Leaderless, Unfunded, and at War.

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Executive Summary

The DHS shutdown enters Week Four with a leadership decapitation on top of the funding crisis: President Trump fired Secretary Kristi Noem on Thursday, March 5, naming Senator Markwayne Mullin (R-OK) as her replacement -- a confirmation that requires Senate action while the agency remains shuttered. The House passed H.R. 7744 for the second time on a 221-209 vote, but Senate Democrats blocked cloture the same day, with only Senator Fetterman crossing party lines. The Disaster Relief Fund remains below $5 billion with hurricane season 14 weeks away, and FEMA is operating at "bare-minimum, life-saving functions only." The security environment continues to deteriorate: U.S.-Israeli operations against Iran have expanded into Lebanon and the Gulf, with Strait of Hormuz shipping down 80%, six U.S. servicemembers killed at Camp Arifjan, and an Austin, Texas mass shooting (three dead, 14+ wounded) under FBI terrorism investigation. Hundreds of DHS cybersecurity personnel are furloughed during what the FBI calls an "elevated threat" of domestic terrorism. DOE's Office of Energy Dominance Financing closed a historic $26.54 billion loan to Southern Company for gas, nuclear, and grid projects -- the largest single loan commitment in DOE history -- while sitting on $289 billion in remaining authority. The Farm Bill cleared committee after 22 hours of markup, expanding REAP to $50 million. Gateway Tunnel construction resumed using $235 million released under court order, but $15 billion in federal funding remains paused. For infrastructure borrowers dependent on federal cash flow, the compounding dysfunction at DHS -- now leaderless, unfunded, and facing an active war -- makes bridge capital against documented receivables not a preference but a necessity.

Fema And Dhs

Trump Fires Noem, Names Mullin -- DHS Enters Week Four Without Leadership or Funding

President Trump fired Homeland Security Secretary Kristi Noem on Thursday, March 5, announcing on Truth Social that Senator Markwayne Mullin (R-OK) will replace her. Noem learned of her dismissal while arriving at an event in Nashville. An administration source told CBS News the decision was "based on the culmination of her many unfortunate leadership failures."

The immediate trigger: Noem testified before both the Senate and House Judiciary Committees this week and told Senator John Kennedy (R-LA) that Trump had personally approved a $220 million DHS advertising campaign prominently featuring Noem on horseback at Mount Rushmore. Trump told Reuters he "never knew anything about it." The campaign was awarded without competitive bidding to firms with Republican ties, including a Delaware LLC created days before receiving $143 million and a firm run by the husband of Noem's chief DHS spokesperson.

Noem departs March 31. Mullin requires Senate confirmation -- which cannot happen during a DHS shutdown impasse where the Senate cannot muster 60 votes for funding. If Mullin is not confirmed by March 31, the DHS Deputy Secretary becomes acting head. Mullin's resignation from the Senate triggers a 30-day appointment window for Oklahoma Governor Kevin Stitt.

The House passed H.R. 7744 on Thursday, 221-209, with four Democrats (Cuellar, Davis, Golden, Gluesenkamp Perez) crossing over. The Senate blocked cloture the same day. Democratic Leader Jeffries stated: "A shift in personnel does not suffice. We were in discussions with the White House before, and we will continue to engage with them now."

Disaster Relief Fund Below $5 Billion -- "Close to the Red Zone"

The Disaster Relief Fund balance remains below $5 billion after FEMA's $5 billion selective release in late February, which excluded California, Illinois, Minnesota, Colorado, and the U.S. Virgin Islands. Two senior Trump administration officials told Semafor the fund could be "completely depleted in the coming weeks" and a single major disaster could zero it out. Over $10 billion in Public Assistance obligations remain pending approval. FEMA cannot replenish the DRF by transferring BRIC mitigation funds because those remain tied up in litigation. The DHS appropriations bill includes $26 billion for the DRF, but passage requires ending the shutdown. Hurricane season begins June 1.

FEMA Workforce Dismantlement Accelerates

A federal judge signaled March 3 she is unlikely to block mass terminations of FEMA CORE employees. Over 1,000 CORE responders have been cut since late 2024 -- approximately 10% of that workforce. The DOGE-aligned reform council has recommended halving FEMA's total workforce, eliminating over 12,000 positions. DOJ contradicted FEMA Administrator Karen Evans in court: Evans stated DHS "decided not to reappoint" workers, while DOJ told the judge FEMA made those decisions unilaterally -- a material discrepancy the court flagged but the government could not explain.

