The new 116th Congress convened on Thursday, January 3, 2019 as the partial government shutdown, carrying over from the prior Congress, continued into the new year. Although the private sector is getting back to business this month, the shutdown has slowed—and in some cases halted—business with the government. Here are some practical considerations for private parties with pending or contemplated capital markets, mergers and acquisitions and regulatory approvals that seek to do business with a range of federal regulatory bodies including the Securities and Exchange Commission (SEC), the Federal antitrust agencies, the Committee on Foreign Investment in the United States (CFIUS), the Federal Communications Commission (FCC) and the Food and Drug Adminstration (FDA). Please contact any of the listed Akin Gump professionals if you have questions about the application of the shutdown to your specific situation.

Securities and Exchange Commission

Effective Thursday, December 27, 2018 and until further notice, the SEC will have a very limited number of staff members available. The SEC has staff available to respond to emergency situations involving market integrity and investor protection, including law enforcement. In addition, the SEC contingency plan calls for the continuing operation of certain Commission systems, including the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR).

Division of Corporation Finance

Regardless of the SEC's operating status, EDGAR will accept registration statements, offering statements and other filings; however, during a shutdown the SEC will not be able to declare registration statements effective or qualify Form 1-A offering statements. A limited number of staff members in the Division of Corporation Finance are available to answer questions relating to fee calculations for filings, but will not generally be available to respond to other questions. Federal law and regulations requires the SEC to cease its regular activities and its ability to respond to other questions may be limited by those regulations. The Division of Corporation Finance has posted Frequently Asked Questions (FAQs) to its home page. Companies that are in the initial public offering process or filing non-automatic shelf registration statements will be affected.

Division of Investment Management

In the case of registered investment companies, the Division of Investment Management will not be in a position to act upon any requests for acceleration of the effective date of a pending registration statement or qualification of a pending offering statement until the SEC receives appropriations to fund its operations. Investment companies can continue to make filings on EDGAR during this time. A significant percentage of filings submitted by registered investment companies are in the form of post-effective amendments to registration statements. Many of these filings, pursuant to rules promulgated under the 1933 Act (e.g., Rule 485 for open-end funds), become effective automatically either immediately upon filing or following the passage of a certain number of days. These filings will become effective automatically after the entire time period set forth in the applicable rules until the SEC returns to open and operational status. The Division of Investment Management will follow the procedures outlined in the Division of Corporation Finance's FAQs posted above. A limited number of staff members are available to answer questions relating to fee calculations for filings.

In the case of investment advisers, the Investment Adviser Registration Depository system is operated by the Financial Industry Regulatory Authority, Inc. and therefore will continue to accept filings, amendments and reports. Filings that require SEC staff action, such as those filings for initial registration as an investment adviser with the SEC, will not be acted upon during the shutdown.

Federal Antitrust Agencies

Both the Department of Justice, Antitrust Division (Antitrust Division) and the Federal Trade Commission (FTC) enforce the antitrust laws; however, only the Antitrust Division has the power to seek criminal penalties, and only the FTC can regulate "unfair methods of competition" and "unfair or deceptive acts or practices" under the FTC Act. They both enforce mergers, but they allocate specific transactions based on their relative experience in the industry.

The lapse in government funding has closed the FTC as of midnight Friday, December 28, 2018. However, the Antitrust Division is not subject to furlough and will continue to support criminal trials and prepare cases that must be filed due to the HSR Act or other deadlines where extensions are not possible, particularly on matters in which the United States has an immediate interest. This is significant, because mergers allocated to the Antitrust Division will proceed in a substantially similar fashion as they always have, whereas mergers that are typically reviewed by the FTC will not.

During the shutdown, the FTC will not update its website or related social media until the government re-opens, and all FTC events are postponed until future notice. Some online services are available and some are not. For your convenience, we have listed the status of online services below:

Premerger: Although the Premerger Notification Office (PNO) and the Department of Justice's (DOJ)'s Premerger Office will be open during regular hours to receive HSR filings, the PNO will operate with a limited staff and will be unavailable to provide guidance about the administration of the HSR Act. Perhaps most importantly, all merging parties will have to wait the full initial waiting period before obtaining antitrust clearance, because the PNO will not be granting early termination of waiting periods during the shutdown.

