Issue Briefs

WASHINGTON, DC - DECEMBER 26, 2018: Sign at the visitor’s entrance of the US National Archives states it is closed due to the government shutdown.

Following are key sections of OMB’s newly updated guidance regarding partial government shutdowns due to a funding lapse.


Basic Principles of Agency Operations during a Lapse in Appropriations

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The Antideficiency Act prohibits agencies from incurring obligations that are in advance of, or that exceed, an appropriation, with certain limited exceptions.

A. Excepted activities under the Antideficiency Act (express statutory authorizations, emergency circumstances, and the President’s constitutional authorities).

As DOJ has explained in its opinions, an agency may incur an obligation in the absence of an appropriation in certain “excepted” situations:

1. A statute or other legal requirement expressly authorizes an agency to obligate funds in advance of appropriations.

In very rare situations, an agency has statutory authority to incur obligations in advance of appropriations. The best-known example is the Civil War-era Feed and Forage Act (41 U.S.C. § 6301), which provides authority to the Department of Defense to contract for necessary clothing, subsistence, forage, fuel, quarters, transportation or medical and hospital supplies in advance of appropriations. Other examples are the authorities provided by 25 U.S.C. § 99 (Bureau of Indian Affairs contracts for goods and supplies) and 41 U.S.C. § 6302 (Army contracts for fuel).

2. The function addresses emergency circumstances such that the suspension of the function would imminently threaten the safety of human life or the protection of property.

As DOJ has explained, the emergency exception of the Antideficiency Act (31 U.S.C. § 1342) permits an agency to obligate in advance of appropriations when both of the following exist:

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(a) a reasonable and articulable connection between the obligation and the safety of life or the protection of property,

and

(b) some reasonable likelihood that either the safety of life or the protection of property would be compromised in some significant degree by failure to carry out the function in question — and that the threat to life or property can be reasonably said to be near at hand and demanding of immediate response.

3. The function is necessary to the discharge of the President’s constitutional duties and powers (e.g., Commander-in-Chief, conduct of diplomacy, supervising the Executive Branch, and participating in the legislative process).

As the Antideficiency Act states, the emergency exception does not authorize the continuation of ongoing, regular functions of government, the suspension of which would not imminently threaten the safety of human life or the protection of property.

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B. Activities that an agency must continue in the absence of appropriations because their continuation is “necessarily implied” from the authorized continuation of other activities.

1. An “orderly shutdown” when there has been a lapse in appropriations (as DOJ has explained, “authority may be inferred from the Antideficiency Act itself for federal officers to incur those minimal obligations necessary to closing their agencies”),

2. One of the “excepted” activities in I.A. above, or

3. A function for which funding remains available during the lapse (including funds already obligated but not expended), where the suspension of the related activity during the funding lapse would prevent or significantly damage the execution of the funded function.

In addition, as DOJ has explained, there are a limited number of government activities that an agency must otherwise continue despite a lapse in their appropriations because the lawful continuation of other funded or excepted activities “necessarily implies” that these additional activities will continue as well. A “necessary implication” can arise when an agency needs to incur obligations, even though there has been a lapse in the appropriation against which those obligations would be charged, to implement:

1. An “orderly shutdown” when there has been a lapse in appropriations (as DOJ has explained, “authority may be inferred from the Antideficiency Act itself for federal officers to incur those minimal obligations necessary to closing their agencies”),

2. One of the “excepted” activities in I.A. above, or

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3. A function for which funding remains available during the lapse (including funds already obligated but not expended), where the suspension of the related activity during the funding lapse would prevent or significantly damage the execution of the funded function.

Processing and payment of tax refunds – Tax refunds are funded by a permanent indefinite appropriation and ordinarily paid promptly upon filing.

Publication of documents in the Federal Register – Publication may be excepted, even if the Federal Register itself is not funded, because publication may be necessary to support funded agencies or an excepted activity of unfunded agencies.

Payroll processing – Agencies may except staff to liquidate payroll obligations incurred during a lapse. See question 9 below. Unfunded agencies that provide payroll services for funded agencies may also continue this function to support the funded agencies.

As DOJ has explained, an example of a “necessarily implied” activity for which obligations can continue to be incurred despite a funding lapse are the administrative activities (funded out of annual appropriations) that are necessary to disburse benefit payments for which a permanent indefinite appropriation provides the funding for the benefits. Other examples include:

However, as DOJ has also explained, a “necessary implication” may not ordinarily be inferred simply from the kind of broad, categorical authority that often appears in the organic statutes of government agencies, in the absence of continued funding for such activities.

