Day 13 Shutdown Update: Litigation Arises Amid Deepening Government Pause

Shutdown Update

The federal shutdown has entered its 13th day, and the ripple effects are now extending into unexpected corners of the regulatory and legal ecosystem. While core FDA, USDA, and import operations remain under severe constraint, new litigation and policy tweaks are emerging as additional stress lines for regulated industries.

Key Developments Today

Litigation & Legal Moves

• CDC layoffs reversed amid backlash and suit
  Hundreds of CDC employees who were terminated under recent workforce reductions have been reinstated following legal objections and internal review, after apparent coding errors in termination notices. Around 600 terminations remain. (The Guardian)
• Dispute over back pay for furloughed federal workers
  The White House (via OMB) is asserting that furloughed employees may not be automatically entitled to retroactive pay—a position in conflict with the Government Employee Fair Treatment Act of 2019. (The Washington Post)
• Labor unions challenging shutdown-related firings
  Legal actions are underway, particularly targeting Department of Education and HHS cuts, with plaintiffs arguing that executive overreach is violating statutory or procedural safeguards. (AP News)
• Court deadlines deferred or stayed
  In parallel, some agencies are citing the lapse in appropriations to request stays or extensions of litigation deadlines, citing inability to staff or respond. (E.g., the CFPB petition response deadline was asked to be stayed to account for the funding lapse and reboot delay.) (Holland & Knight)

These legal shifts are significant: they herald that firms should track not just regulatory pause, but also evolving judicial interpretations of what emergency funding lapses allow—or disallow.

Regulatory & Operational Impacts

FDA & USDA operations

• The standstill of open comment periods, guidance drafts, and regulatory workshops continues, with agencies unable to publish notices or hold stakeholder sessions.
• Reviews already in train under carryover user fees are slowing further—staff tie-ups and limited communication are delaying cross-center coordination.
• Inspection schedules remain deferrable; “for cause” or safety inspections continue but may be throttled.
• USDA continues to suspend payments, loan processing, and technical assistance functions, leaving producers in operational limbo.
• Data blackout remains in place—no new NASS, ERS, WASDE, or export data is available.

Imports / Trade

• Port delays are deeper, especially for food, agricultural inputs, and biotech ingredients requiring both FDA and APHIS signoffs.
• Brokers and importers report longer clearance times as small documentation issues cannot be resolved quickly due to furloughed staff.
• Systems like APHIS eFile or FDA’s prior notice/registration tools remain online but with minimal support, so error handling is slow.

Less obvious ripple effects

• Policy drift: Agencies may de-prioritize or indefinitely delay lower-impact rulemaking projects (e.g. minor labeling changes, pilot programs).
• Grant and contract freezes: Many external research, regulatory science, and support contracts are halted or deferred.
• FOIA and disclosure backlogs: Legal and administrative staff are largely furloughed, slowing even routine document requests or agency transparency functions.
• Court scheduling disruption: The judiciary is using non-appropriated funds and fee balances to remain operational, but federal agency respondents may miss deadlines or lack resources to respond. (United States Courts)

What Industry Should Be Watching & Doing

• Legal exposure: If your business is party to pending administrative litigation, monitor whether opposing parties are seeking stays or invoking the shutdown as a force majeure.
• Documentation of impact: Keep contemporaneous records of delays, missed reviews, communications gaps, and staffing or submission interruptions—such logs may be needed for later extensions or appeals.
• Re-prioritize critical filings: Focus your limited regulatory bandwidth on safety-critical submissions, import shipments, and compliance actions at higher risk of enforcement or disruption.
• Proactive engagement: Post-shutdown, agencies may triage work by urgency. Be ready to escalate or remind contacts of your priority issues.
• Flexibility in planning: Don’t assume processes and timelines will return at full speed. Staggered relaunch, backlogs, and staff retraining may stretch recovery.

Links:

• The Guardian
• The Washington Post
• AP News
• The Washington Post
• Reuters