Unless Congress reaches an agreement to keep the lights on, the U.S. government appears headed for a shutdown at midnight on October 1.  As the deadline looms, stakeholders should not let the legislative jockeying overshadow another consequence of a funding lapse: regulatory delay.  Under normal circumstances, federal agencies publish thousands of rules per year, covering agriculture, health care, transportation, financial services, and a host of other issues.  In a shutdown, however, most agency proceedings to develop and issue these regulations would grind to a halt, and a prolonged funding gap would lead to uncertainty for stakeholders, particularly as the 2024 elections approach.  Another consequence is that more regulations could become vulnerable to congressional disapproval under the Congressional Review Act (CRA).

The Administrative Procedure Act (APA) provides that “General notice of proposed rulemaking shall be published in the Federal Register,” and prescribes requirements for the contents of an agency rulemaking notice.  To initiate or finalize a rulemaking, agencies must submit rules to the Office of the Federal Register (OFR)—the National Archives and Records Administration agency that publishes the Federal Register, the government’s daily journal of rules, regulations, and other activities.

When government funding lapses, however, publication of critical rulemaking documents slows.  Under the Antideficiency Act, both an agency seeking to publish documents and OFR are prohibited from spending or obligating funds during a shutdown.  Government agencies are also prohibited from accepting voluntary services for government work—except in cases of “emergencies involving the safety of human life or the protection of property.”

These restrictions significantly curtail the ability of agencies to initiate new rulemakings that don’t qualify for the exception, or to advance rulemakings that began before a shutdown.  Federal employees are not allowed to draft or submit rules for publication, accept or review public comments, or revise or publish final rules while their agency is unfunded. 

Likewise, because the APA and other statutes require certain executive actions to be published in the Federal Register—OFR must also be funded and operational to publish most agency documents, even if the agency publishing the document has not experienced a funding lapse.

To account for this issue, OFR has set forth guidelines in advance of prior shutdowns that detail when agencies—funded or not—may submit documents for publication in the Federal Register, and when OFR will publish those documents.

First, for unfunded agencies—which, as of today, would include all federal agencies whose budgets are subject to annual appropriations—OFR will only publish documents that are necessary to safeguard human life, protect property, or “provide other emergency services consistent with the performance of functions and services exempted under the Antideficiency Act.”   Agency materials related to “ongoing, regular functions of government” that pose no “imminent threat” to human safety or property protection are not permissible activities for unfunded agencies, and therefore inappropriate for OFR publication. 

This restriction would have significant implications for agency regulatory efforts across the government, with impact on a wide range of regulated sectors.  In one notable example, the rulemaking to implement the President’s recent outbound investment executive order (which we and our colleagues have discussed here) would likely stall for the duration of the shutdown.  Nothing in the order or the Treasury Department’s advance notice of proposed rulemaking (ANPRM) suggests that the order—despite being issued under the International Emergency Economic Powers Act (IEEPA)—involves imminent threats to human safety or property.  Thus, while public comments on the ANPRM are due on September 28, before the end of the fiscal year, a subsequent lapse in the Treasury Department’s funding would prohibit agency staff from reviewing public comments, scheduling and taking meetings with stakeholders, and revising and finalizing the proposed rule.

Other notable examples of agency proceedings that might be slowed by a shutdown include the Federal Communications Commission’s rulemaking to combat digital discrimination; the National Telecommunications and Information Administration’s distribution of broadband grants, and as Commerce Secretary Gina Raimondo told the House Science Committee this week, export control regulations and distribution of CHIPS Act funding.

Second, when OFR’s own appropriations have lapsed, even funded agencies, such as fee-funded agencies like the Patent and Trademark Office and the Food and Drug Administration, do not have carte blanche to publish Federal Register documents as usual.  Citing opinions of the Office of Legal Counsel, OFR has advised that funded agencies may only publish when “delaying publication until the end of the appropriations lapse would prevent or significantly damage the execution of funded functions at the agency,” and emphasizes that “[d]ocuments related to normal or routine activities of Federal agencies, even if funded under prior year appropriations, will not be published.”  Office of Management and Budget guidance also acknowledges that ordinarily Federal Register publication is suspended, but that publication may still occur in circumstances where “necessary to support funded agencies or an excepted activity of unfunded agencies.”

At a minimum, delay in Federal Register publication of agency actions increases uncertainty for regulated stakeholders as the regulatory process remains frozen. Delays also have potentially significant implications for the Administration’s regulatory agenda, particularly as the 2024 elections approach. 

Under the Congressional Review Act (CRA), agencies must submit any final rule to Congress before it takes effect.  If Congress enacts a joint resolution of disapproval—and the president signs the resolution into law—the rule is nullified. The CRA also provides special procedures to ensure Congress can quickly consider disapproval resolutions.  In particular, disapproval resolutions are “fast tracked” in the Senate if they are introduced within 60 days of submission by the agency.  CRA resolutions introduced within this time limit may be moved out of committee to the floor on an accelerated timeline, may be called up for floor debate at any time, and, critically, are not subject to the Senate filibuster, allowing for passage by a simple majority vote rather than the 60-vote threshold required for most legislation.

