What happens to freight if the government shuts down?

WASHINGTON — According to a poll taken Tuesday by the Committee for a Responsible Federal Budget (CRFB), the odds of a government shutdown have increased to 87%, up from 70% six days earlier.

The reason? As of Thursday, Congress still had not passed any of the 12 appropriations bills that set discretionary spending levels. With the new fiscal year beginning on Sunday, lawmakers have until Saturday night at midnight to enact legislation to fund programs covered by the appropriations process — or there will be a full government shutdown.

“A full shutdown would be more extensive than the partial shutdown that started in December 2018, when Congress had enacted five of the 12 appropriations bills,” noted the nonpartisan, nonprofit CRFB. According to the group, a full shutdown would likely be similar to those in 2013 and early 2018, when approximately 850,000 out of 2.1 million non-postal federal employees were furloughed.

What would a full shutdown mean for industries and companies involved in moving freight? Because goods movement is considered a pillar of the U.S. economy, the supply chain should be relatively unscathed — assuming a shutdown ends sooner rather than later.

Concerns remain, however, so here are the basic plans of 10 federal government agencies involved with freight in the event of a full shutdown.

Federal Maritime Commission

Percent furloughed: 94%

Shutdown plan/concerns: An independent agency with sole jurisdiction over container shipping competition in the U.S., the FMC’s mission is to ensure a competitive and reliable international ocean transportation supply chain that supports the U.S. economy while also protecting the public from unfair practices.

But because most of the agency would close for the duration of a shutdown, all work that furthers that mission would cease. As a result, shippers and carriers involved in the container trades will be unable to submit new filings or applications such as ocean transportation intermediary licenses, service contracts, tariff registrations, vessel-operating common carrier and marine terminal operator agreements, and agreement reports, according to the law firm Venable.

In addition, according to the firm, “formal and informal adjudicatory and investigatory proceedings pending before the FMC or the administrative law judges are also expected to be temporarily suspended until the government reopens.”

Federal Railroad Administration

Percent furloughed: 35%

Shutdown plan/concerns: The FRA, which oversees railroad safety, would not advance any rulemakings “unless such regulatory activity was related to the award, administration, oversight, and technical assistance of FRA’s financial assistance programs and funded from FRA’s Oversight account,” according to the agency.

A labor group representing rail employees pointed out that halting safety rulemakings at this time is particularly concerning for rulemakings pending in the aftermath of the East Palestine, Ohio, train derailment in February.

U.S. Coast Guard

Percent furloughed: 13%

Shutdown plan/concerns: Among many of its missions, the USCG is responsible for vessel safety and inspection regulations for domestic and foreign commercial vessels that enter U.S. ports, as well as for regulating and overseeing safety and security functions at ports and port facilities.

These functions would not directly be affected by a shutdown. However, as the USCG is part of the Department of Homeland Security and not the Department of Defense, it is the only military branch whose service members would go without pay during a shutdown, which could affect morale.

Surface Transportation Board

Percent furloughed: 99%

Shutdown plan/concerns: The STB regulates and monitors competition among the U.S. freight railroads. Virtually the entire agency would close in the event of a shutdown, with activities associated with case processing, regulatory filings and most litigation suspended. The STB recently began receiving comments on a major proposed rule to give shippers more competitive access to rail lines. Other suspended activities include procedural schedules, oral arguments and voting conferences, data collection and analysis, and tariff filings.

U.S. Maritime Administration

Percent furloughed: 24%

Shutdown plan/concerns: Almost all functions of MarAd, which regulates domestic U.S. maritime markets, would continue during a shutdown, including its mission to protect imminent hazards to the safety of human life and U.S. government vessels.

However, activities within MarAd’s Office of Cargo and Commercial Sealift would be suspended — with the exception of staff to monitor Jones Act waiver requests and if necessary to support emergency crisis management and to identify domestic shipping options that can be utilized in an emergency. Approval of vessel transfers out of the U.S.-flag registry would also be suspended.

Customs and Border Protection

Percent furloughed: 8%

Shutdown plan/concerns: With 92% of its employees to be retained during a shutdown, CBP is expected to continue normal operations of inspecting cargo at U.S. ports at staffing levels to allow for the continued flow of trade.

While cargo processing and security screenings will continue, policy, regulatory, legislative, auditing and training activities will likely be suspended, according to Venable.

In addition, the law firm cautions, “importers should also be cognizant of the operational impacts of a potential government shutdown on [CBP partner agencies] involved with processing imported merchandise, including the U.S. Environmental Protection Agency, U.S. Food and Drug Administration, and U.S. Department of Agriculture, which may result in slower clearance of shipments subject to review.”

Federal Highway Administration

Percent furloughed: 0%

Shutdown plan/concerns: At the FHWA, all operations will continue as normal during a lapse in appropriations, including activities and personnel funded from supplemental appropriations included in the Infrastructure Investment and Jobs Act (IIJA), which encompasses state formula funds for infrastructure projects.

However, state agencies remain concerned that even short delays in funding can cause longer delays in project timelines.

“As we have experienced in the past, disruptions from a lapse in appropriations or a series of short-term [continuing resolutions] will impede state DOT’s ability to translate Congressional mandates and funding in the IIJA into tangible surface transportation programs and projects,” wrote the American Association of State Highway and Transportation Officials (AASHTO) in a letter to Congress last week.

“Such disruptions prevent states and local governments from being able to strategically invest IIJA dollars throughout the full federal fiscal year.”

Federal Motor Carrier Safety Administration

Percent furloughed: 0%

Shutdown plan/concerns: The regulator of commercial vehicle drivers and carriers will continue operations as normal in the event of a lapse in annual appropriations, according to the agency, subject to the amount of cash it has available.

“FMCSA positions are primarily funded by authorized contract authority and paid out of the Highway Trust Fund and liquidated with cash appropriated by annual appropriations,” FMCSA stated in its shutdown plan.

“Although FMCSA positions are mostly funded from the Highway Trust Fund, FMCSA collects fees under its Licensing and Insurance function and Drug and Alcohol Clearinghouse, which are made available to support the programs.”

National Highway Traffic Safety Administration

Percent furloughed: Zero

Shutdown plan/concerns: NHTSA, which regulates the safety of commercial vehicles, stated in its shutdown plan that activities appropriated by Congress would continue with available multiyear funding from prior-year appropriations and supplemental appropriations.

As with FMCSA, all activities and personnel funded through the Highway Trust Fund or the supplemental appropriations portion of the IIJA would continue during a lapse in annual appropriations.

Environmental Protection Agency

Percent furloughed: 93%

Shutdown plan/concerns: EPA is expected to maintain most of its core functions. However, approvals of pending state requests, including state-issued EPA environmental permits for freight-related infrastructure projects, could be suspended.

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Click for more FreightWaves articles by John Gallagher.

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