developers positioning for financial close once Congress acts.
4. REAP is dead, the Farm Bill is stalled, and IIJA reauthorization is pushed to 2027. Three September 30 cliffs converge with zero legislative momentum. The $40.5 billion TIFIA/RRIF pipeline, the BRIC NOFO, and every rural development program run against the same expiration date. Borrowers relying on any of these programs should restructure capital stacks now, not after the deadline.
5. The DOE lending thesis is accelerating while the legislative calendar stalls. EDF has $289 billion in authority and is actively restructuring $80 billion in legacy commitments toward gas and nuclear. Southern Company ($26.5 billion), Palisades ($1.52 billion), Crane ($1 billion), and the SPARK program ($1.9 billion) define the new lending priorities. Constellation's FERC filing to bypass PJM delays signals how aggressively the private sector is moving to access grid capacity. ABC provides bridge financing to energy developers positioning for DOE credit.