In the wake of this country’s longest federal shutdown, federal courts were facing unprecedented decision-making whether to stay civil proceedings implicating federal employees and agencies.
The Anti-Deficiency Act prohibits federal agencies from spending beyond their allotted funding and simultaneously restricts federal employees from working on a volunteer basis. The Act provides, in relevant part:
An officer or employee of the United States Government or of the District of Columbia government may not accept voluntary services for either government or employ personal services exceeding that authorized by law except for emergencies involving the safety of human life or the protection of property.
31 U.S.C. § 1342 (emphasis added).
During lapses in federal funding, voluntary services are only authorized in very limited circumstances, but the parameters of the “safety of human life” or “protection of property” exceptions have not been uniformly defined nor applied across the courts.
The U.S. Department of Justice’s 2026 Contingency Plan anticipated civil litigation would be curtailed or delayed, absent cases that would substantially affect the protection of human life or property interests. Indeed, the Contingency Plan instructed federal civil litigators to “approach the courts and request that active cases, except for those in which a delay would compromise to a significant degree the safety of human life or the protection of property, be postponed until funding is available.” Nevertheless, the Contingency Plan also seemingly deferred to federal courts whether to stay proceedings, providing:
If a court denies such a request and orders a case to continue, the Government will comply with the court’s order, which would constitute express legal authorization for the activity to continue. The Department will limit its civil litigation staffing to the minimum level needed to comply with the court’s order and to protect life and property. Receipt of summonses, pleadings and motions by mail may be delayed.
A natural tension arises between the Anti-Deficiency Act, which aims to postpone cases, and Article III of the United States Constitution, which vests federal courts with the power to decide cases and controversies within its jurisdiction. See U.S. Const. Art. III, § 2, cl. 1. As the cases discussed below illustrate, courts over time have endeavored to strike a balance between complying with the federal law and their constitutional authority during federal shutdowns.
In 2013, the D.C. Circuit court in United States, et al. v. US Airways Group, Inc. et al., contemplated whether a stay of proceedings due to a lapse in appropriations was warranted in a time-sensitive civil proceeding. 979 F.Supp.2d 33 (D.C. Cir. 2013). There, the federal government initiated the suit and sought injunctive relief to block a merger between two airline corporations. Although the government argued that the Anti-Deficiency Act only allowed employees to work in limited emergency circumstances, the court noted the time-sensitive nature of the matter, the substantial amount of money at issue, and the impact of a stay on swift resolution of the matter. Accordingly, the court denied the government’s motion to stay and allowed the matter to proceed during the federal shutdown.
During the 2019 federal shutdown, the D.C. Circuit also denied a request to stay oral argument in a civil proceeding. See Kornitzky Grp., LLC v. Elwell, 912 F.3d 637 (D.C. Cir. 2019). The concurring judges noted that the DOJ’s FY 2019 Contingency Plan, similar to the 2026 Contingency Plan, provided that if a court denies a stay, “the Government will comply with the court’s order, which would constitute express legal authorization for the activity to continue.” Specifically, the concurrence observed that the federal courts uniformly denied the government’s request to stay oral arguments during the 2013 federal shutdown and the government attorneys still appeared for oral argument.
Most recently, during the 2025 federal shutdown, a federal court denied the Department of Labor’s motion to stay proceedings and suggested that the DOL carried a burden to show “good grounds for either a stay or an extension of the deadlines previously established,” which was not met. Lehman v. Dep’t of Labor, 2025 WL 2808472, *2 (E.D. Mich. Oct. 2, 2025). While the court acknowledged the limitations set forth in the Anti-Deficiency Act, it recognized a circuit split on how strictly courts adhere to the general rule that government attorneys are not authorized to work during federal shutdowns—even on a volunteer basis—absent exceptional circumstances. Whereas the Sixth Circuit has traditionally taken a more literal interpretation of the Anti-Deficiency Act—finding government attorneys may exclusively work on “emergency” matters during a federal shutdown—the D.C. Circuit has taken a “less sanguine view” and has denied stays on the grounds that government attorneys must comply with federal court litigation timelines. Id. at *1 (comparing United States v. Trevino, 7 F.4th 424, 421 n.6 (6th Cir. 2021) (“The prosecution cannot continue without expenditures[,] [and] The Anti-Deficiency Act prohibits any government official from carrying out the prosecution on an unpaid, volunteer basis.”) with People for the Ethical Treatment of Animals v. USDA, 912 F.3d 641 (D.C. Cir. 2019) (declining to stay scheduling deadlines during the 2019 federal shutdown)).
The Lehman court further explained that the Michigan Rules of Professional Conduct apply to federal government attorneys who appear before the state’s courts and provide that “[w]hen ordered to do so by a tribunal, a lawyer shall continue representation notwithstanding good cause for terminating the representation.” Id. at *2 (quoting Mich. Rule of Prof. Conduct 1.16(c)). While non-attorney government staff are not bound by the ethical rules, the court noted the DOL publicly announced that it has staff available to meet court-imposed deadlines. Unlike in US Airways Group and Kornitzky, which focused on the type of litigation and the stage of the proceedings to warrant postponement, here, the court appeared to focus on the government’s failure to show “good grounds” for a stay or deadline extension.
The Lehman approach was subsequently followed in New Jersey v. U.S. Office of Management & Budget, 2025 WL 3089495 (D. Ma. Nov. 5, 2025), wherein the court echoed that federal courts retain the power to stay litigation and the Anti-Deficiency Act “does not require that non-emergency litigation cease.” There, the substantive issue was whether the federal government defendants could properly terminate funding for a federal grant that was formerly awarded to plaintiffs. After the federal shutdown took effect, defendants requested a stay to file a reply brief while plaintiffs’ motion for partial summary judgment was pending. The court rejected defendants’ request, weighing the parties’ competing interests and finding a stay “could allow [d]efendants to continue to terminate funding but close off [p]laintiffs’ opportunity to resolve this matter pursuant to the parties’ agreed-upon schedule.” Stated differently, the court acknowledged that a stay could lead to a procedural advantage for the federal defendants by effectively preserving a status quo that is under scrutiny.
Conversely, in Dash Markets, Inc. v. United States, 2025 WL 3502097 (W.D. N.Y. Oct. 21, 2025) the court deviated from Lehman and New Jersey v. U.S. Office of Management & Budget by deferring to the Anti-Deficiency Act. There, the plaintiff sued the United States, seeking remission of $3 million in Employee Retention Credits and the government requested a stay due to the 2025 federal shutdown. While the court recognized that stays are “subject to the sound discretion of the court,” the court stated that it was “disinclined to subject [d]efendant’s counsel to the risk of violating the [Anti-Deficiency] Act” and does not find plaintiff’s “alleged financial plight to constitute a potential emergency exception to the Act.” Id. Accordingly, the government’s requested stay was granted. Id.
As illustrated by the courts’ differing approaches to the Anti-Deficiency Act, federal shutdowns create significant uncertainty for clients involved in civil litigation with federal agencies or personnel. While the current shutdown has ended, this moment demonstrates the need for practitioners and clients alike to remain vigilant in anticipating delays for future lapses in federal appropriations. Epstein Becker Green attorneys remain prepared to assist clients in navigating this unpredictable landscape.