Public Comment: Public comments can be submitted, using the appropriate web form, found here or here, but the FTC will take no action on these comments until the government reopens.

E-Filing: Individuals can submit documents to be filed, but the FTC will take no action until the government reopens.

FOIA: Freedom of Information Act (FOIA) requests may be filed, but they will not be processed until the government reopens.

Registered Identification Number (RN) Database: The RN Database will be available but staff are not available to respond to queries.

Committee on Foreign Investment in the United States

CFIUS is an interagency committee that conducts national security reviews of foreign investments in the United States. During the shutdown, CFIUS activities generally will be suspended, and deadlines and time limitations will be tolled. CFIUS consequently will not initiate reviews of most CFIUS cases during the shutdown, including the review of a "declaration" submitted under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) pilot program that became effective November 10, 2018. The Committee will continue to perform "caretaker functions" relating to (i) cases initiated prior to the enactment of FIRMMA on August 13, 2018 and (ii) matters that CFIUS considers to be national security exigencies. The pre-FIRMMA cases are treated differently because FIRRMA grants the authority for CFIUS to toll cases during a lapse in appropriations. The practical result of this distinction is that CFIUS is more likely to extend the review of pre-FIRMMA cases either by initating an additional investigation period or forcing a withdraw/re-file of cases for which the timelines expire during the shutdown or shortly thereafter.

Federal Communications Commission

During the government shutdown, the FCC is not accepting for filing, processing or granting any applications for for companies that hold FCC licenses. The FCC's electronic filing system used to allow applicants to prepare and file applications for services regulated by the FCC (other than satellite services) generally is available for use during the government shutdown. Thus, for example, transfer of control/assignment applications for FCC licenses for such services involved in pending merger transactions can be prepared and uploaded in the FCC's electronic filing system during the government shutdown. Such applications will not be accepted and processed until after the reopening of the FCC/government. Certain FCC electronic filing and database systems will be unavailable until normal FCC operations resume as described in the FCC's January 2, 2019 notice. Spectrum auction activities authorized by Section 309(j) of the Communications Act will continue, and all spectrum auction filing deadlines will continue to apply.

The FCC is extending normal filing deadlines so that any submission that would be due during a suspension of operations, including submissions which were due on January 3, 2019, will be due on the second day of normal operations.

Food and Drug Administration

Approximately 40 percent of the FDA's workforce is furloughed. The FDA continues specific activities within the scope of its user fee funded programs, including those for prescription drugs, generic drugs, biosimilars, medical devices, animal drugs and tobacco products. The tobacco program has sufficient user fee carryover to continue all programmatic work. User fee-funded activities support the review and approval of new medical products, the FDA's ability to review requests to conduct important clinical research, issue certain guidances, and other necessary activities to help patients have access to new therapies and important generic and biosimilar treatment options. Nevertheless, there is likely to be some impact on medical product premarket activities, given that these programs are only partially funded by user fees and frequently require support from multiple agency components. During a shutdown, the FDA will also continue vital activities to respond to emergencies, manage high-risk recalls, pursue criminal enforcement work and civil investigations related to imminent threats to human health or life, review import entries to determine potential risks to health, and respond to other critical public health issues, as appropriate. The FDA would also continue to address existing critical public health challenges, including drug shortages, and outbreaks related to foodborne illness and infectious diseases.

FDA would be unable to support some routine regulatory and compliance activities. This includes some medical product, animal drug and most food related activities. FDA will also pause routine establishment inspections (i.e., not "for cause" inspections), cosmetics and nutrition work, and many ongoing research activities.

The chart below identifies certain federal agencies, the related contingency agency plan and their home pages where up-to-date information can be accessed if the federal agency is maintaining its website during the temporary shutdown.

Federal Agency

Monitor Status

Securities and Exchange Commission
(SEC Shutdown Plan – Effective December 27, 2018)

Federal Trade Commission
(DOJ Shutdown Plan)
(FTC Shutdown Plan – Effective midnight Friday, December 28, 2018)

Committee on Foreign Investment in the United States
(Treasury Shutdown Plan)

Federal Communications Commission
(FCC Shutdown Notice)

Food and Drug Administration
(FDA Shutdown Plan)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.