The fact that an agency has unobligated balances (appropriated in a prior fiscal year on a multi-year or no-year basis) that continue to remain available for funding a program does not, in itself, demonstrate that the incurring of obligations for related activities for which there has been a lapse in appropriations is necessarily implied. Agencies may have discretion with respect to when the agency engages in activities for which funding is available. Depending on the duration of the lapse and the programs involved, obligations of such funds, and excepting staff to make such obligations, may be appropriate. As described above, making social security or tax refund payments are examples. Agencies should evaluate each category of funds to determine whether delaying the obligation or expenditure of the funds would “prevent or significantly damage the execution of those funded functions.” 19 O.L.C. 337, 338 (1995).

OMB is aware of Government Accountability Office (GAO) opinions that provide an interpretation of “necessary implication” that is not consistent with DOJ’s legal opinions on this issue. When an agency of the Legislative Branch interprets a law differently than the Executive Branch, the Executive Branch is not bound by its views. Instead, agencies are required to follow DOJ opinions on this issue.

DOJ’s Office of Legal Counsel (OLC) has also interpreted the necessary implication exception to allow, in certain circumstances, unfunded agencies to incur obligations to support the funded activities of another agency or branch of the U.S. Government. For example, OLC concluded in a 1995 legal opinion that DOJ staff could continue to prepare DOJ witnesses to appear for testimony at congressional hearings, even while the Department experienced a lapse in appropriations, where appropriations were available for the congressional hearings themselves and the DOJ’s participation was necessary for the hearing to be effective.

OLC did not limit its application of the necessary implication exception to inter-branch activities. Instead, OLC stated that “[a] similar implication can also be supported by the specific decisions that Congress has made to fund other agencies and departments of government so that their functions are to continue during a funding lapse.” In other words, where the activities of an unfunded agency are necessary to the effective execution of functions by a funded agency, such that a suspension of the former agency’s functions for the duration of the funding lapse would “prevent or significantly damage” the execution of latter agency’s activities, the narrow set of unfunded activities may continue. Accordingly, consistent with OLC’s reasoning, OMB determined the following activities to be permissible based on the necessary implication doctrine:

• When a program is funded through a permanent indefinite appropriation, an implication may be drawn that Congress did not intend for that program to shut down, such that the services of employees whose salaries are paid by annual appropriations that have lapsed are necessarily implied by law to continue during a lapse in appropriations.

• Where the non-performance of an unfunded action (such as one agency’s review of another agency’s proposed actions) would directly and significantly compromise the execution of the latter agency’s legally authorized and funded programs, and would harm the litigating posture of such funded activity, obligations for the unfunded actions may be incurred to the extent necessary to prevent such compromise to the funded agency’s activities.

C. Funded activities

As noted above, GAO’s opinions are not binding on Executive Branch agencies. OLC opinions are binding on Executive Branch agencies, and OMB’s determinations are supported by this binding OLC analysis.

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When an agency funds an activity out of a specific discretionary appropriation, and that appropriation no longer exists by virtue of a lapse in appropriations, to the extent a more general appropriation exists that is legally available for that same purpose, such appropriation may be used for that purpose until the more specific appropriation is restored.

Orderly Shutdown

Q20: When does an agency begin “orderly shutdown?”

A20: While agencies should be prepared to implement their contingency plans, they must wait to execute an orderly shutdown until the Director of OMB directs agencies to operate in accordance with the contingency plans that agencies have prepared under OMB Circular A-11, section 124, and apportions the amounts necessary for obligations required to carry out agencies’ contingency plans. Agencies should not begin orderly shutdown prior to such direction and apportionment by OMB. (Note: Individual employees may be allowed to engage in some orderly shutdown preparatory activities in anticipation of a possible lapse, as provided in Q21.)

Q21: How long should “orderly shutdown” take?

A21: Ordinarily, furloughed employees should take no more than three or four hours to provide necessary notices and contact information, secure their files, complete time and attendance records, and otherwise prepare to preserve their work. Agencies should use this time to provide written notices of the decision to furlough if notice has not already been provided to employees. OMB Circular A-11 requires agencies to provide OMB with written justification for the conduct of orderly shutdown activities in excess of a half-day. While it may be appropriate in limited circumstances for some employees to take longer to assist in shutdown activities (e.g., seeking court continuances or stop-work orders on pending contracts), these may not be necessary in the event that a very short period of a lapse in appropriations is anticipated.

Agencies should make every effort to prepare for these needs in advance of a lapse so that orderly shutdown activities are minimized.

In the event of a longer lapse in appropriations, agencies may extend the orderly shutdown principle throughout the period of the lapse to include incurring the minimal obligations necessary to perform the work of timekeeping and payroll tracking, issuing and delivering furlough notifications to employees, and interpreting, applying, or communicating any guidance either internally or externally to the agency to mitigate or address the effects of the lapse on Federal employees.

