CBP Would Stay Largely Open During Government Shutdown, But Other Large Trade Impacts Seen

CBP estimated that 52,673, of its 59,561 employees will be "exempt and estimated to be retained during a federal funding hiatus," the plan said. The agency "expects to complete an orderly cessation of all other activities not identified as exempt functions within four business hours following notification of a federal funding hiatus," said DHS. All non-exempt DHS employees can only use their agency-issued mobile devices to monitor hiatus status updates and emergency notifications from supervisors and other management, it said. "Failure to follow this policy may result in a violation of law," said DHS.

CBP's Senior Advisor for Trade in the Office of Trade Relations Maria Luisa Boyce said she was not yet ready to provide information on the CBP's contingency plans. During a brief Sept. 27 interview, she said she "could not say anything" about CBP's plans for a possible shutdown. "You know our track record, though, we always communicate and we're ready to address and when the situation arises we continue to do the best that we can, but we'll be able to talk more about this, if anything, [this] week." CBP is part of DHS. The Office of Management and Budget recently provided some guidance on the possibility of a shutdown (see 13092521). An OMB list of agency contingency plans is (here).

The Food and Drug Administration would conduct import entry review in the event of a shutdown, and would also be able to continue work related user fee funded programs, high-risk recalls, civil and criminal investigations, and "other critical public health issues," said the Department of Health and Human Services in its contingency plan (here). But the agency would be "unable to support the majority of its food safety, nutrition, and cosmetics activities," it said. FDA would cease activities including routine establishment inspections, "monitoring of imports," notification programs like food contact substances and import formula, and its laboratory research activities. In all, 52 percent of total HHS employees would be furloughed. FDA would have it easier than other HHS agencies: it would have access to leftover user fees paid by industry, and would comprise over half of HHS staff excepted from furloughs "for the protection of human life," HHS said.

The Food Safety and Inspection Service said it will continue to perform functions related to meat, poultry, and egg safety (here). That includes daily on-site inspections, regulatory enforcement, and product testing in laboratories, the agency said. Work that's reimbursed by industry would also be unaffected by a shutdown, as would work performed by state employees. Inspection of imports and certifying products for export would continue, although other international activities would come to a halt. In total, 8,407 out of 9,633 FSIS employees, or 87%, would be excepted from furloughs.

For the Federal Maritime Commission, the shutdown would be much more drastic. In fact, the plan it released said all of the FMC's 120 employees would be furloughed within four hours of a shutdown (here). That does not include presidentially nominated and Senate-confirmed appointees (i.e., the chairman and four commissioners).

The Surface Transportation Board said that, for the duration of the shutdown, all board operations will be suspended. It won't accept or process filings or tariffs, receive or acknowledge general or electronic mail, process cases, issue decisions or accept recordations, it said (here).

The Alcohol and Tobacco Tax and Trade Bureau would halt its regulatory functions, non-criminal investigative activities and audit functions, it said, but would ensure that all tax remittances are processed because these functions are deemed necessary for safety and protection of property (here)

On the industry side, there is some hope that the impact won't be huge, at least at first, since most CBP personnel will be considered essential and continue working during the shutdown. "This should allow freight to continue to move normally," said Sandra Liss Friedman of Barnes, Richardson.

One concern is that there will be no capacity for overtime for customs inspectors. That would mean that "if there is a backup at the border, there will be no help available to clear the backlog," said Lawrence Friedman of Barnes, Richardson. He said that "could result in longer waits at borders and delays in the release of merchandise."

For the economy as a whole, the impact "all depends on how long the shutdown lasts and what type of resolution eventually is worked out," Friedman told us. "If it continues more than a few days, the economy will feel the impact; but if everyone comes to their senses quickly the economy should not be impacted."

But the shutdown "would affect all aspects of importing and trade," one shipper told us: "GSP renewal would be delayed as more pressing business will push renewal to late 2013 or even to 2014, causing a huge financial burden on the importing public. This would probably also push the Miscellaneous Tariff Bill (MTB) and the possibility of the Trade Promotion Authority (TPA) renewal.

There also would be immediate impacts on programs such as ACE development where there are a lot of contractors, the shipper said. Other cutbacks would cause delays in completing exams and ultimately costing the importer with additional storage fees.

One of the big questions is what will happen with the U.S. Army Corps of Engineers, said John Martin, president of the Martin Associates consulting firm and member of the American Association of Port Authorities. He said it remains unclear what will happen with such things as Corps dredging and maintenance of rivers, dams and ports: "Who knows?" An immediate impact for him is the impending shutdown of website models that he uses for economic impact studies. He said he had to download a batch of models Sept. 30 that "cost me personally $10,000 today." Another "major issue" is what happens to the Department of Transportation Tiger Grants, some of which are being used for such things as port improvements, Martin said.

The Senate is to convene at 2 p.m. Sept. 30 to debate the most recent round of House amendments to H.R. Res. 59, the stopgap funding measure docketed to avert an Oct. 1 government shutdown. The House on Sept. 27 amended the continuing resolution (CR) to delay funding for the Affordable Care Act by one year and repeal a medical device tax. Senate Majority Leader Harry Reid, D-Nev., on Sept. 30 flatly rejected the amendments, paving the way for government shutdown.

“The Senate will reject any Republican attempt to force changes to the Affordable Care Act through a mandatory government funding bill or the debt ceiling. Furthermore, President Obama has stated that he would veto such measures if they ever reached his desk,” said Reid (here). “Republicans must decide whether to pass the Senate’s clean CR, or force a Republican government shutdown.” In recent weeks, the White House Office of Management and Budget has advised agencies on conducting orderly shutdowns, while retaining essential staff (see 13092521).