Security Environment: War, Terrorism Threats, and a Gutted DHS

U.S.-Israeli military operations against Iran ("Operation Epic Fury"), launched February 28, have expanded significantly. The combined force has established air superiority over Tehran and destroyed 300 Iranian missile launchers. The conflict has spread to Lebanon (Israeli strikes on Hezbollah) and the Gulf, where Iran has conducted four attacks on commercial vessels near the Strait of Hormuz, dropping transit by 80%. Six U.S. servicemembers were killed in an Iranian drone strike on Camp Arifjan, Kuwait.

A DHS intelligence assessment warns of "persistent threat of targeted attacks in the Homeland" from Iran and its proxies. The FBI is investigating the March 1 Austin mass shooting -- three dead, 14+ wounded -- as a potential act of terrorism; the suspect was wearing an Iranian flag undershirt. Noem testified that hundreds of DHS cybersecurity personnel have been furloughed. DHS is simultaneously leaderless, unfunded, and facing an active war with a state sponsor of terrorism.

Build America Bureau at the U.S. Department of Transportation

Build America Bureau VfM Guidance Takes Effect

The Build America Bureau and FHWA's final guidance on Value for Money analyses for P3 projects was published in the Federal Register on March 3 and is now in effect. Every P3 project seeking TIFIA or RRIF credit assistance, regardless of size, must complete VfM analysis prior to deciding to advance as a P3. The two-stage framework requires initial analysis pre-procurement (Stage 1) and detailed analysis pre-commercial close (Stage 2), with progressive P3s getting an additional Stage 1A checkpoint. Public disclosure of VfM results and concession terms is mandatory.

Gateway Tunnel Resumes, But $15 Billion Remains Frozen

Construction on the $16 billion Hudson Tunnel Project resumed the week of February 24 using approximately $235 million released under a federal court order, restoring nearly 1,000 jobs. Active work includes TBM launch box excavation, slurry wall installation, and Hudson River ground stabilization. However, DOT continues to fight the court order on appeal. Two major procurement contracts -- the Hudson River Tunnel and NJ Surface Alignment packages -- remain on hold until GDC regains access to all $15 billion in paused federal grants and loans.

FTA: $100.3 Million for FIFA World Cup Transit; $686 Million Station Modernization

FTA announced $100.3 million in transit grants for 2026 FIFA World Cup host cities at 100% federal share, no local match required. FTA will host a webinar on March 11 to discuss requirements. Separately, the $686 million station modernization competitive round from FY2025/FY2026 budgets remains open. The IIJA surface transportation authorization expires September 30, 2026, with the House T&I Committee identifying reauthorization as its top priority.

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Usda And Rural Development

Farm Bill Clears Committee After 22-Hour Markup

The House Agriculture Committee advanced the Farm, Food, and National Security Act of 2026 early Thursday after more than 22 hours of debate. The bill heads to the House floor before Easter recess. Key infrastructure provisions:

• REAP loan guarantee maximum increased to $50 million, with USDA required to consider economic impacts in application scoring. -- Agricultural cooperatives with fewer than 2,500 employees added as eligible REAP applicants. -- Rural broadband programs enhanced through ReConnect integration; minimum speeds raised from 25/3 Mbps to 50/25 Mbps. -- USDA must consider broadband affordability -- not just availability -- when determining "unserved" areas. -- Rural water and wastewater infrastructure programs reauthorized. -- Farm ownership loans increased to $1.75 million, operating loans to $3 million. -- Restricts USDA from funding solar on prime farmland, with exceptions for small projects under 5 acres or under 50 acres with county approval.

The current Farm Bill extension expires September 30, 2026 -- the same deadline as surface transportation reauthorization, creating a dual policy cliff.

USDA March 2026 Lending Rates

USDA FSA published March 2026 rates effective March 1: Farm Operating Loans (Direct) at 4.750%, Farm Ownership Loans (Direct) at 5.875%, Emergency Loans at 3.750%. Farm Storage Facility Loans range from 3.625% (3-year) to 4.625% (sugar storage, 15-year).

P3 And Infrastructure Finance

VfM Guidance Reshapes Active P3 Pipeline

The March 3 VfM guidance will reshape every active P3 procurement seeking federal credit. Projects like I-77 South in Charlotte ($3.2B), Penn Station Transformation, and any toll road or managed lane seeking TIFIA must now demonstrate VfM at Stage 1 before procurement begins. The I-77 South project continues with two shortlisted consortia -- Carolina Connectors (ACS/Iridium, Flatiron/Dragados, Kiewit, Meridiam) and the ACCIONA-led team (Balfour Beatty US, APG Asset Management) -- with NCDOT targeting design-build procurement in mid-2026.

