A government shut down arises when Congress fails to pass an appropriations act that enables federal agencies to spend. There should be separate appropriations acts for groups of agencies. However, in recent years, Congress has not enacted these separate appropriations acts, but collected them in one enormous bill that includes virtually every agency of the federal government. Having created these monster bills, Congress then delays passage over battles about what programs or expenditures should or should not be included. This creates the delays that lead to government shutdowns. Most government employees may not work during a shutdown nor may they use government equipment. Employees away from their offices on business are brought home in anticipation of a shut down because once the shut down in place, they have no authority to use federal funds to travel. After the deadline for the appropriation has passed, employees may only return to work for a short time in order to provide for the orderly cessation of their agency’s activities. During a shutdown, employees performing essential or emergency functions must continue to work, which is why so many government agencies continue to operate partially during a shut down.
The federal government has shut down 18 times since the 1970s. The longest shutdown lasted 3 weeks. The October 2013 shutdown lasted 16 days. Nearly 800,000 federal employees were out of work without pay (Congress later restored the pay lost by these federal employees, which has occurred after every shutdown), and more than a million other working employees had their paychecks delayed (even though having to work because their jobs were essential, there was no authority to pay in the absence of an appropriations act). Members of Congress however could keep collecting their paychecks due to a permanent appropriation for their compensation. The same was true of government employees whose pay was not tied to the appropriations act that Congress failed to enact. Standards & Poor’s estimated that the last government shutdown cost America $24 billion, or $1.5 billion per day. This estimate is based largely on the imputed value of government services that are not provided or performed during a shut down. Of course, the direct cost of shutting down can be substantial as well.
The 2018 Shutdown lasted just about 60 hours until a band-aid was put on it, but the shutdown might well be reinstituted if a comprehensive agreement is not reached in the next few weeks. Anticipating the shutdown that went into effect on Saturday, the U. S. Department of Transportation published its plan for operations during a lapse in annual appropriations. According to the Plan, 34,600 of the DOT’s 55,100 employees would continue working during a shutdown. Air traffic controllers, aviation, pipeline and railroad safety inspectors are among those who would continue to work. The largest group of employees remaining on the job work for the Federal Aviation Administration, which operates the nation's air traffic control system. However, aviation won’t escape unscathed. Certification of new aircraft will be limited. Processing of airport construction grants, training of new controllers, registration of planes, air traffic control modernization research and development, and issuance of new pilot licenses and medical certificates will stop.
The Federal Highway Administration and the Federal Motor Carrier Safety Administration will continue most of their functions during a shutdown. As noted in this blog last time the government shut down, FHWA’s operations mostly are paid out of the Federal Highway Trust Fund. The fund's revenue comes from federal gas and diesel taxes, which will continue to be collected during the shutdown. However, any work on issuing new regulations would stop throughout the department and its nine agencies. This is because the regulations process involves officials outside of the agencies that may continue to work. The National Highway Traffic Safety Administration’s investigations of auto safety defects would be suspended, as would review of incoming information on possible defects from manufacturers and consumers, and compliance testing of vehicles and equipment will be delayed.
The Plan indicates the Federal Motor Carrier Safety Administration would not furlough any employees. Roadside truck inspections would continue because the trust fund supplies FMSCA money to support state law enforcement agencies doing the inspections. The same is true for scale houses.
Transit and rail programs and employees are less fortunate because their funding is mostly subject to annual appropriation.
Truckload border crossings could see delays because the Customs and Border Patrol prioritizes security over speedy freight flows, and crossings depend on cooperation by several different agencies. The same is true of air and ocean imports.
The severity of a shutdown’s impact will depend in large part upon how long it lasts. Following the 2013 shutdown, the Government Accountability Office (GAO) studied the shutdown’s effects on the DOT. The study informs what types of activities may be expected to continue or be terminated during a shutdown.
According to the study, activities that continued at DOT during the shutdown included: FTA – Hurricane Sandy activities funded under the Disaster Relief Appropriations Act and Lower Manhattan Recover Office activities funded by emergency appropriates after 9/11; FAA – air traffic control services, maintenance and operation of navigation aids and facilities, flight standards and field inspections; Maritime Administration (MARAD) – positions required for U.S. merchant marine academy midshipmen safety and welfare; and Pipeline and Hazardous Materials Safety Administration (HMSA) – pipeline accident investigations, pipeline operations and systems inspections, and pipeline safety enforcement.
Activities that did not continue during the shutdown included: FTA – unfunded core agency functions, including grants, cooperative agreements, contracts, purchase orders, travel authorizations, or documents obligating funds; FAA – development of new air traffic control specialists, aviation rulemaking, facility security inspections, evaluations, audits and similar activities; MARAD – administrative support excepting life and safety support and activities associated with the no-year Maritime Security Program, National Defense Reserve Fleet, and U.S. Merchant Marine Academy Operations; HMSA – strategic planning, public affairs, civil rights and pipeline program development.
In 2013 all FTA grants management employees were furloughed and unavailable to help grantees. According to FTA officials, this had limited consequences because the grant processing system is typically offline in early October. FTA officials said they returned to normal scheduling and timing of grant activities soon after the shutdown concluded because grant milestones were not scheduled to occur during the shutdown. The impact of a February shutdown may differ due to different timing considerations.
Ultimately, the GAO concluded that the 2013 shutdown’s long-term effects were difficult to assess in isolation of other budgetary impacts. The Bureau of Economic Analysis (BEA) estimated in January, 2014 that the direct effect of the shutdown on real GDP growth was a reduction of 0.3 percentage point, and the GAO reported that its forecasters believed the other economic effects to be minimal at the economy-wide level. With some luck and, hopefully, good will, the 2018 shutdown will remain shut down, its impact short-lived, without any lasting damage.
For more than 25 years, Donna Brady has focused on innovative procurement, contracting and finance for infrastructure project development. She began her career in the firm’s commercial real estate practice, and adds extra value ...
With nearly 40 years of experience holding senior positions in federal government, Ed Kussy is one of the nation’s leading experts on federal surface transportation policy and regulations. He uses this background to provide ...
Nossaman LLP’s 30-plus infrastructure attorneys offer clients, colleagues, strategic partners, and industry media a wealth of practical experience, insider insight, and thoughtful analysis here on Infra Insight. We blog about what we know best, from industry-leading procurements to local and national policy developments that affect the market and our clients.