Keeping FCC Open Likely Minimizes Effect of Federal Shutdown on Industry

With the FCC keeping its doors open until at least Oct. 20 (see 2309280084), the communications industry faces less of a challenge if the federal government closed Saturday night, industry experts agree. The FTC also would remain open. NTIA is expected to furlough many employees. For the FCC, there are questions about what would happen after Oct. 20. The last federal shutdown, in 2018-2019, went on for 35 days. A closure in 1995-1996 lasted 21 days and one in 2013 16 days.

The House and Senate had not worked out an agreement Friday afternoon on a continuing resolution to keep the government open starting at 12:01 a.m. Sunday. The House rejected Friday a revised version of GOP leaders' CR proposal, the Spending Reduction and Border Security Act (HR-5525), that would have extended appropriations by a month but would cut funding levels for the FCC, FTC and other federal agencies by almost 30%. All Democrats and 21 Republicans voted no. It wasn't clear when the Senate would vote on its CR via shell bill HR-3935, which would extend appropriations through Nov. 17 (see 2309270046).

“The biggest risk is the macro risk to the economy,” said New Street’s Blair Levin. “While the communications sector provides an essential service, it is not immune from the consequences of millions of people losing a paycheck, government support, etc., in terms of the timely payment of their telephone, video and broadband bills and other collateral damage,” he said. If a shutdown is short, “the losses will be neither significant nor long-term,” Levin said. But since “no one can articulate the policy reason underlying why we are shutting down, it makes it much harder to analyze what is required to open up again and when that will happen,” he said.

“We’ve been through these potential shutdowns many times over the decades,” emailed Cooley’s Robert McDowell: “More often than not, a short-term CR gets worked out at the last minute and that could still happen here.” The OMB and Treasury Department have already “crunched the numbers to figure out how long various agencies have until they run out of money for non-essential personnel and functions,” he said.

During the two most recent lengthy shutdowns, the FCC was mostly shuttered. In 2013, in an especially bitter blow to industry, the agency also shuttered its website, taking past regulatory filings and other documents offline (see 1812280021).

Money flows into the Treasury every day from various sources “so there’s cash there to a certain extent -- there’s just not a budget to determine how that money should be spent after Sept. 30 without a signed budget bill,” McDowell said. The FCC would stay open through the Oct. 19 meeting, but McDowell asked what would happen if a shutdown continued beyond then. The FCC faces a Nov. 15 statutory deadline to issue digital discrimination rules, he noted: “The FCC may need a wink and a nod from Congress giving it permission to miss that deadline should a shutdown occur.”

“There is a cascade effect as things pile up,” warned Harold Feld, senior vice president at Public Knowledge. The Federal Register shuts down, as do OMB and other agencies involved in the mandatory reviews of commission orders, he said. "Even if the FCC completes a rulemaking or takes some action that requires Federal Register publication, it remains stalled -- unless it is something that becomes final on release rather than after … publication or falls into the narrow exceptions for emergencies,” he said. The FCC can approve a net neutrality NPRM at the October meeting, but it won’t be published until the Federal Register is back online, he noted.

A government shutdown, and particularly the shuttering of the FCC’s electronic filing systems, makes things extremely difficult for FCC licensees and their attorneys, said broadcast attorney Dawn Sciarrino. Broadcasters can’t put documents in their online public inspection files, and can’t meet deadlines for filings such as ownership reports. “It effectively shuts down my business,” Sciarrino said. Though the FCC is staying open into October, Sciarrino says the threat of the shutdown is going to cause her to move quickly to file ownership reports at the start of the month, since she might be unable to do so after Oct. 20. In a newsletter to members Thursday, NAB urged them to upload carriage election statements by Friday and to “prepare all filings that would be due during the shutdown by the normal deadlines so your station will not be caught off guard if the FCC is able to remain open.”

“It is very creative and admirable that the FCC found ways to stay open,” said longtime lobbyist Preston Padden. “Obviously, it will be bad for the industry if ultimately the FCC is forced to close …but I don’t know of any consequences so long as the FCC stays open,” he said.

FTC Staying Open

The FTC will stay open at least through Oct. 20 if there's a government shutdown, using prior-year obligated balances to fund continuing operations, a spokesperson told us Friday.

Commerce's plan, updated Wednesday, says it would continue "minimally necessary activities to oversee and manage the excepted functions and activities of NTIA line offices ... including providing legal, policy, and advisory support." Commerce said it would "support the United States Government in the United Nations’ International Telecommunications Union ... on an intermittent basis. Broadband programs financed by other than annual appropriations -- including the broadband equity, access and deployment program, the tribal broadband connectivity grant program and the enabling middle-mile broadband infrastructure program -- would continue during a shutdown.

Commerce lists 52,507 employees on its rolls before a shutdown. Of those, 6,390 are listed as “necessary to protect life and property.” About 2,000 others would stay on under a variety of other justifications.

The U.S. Court of Appeals for the D.C. Circuit said it wouldn't be affected, "at least initially," by a Sunday shutdown. "Cases calendared for oral argument during the month of October will proceed as scheduled," and parties still have to meet filing deadlines, it said: The Administrative Office of the U.S. Courts indicated the Judiciary can use carryover funds and fees to keep the courts running for several weeks. "Once that funding is exhausted, however, the federal courts face serious disruptions," the court said.

The National Conference of State Legislatures urged on Congress Friday to “take immediate action” to avoid a federal closure. “A shutdown creates uncertainty for states and impedes access to vital federal programs. While states may not feel the immediate effects, critical state services that receive federal funding such as … disaster relief efforts, cybersecurity and child nutrition may be put in jeopardy if Congress does not come to an agreement quickly,” CEO Tim Storey said.

“A government shutdown will have a direct, detrimental, and oversized impact on all of metropolitan Washington,” Metropolitan Washington Council of Governments Chair Kate Stewart said.