New P3 Pipeline: PennDOT, California, Federal P3 Office

PennDOT is evaluating four unsolicited P3 proposals, including Cintra's $5 billion I-76 Schuylkill Expressway Managed Lanes project -- Pennsylvania's first express toll lanes -- along with a Pittsburgh bundled bridge replacement and two other projects. In California, the Riverside County Transportation Commission is advancing a $700 million I-15 Express Lanes Southern Extension (15.8 miles, Lake Elsinore to Corona). The DOT advisory board has recommended creating a federal P3 office to increase visibility of the managed lanes pipeline.

Data Center Demand Drives Utility Capital Plans

PPL Corporation raised its four-year capital plan 15% to $23 billion (2026-2029), primarily from $2 billion in additional transmission spending for hyperscaler data centers. PPL launched a $1 billion Equity Units offering and a joint venture with Blackstone Infrastructure. Industry forecasts show electric utility capex climbing from $84 billion in 2025 to over $105 billion by 2027, driven by $700 billion in planned hyperscaler data center spending in 2026.

Doe And Energy Infrastructure

DOE Closes Historic $26.54 Billion Loan to Southern Company

The Office of Energy Dominance Financing closed the largest single loan commitment in DOE history: $26.54 billion to Southern Company subsidiaries Georgia Power ($22.4B) and Alabama Power ($4.1B). The approximately 30-year loans will finance 5 GW of new natural gas generation, 6 GW of nuclear uprates and license renewals, hydropower modernization, battery storage, and 1,300 miles of transmission and grid enhancements. DOE projects over $7 billion in customer savings and $300 million per year in reduced interest expenses.

EDF Pipeline: $289 Billion in Authority, Nuclear-First Strategy

EDF retains $289 billion in available loan authority under the One Big Beautiful Bill Act and has received an additional $150 million specifically for small modular reactors and advanced nuclear. The office has restructured or eliminated over $83 billion in Biden-era loans, including $9.5 billion in wind and solar, and de-obligated nearly $30 billion total. The Trump administration's Westinghouse/Brookfield deal ($80 billion in new large reactor construction) and $2.7 billion in domestic uranium enrichment funding signal that nuclear is the centerpiece of the new federal energy lending landscape.

What This Means For Borrowers

1. DHS is now leaderless, unfunded, and at war -- simultaneously. The Noem firing adds a leadership vacuum to the funding crisis. Mullin requires Senate confirmation that cannot happen while the shutdown impasse persists. Every entity dependent on FEMA PA, DHS grants, or federal disaster reimbursements now faces a triple bottleneck: no appropriation, no permanent leadership, and an agency consumed by an active military conflict with a state sponsor of terrorism. Bridge capital against documented receivables is the only viable liquidity path.
2. The Disaster Relief Fund is one major disaster away from zero. Below $5 billion with $10 billion+ in pending PA obligations. Over $26 billion in replenishment sits locked in a DHS funding bill the Senate will not pass. FEMA's workforce has been cut by over 1,000 CORE responders with recommendations to halve the entire agency. Hurricane season begins in 14 weeks. Contractors and municipalities with FEMA receivables should assume processing timelines measured in quarters, not weeks.
3. DOE's $26.5 billion Southern Company loan establishes the new federal energy finance playbook. Gas, nuclear, grid reliability, transmission. That is the lending thesis. The $289 billion in remaining EDF authority will flow to borrowers aligned with these priorities. Energy infrastructure developers who can frame projects around baseload generation, grid hardening, and nuclear will have access to historically cheap federal capital. Those relying on the old renewable-first framework will not.
4. The VfM guidance and expanding P3 pipeline create a two-speed market. Sponsors who invest in VfM analysis early will move faster through the TIFIA/RRIF pipeline. Those who treat it as an afterthought will face delays. With PennDOT evaluating its first express toll lane P3, California advancing I-15, and Charlotte I-77 South in procurement, the managed lanes sector continues to mature. Private activity bond capacity is approaching the $30 billion federal cap -- making PAB allocation a strategic constraint.
5. Two policy cliffs converge September 30: Farm Bill and surface transportation reauthorization. REAP expansion to $50 million, broadband speed upgrades, rural water reauthorization, and increased farm loan limits all depend on the Farm Bill. TIFIA, RRIF, and formula funding levels reset with reauthorization. Infrastructure borrowers in both rural and transportation sectors should position capital now -- either to move when authorizations take effect or to bridge the gap if they slip.