Q22: In the event of a lapse on a Friday, when would employees whose schedule is a normal Monday-Friday work week and who are funded by annual appropriations be expected to conduct orderly shutdown activities?

A22: Unless the employee’s agency specifically directs otherwise, employees should generally report to work to conduct necessary orderly shutdown activities on the next day on which the employee would have been scheduled to work. Agencies should take into consideration an employee’s previously scheduled leave, alternative work schedule (AWS) day off, or holiday(s) that take place during the furlough period and generally allow the employee to complete orderly shutdown activities on the workday on which the employee had been scheduled to return to work. For example, if the employee was scheduled to be on paid leave and out of the office on the next workday after the commencement of a lapse in appropriations, the employee would not report to work to complete orderly shutdown activities until the workday on which the employee had been scheduled to return to duty. Even though an employee’s scheduled paid leave is cancelled during a lapse in appropriations, agencies should generally allow the employee to continue planned periods of absence. Agencies should provide clear instructions to employees who have planned periods of absence regarding when they are expected to report to work to perform orderly shutdown activities.

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If an employee is teleworking, he or she may, but is not required to, perform orderly shutdown activities prior to his or her next regularly scheduled workday.

If an agency directs an employee to perform orderly shutdown activities on a weekend off day, a holiday, or an AWS day off, any hours performing orderly shutdown activities would count as hours in applying applicable premium pay rules (e.g., for holiday premium pay or overtime pay). (Whether the agency will be obligated to provide pay at an overtime rate for those hours after the lapse has ended will depend on whether the legislation restoring appropriations provides retroactive pay for hours during which employees were furloughed. If pay is provided for furlough hours, those hours would count as hours of work in applying overtime rules.)

Q23: Does this mean that an employee can continue to work remotely until he or she reports to duty to perform orderly shutdown activities?

A23: No. Following a lapse in appropriations, the Antideficiency Act bars non-excepted work by such employees other than to perform orderly shutdown activities.

Q24: In the event of a lapse on a Friday, when would employees whose regular schedule includes weekend (i.e., Saturday and/or Sunday) work and who are funded by annual appropriations be expected to conduct orderly shutdown activities?

A24: A non-excepted weekend employee generally should report to work on the next day on which the employee would have been scheduled to work—for the sole purpose of engaging in orderly shutdown activities. Agencies should take into consideration an employee’s previously scheduled leave, AWS day off, or holiday(s) that takes place during the furlough period and generally allow the employee to complete orderly shutdown activities on the next workday on which the employee had been scheduled to return to work. For example, the employee described in this question would report to perform orderly shutdown activities on Saturday, if the employee had been scheduled to work on that day. If the employee was scheduled to be on paid leave on the days right after the lapse commenced, the employee would report to perform orderly shutdown activities on the first workday after the planned period of leave—even though the leave was cancelled by the lapse.

Q25: In the event of a lapse on a Friday, when should excepted employees report for duty?

A25: Unless the employee’s agency specifically directs otherwise, excepted employees should generally report for duty on the next day on which they are scheduled to work. Agencies should take into consideration an employee’s previously scheduled leave, AWS day off, or holiday(s) that takes place during the furlough period and generally allow the employee to be excused from duty through a furlough action on the days the employee had planned to be absent—unless the agency determines there is a need for the employee to report to work. An excepted employee must be furloughed if excused from duty on a holiday or regular workday.

If an agency directs an excepted employee to work on a holiday or the employee’s AWS or other regular day off, any hours performing work would count as hours in applying applicable premium pay rules (e.g., for holiday premium pay or overtime pay). Excepted employees will be paid for any earned overtime pay or holiday premium pay when appropriations are enacted.

V. Travel

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Q26: If employees funded through appropriations that have lapsed are on temporary duty assignments away from their normal duty stations at the time of an appropriations lapse, can they make arrangements to return home sooner than planned?

A26: They are encouraged to do so wherever reasonable and practicable. However, agencies should make a determination of reasonableness and practicality based on the length of the assignment and the time required for return travel, compared to the anticipated length of the lapse, so as to minimize the burdens of doing so.

VI. Entitlement to Payment for Excepted Work

Q27: How will excepted employees be paid for excepted work required during the lapse in appropriations?

A27: All excepted employees are entitled to receive payment for their performance of excepted work during the period of the appropriations lapse when appropriations for such payments are enacted.

The Government Employee Fair Treatment Act of 2019 (Public Law 116-1) provides that upon enactment of appropriations to end a lapse, both furloughed and excepted employees will be paid retroactively as soon as possible after the lapse ends, regardless of scheduled pay dates.

Additional guidance for agencies on implementing Public Law 116-1 and treatment of pay and leave is available from OPM.

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