DOT, EPA and the Corps of Engineers resume operations under tight limits that slow grant execution, permitting and major project reviews
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The federal government’s 43-day shutdown—the longest in the United States’ 249-year history—ended Nov. 12 after Congress approved a revised stopgap funding package and President Donald Trump signed it into law.
The stalemate ended after five members of the Senate minority brokered a deal with Republicans to pass a revised version of the House’s continuing resolution (CR) legislative package first passed on Sept 30. The Senate version, passed on Nov. 9, amended the CR to add full-year fiscal 2026 appropriations for the U.S. Dept. of Veterans Affairs and military construction programs—two areas Congress chose to fund for the full year rather than place under a short-term extension.
The House passed the revisions on Nov. 12 before sending it to the White House for President Trump’s signature. The law reopens government, but nearly every federal agency involved in infrastructure remains operating under the CR through Jan. 30, 2026, setting strict parameters on how agencies operate.
«Contractors Should Expect Additional Delays»
The reopening restores federal paychecks and restarts suspended programs, but the stopgap sharply limits what agencies can do. Under Sections 101 through 115, agencies must operate at fiscal 2025 funding levels, cannot initiate new programs and are directed to spend only what is needed to maintain essential operations.
Those rules now sit atop a sizable backlog inside the U.S. Dept. of Transportation, Environmental Protection Agency, U.S. Army Corps of Engineers, Federal Aviation Administration and other infrastructure-facing agencies—delays that will take weeks, not days, to unwind.
“Reopening the government [was] long overdue, but business will not immediately resume as normal,” said Jake Scott, a partner at Smith Currie Oles based in Washington D.C., whose practice advises and litigates on behalf of federal contractors nationwide.
“It will take the government some time to dig out and contractors should expect additional delays even after reopening,” Scott added.
DOT faces the largest queue. ENR reporting throughout this year reflects that before the shutdown began, the department had announced thousands of discretionary grant awards that had not yet been finalized through signed agreements.
About 23% of fiscal 2022 awardees still lacked executed agreements earlier in 2025, and DOT had cleared only about one-third of a nearly $10-billion backlog when the shutdown hit. The 43-day pause means every one of those steps—negotiation, compliance review, documentation and obligation—has been pushed further into the calendar.
Now, under the continuing resolution, DOT must complete that work using only prior-year authority and cannot accelerate staffing or contracting to match the workload.
EPA and the Corps of Engineers face similar challenges. EPA must resume reviews of Clean Water and Drinking Water State Revolving Fund applications, along with a range of water-infrastructure approvals, under fiscal 2025 limits that cannot be adjusted until Congress passes full-year appropriations.
Those reviews slowed or paused during the shutdown and must be reestablished with state partners on a staggered basis. The Corps’ Regulatory Program must work through a backlog of Section 404 permits, water-resources authorizations and jurisdictional determinations.
Those actions paused in early October must now be rebuilt project by project. Districts cannot expand their operating posture because Section 110 directs agencies to spend “in the most limited way possible” during the stopgap.
Aviation and transit programs also remain constrained. Delays began mounting at the nation’s largest airports as the shutdown entered its fourth week, forcing Transportation Sec. Sean Duffy to introduce mandated reductions in airspace capacity for public safety. The tiered flight decreases, along with food assistance funding, were significant catalysts prompting action to reopen.
FAA resumes Airport Improvement Program reviews for major terminal and airfield projects at a time when several sponsors need environmental determinations to proceed with procurement. The Federal Transit Administration must advance Capital Investment Grant agreements with no additional flexibility to expand administrative capacity.
Shutdown’s Effects Seen in Industry Data
The effects are beginning to appear in market data. Associated Builders and Contractors reported its Construction Backlog Indicator fell to 8.4 months in October, the lowest reading since May and the third consecutive monthly decline.
Smaller firms saw the most pronounced drop. Those with less than $30 million in annual revenue reported just 7.29 months of backlog—more than a month lower than late summer. ABC Chief Economist Anirban Basu said the data reflect more competitive bidding conditions as companies try to maintain their workload amid delayed federal actions, higher financing costs and elevated material prices.
Contractors directly tied to federally supported projects felt the practical and immediate effects of the shutdown’s ripple. Delayed grant agreements and environmental reviews postponed mobilizations, leaving crews and equipment idle. Firms may consider rebalancing their backlogs to avoid gaps between federal and private work in the future.
Project teams preparing early-work packages should anticipate longer lead times for federal reviews that have since resumed, albeit more slowly than before the shutdown. The other challenge for contractors is how persistent inflation compounds the challenge, as procurement windows pushed deeper into winter or spring risk exposing material packages to cost volatility.
Public owners face similarly compressed schedules. State departments of transportation must obligate formula funds from the 2021 Infrastructure Investment and Jobs Act on statutory timelines even though federal review pipelines slowed for more than six weeks.
The IIJA’s surface-transportation title expires on September 30, 2026, and the DOT cannot expand spending authority or adjust contractual capacity under the CR to help states regain lost time. Transit agencies negotiating multiyear projects must finalize Capital Investment Grant agreements within limited administrative bandwidth.
Airport sponsors must align capital-program schedules with FAA’s restricted review capacity. Water-sector owners—especially utilities planning major upgrades in response to regulatory or growth pressures—must sequence projects around EPA approvals that will improve gradually, not immediately.
Corps-linked civil works face additional timing challenges.
Coastal, navigation and flood-risk-reduction projects that were awaiting permit decisions or feasibility analyses before the shutdown must reenter the queue at a district-by-district pace. Construction packages expected to advance in early winter may shift into spring, increasing exposure to weather-related delays and potential cost escalation.
Binding and Blessings
The CR’s section-specific operational rules shape all these outcomes. Section 109 restricts grant spending to only what is required during the CR period, limiting agencies’ ability to accelerate obligations even when backlogs demand it.
Section 111 maintains mandatory programs but does not expand authority for discretionary infrastructure accounts. Section 118 directs reimbursement to states that administered federal programs during the lapse, helping to stabilize budgets after they fronted funds to maintain essential services. Retroactive pay in Section 116 restores federal payroll operations and allows agencies to reassign staff to core program functions, but not beyond the limits of the stopgap.
Despite the constraints, the reopening gives agencies a baseline to work from through late January. Federal teams can triage backlogs, issue delayed guidance and restart obligation schedules, though at slower-than-normal rates.
ENR reporting, following the passage of the reopening deal, noted that “weeks of delayed federal actions” should be expected as agencies regain momentum. That outlook remains accurate under the continuing resolution.
For the industry, the end of the shutdown does not mean a return to normal operations. Contractors, designers and public owners anticipating extended federal timelines—and to sequence work accordingly—will be best positioned as agencies work to regain full operating pace through the winter.