Significantly, the CRA contains a “lookback” provision that resets the 60-day clock for introducing a CRA resolution if Congress adjourns sine die—i.e., at the end of the Congress—within 60 session days in the Senate or 60 legislative days in the House.  The lookback period gives Congress considerable leverage over the timing of agency rulemakings in an election year: because Congress is often out of session for long stretches around federal elections, 60 session or legislative days can mean rules issued even earlier in the year can be eligible for CRA disapproval.  In 2021, for example, the lookback provision allowed the Democratic-controlled Congress to invoke the CRA against any Trump Administration rules finalized after August 21, 2020—nearly 5 months before the new Congress took office, and nearly 3 months before the 2020 elections.  

As the 2024 elections approach, with control of both Congress and the White House in play, the Biden Administration will be closely examine the 2024 congressional calendar to complete key rulemakings before the CRA lookback period begins.  A lengthy shutdown that delays agency regulatory processes will push agency actions closer to the deadline and complicate efforts to insulate rules from congressional review in the event of a shift in the balance of power in Washington.

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This article is also published on Law360.

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Photo of Matthew Shapanka Matthew Shapanka

Matthew Shapanka draws on more than 15 years of experience from Capitol Hill, private practice, state government, and political campaigns to counsel clients significant legislative, regulatory, and enforcement matters. He develops and executes complex, multifaceted public policy initiatives for clients seeking actions by…

Matthew Shapanka draws on more than 15 years of experience from Capitol Hill, private practice, state government, and political campaigns to counsel clients significant legislative, regulatory, and enforcement matters. He develops and executes complex, multifaceted public policy initiatives for clients seeking actions by Congress, state legislatures, and federal and state government agencies, many with significant legal and political opportunities and risks. Matt also leads the firm’s state policy practice, advising clients on complex multistate legislative and regulatory policy matters and managing state advocacy efforts.

Matt rejoined Covington after serving as Chief Counsel for the U.S. Senate Committee on Rules and Administration, where he advised Chairwoman Amy Klobuchar (D-MN) on all legal, policy, and oversight matters before the Committee, including federal election and campaign finance law, Federal Election Commission nominations, and oversight of legislative branch agencies, U.S. Capitol security, and Senate rules and regulations. Most significantly, Matt led the Committee’s staff work on the Electoral Count Reform Act – a landmark bipartisan law enacted in 2022 to update the procedures for certifying and counting votes in presidential elections —and the Committee’s joint (with the Homeland Security Committee) bipartisan investigation into the security planning and response to the January 6, 2021 attack on the Capitol.

Both in Congress and at Covington, Matt has prepared dozens of corporate and nonprofit executives, academics, government officials, and presidential nominees for testimony at congressional committee hearings and depositions. He is also an experienced legislative drafter who has composed dozens of bills introduced in Congress and state legislatures, including several that have been enacted into law across multiple policy areas.

In addition to his policy work, Matt advises and represents clients on the full range of political law compliance and enforcement matters involving federal election, campaign finance, lobbying, and government ethics laws, the Securities and Exchange Commission’s “Pay-to-Play” rule, and the election and political laws of states and municipalities across the country.

Before law school, Matt worked in the administration of former Governor Deval Patrick (D-MA) as a research analyst in the Massachusetts Recovery & Reinvestment Office, where he worked on policy, communications, and compliance matters for federal economic recovery funding awarded to the state. He has also worked for federal, state, and local political candidates in Massachusetts and New Hampshire.

Photo of Holly Fechner Holly Fechner

Holly Fechner advises clients on complex public policy matters that combine legal and political opportunities and risks. She leads teams that represent companies, entities, and organizations in significant policy and regulatory matters before Congress and the Executive Branch.

She is a co-chair of…

Holly Fechner advises clients on complex public policy matters that combine legal and political opportunities and risks. She leads teams that represent companies, entities, and organizations in significant policy and regulatory matters before Congress and the Executive Branch.

She is a co-chair of the Covington’s Technology Industry Group and a member of the Covington Political Action Committee board of directors.

Holly works with clients to:

  • Develop compelling public policy strategies
  • Research law and draft legislation and policy
  • Draft testimony, comments, fact sheets, letters and other documents
  • Advocate before Congress and the Executive Branch
  • Form and manage coalitions
  • Develop communications strategies

She is the Executive Director of Invent Together and a visiting lecturer at the Harvard Kennedy School of Government. She serves on the board of directors of the American Constitution Society.

Holly served as Policy Director for Senator Edward M. Kennedy (D-MA) and Chief Labor and Pensions Counsel for the Senate Health, Education, Labor & Pensions Committee.

She received The American Lawyer, “Dealmaker of the Year” award. in 2019. The Hill named her a “Top Lobbyist” from 2013 to the present, and she has been ranked by Chambers USA – America’s Leading Business Lawyers from 2012 to the present.