Who Shut Down the Government? Unpacking the Legal Battle Behind the 2025 Federal Shutdown

The 2025 government shutdown, which ended on November 12, became the longest in U.S. history. During the shutdown, at least 670,000 federal employees were laid off, while about 730,000 kept working without pay. Although the White House’s public-facing “government shutdown clock” attributed the lapse to congressional action, the underlying circumstances were legally more complex. The administration directed federal agencies to initiate large-scale Reduction in Force (RIFs) during the funding gap, despite longstanding statutory limitations on personnel actions in such periods, representing an unprecedented extension of executive authority. According to the unions challenging these actions, the administration lacked lawful authority to bypass notice requirements, disregard established RIF procedures, and reinterpret the Antideficiency Act as permitting the suspension of statutory duties. Their lawsuit, which has already secured a temporary restraining order blocking some layoffs, asserts that the firings were procedurally defective and exceeded permissible executive authority, raising questions under both federal personnel statutes and the constitutional separation of powers. 

The 2025 shutdown began after a breakdown in budget negotiations, when Congress failed to pass the necessary or continuing resolution to fund federal operations by October 1, the start of the new fiscal year. A key flashpoint was the expiration of the expanded health-insurance subsidies under the Affordable Care Act, which Democrats insisted must be renewed, while Republicans pushed a “clean” funding bill without those extensions. As the negotiations deteriorated, the Office of Management and Budget (OMB) instructed federal agencies to prepare for mass RIFs in the event of a funding lapse.

According to Section (b) of CFR § 351.801, if a reduction in force results from circumstances not reasonably foreseeable, the Director of the Office of Personnel Management (OPM) may, upon the agency head’s request, authorize a shorter employee notice period of between 30 and 60 days before the layoff occurs. 

Since the administration’s current layoffs occur without the required minimum notice period, compliance with RIF procedures, or lawful authorization from OPM for any shortened process, unions and federal employee advocates have argued that the administration’s current layoffs fall beyond the scope of lawful authority. Facing these allegations, during a recent hearing, Elizabeth Hedges, a Justice Department attorney representing the administration, refused to comment on the legality of the RIF. Instead, she maintained that the district court was “not the proper forum for the dispute and that the merits of the layoffs could not yet be challenged.” Her refusal to address the legality of the RIF implicitly suggested that the administration was attempting to to bypass statutory limits and exercise authority reserved to Congress, thereby blurring the boundaries of the separation of powers. 

On September 30th, the American Federation of Government Employees (AFGE) and American Federation of State, County and Municipal Employees (AFSCME) sued the OMB and its director, Russ Vought, alleging that they unlawfully threatened mass firings of federal workers during the shutdown. Two primary charges are made in the lawsuit, suggesting that the administration has exceeded its constitutional and statutory authority. 

First, the plaintiffs argue that OMB Director Vought and officials at the OPM acted illegally by authorizing agencies to carry out RIFs under a directive known as the Lapse Memorandum. The complaint contends that this memorandum rests on a “fundamental misunderstanding” of federal law, particularly the Antideficiency Act, which restricts spending during funding gaps but does not nullify statutory obligations or authorize the termination of employees. By asserting that agency duties cease to exist when funding lapses, OMB and OPM allegedly exceeded their statutory authority in violation of the Administrative Procedure Act (APA), 5 U.S.C. §706(2)(A),(C). This misreading of federal law enables the administration to ignore Title 5’s mandatory notice and RIF requirements, making the current layoff unlawful. 

Second, even if OMB and OPM had lawful authority to issue such directives, the unions claim the agencies’ actions were “arbitrary and capricious” under the APA. The plaintiffs cite Motor Vehicle Manufacturers Association v. State Farm (1983) to argue that the agencies failed to consider the legal protections for federal employees and the disruption to essential public services, while relying on irrelevant political considerations. The complaint further notes that OMB’s Lapse Memorandum and OPM’s updated guidance are internally inconsistent: they simultaneously declare that RIF rules do not apply to emergency shutdown furloughs yet direct agencies to initiate RIFs anyway. These allegations suggest that by misinterpreting statutory mandates and acting without lawful authorization, the executive branch has attempted to free itself from the constraints Congress put on federal employment. The administration treats the temporary funding lapse as if it nullifies statutory duties, and thus rewrites legal obligations themselves –– an authority reserved to Congress. It not only exceeds the bounds of the APA but also threatens the constitutional separation of powers by allowing the executive to operate without legislative constraint. 

The case foregrounds a deeper constitutional question about the separation of powers. By ordering mass layoffs under the pretext of a funding lapse, the administration has effectively claimed authority to suspend statutory duties without congressional action, a move that collapses the constitutional distinction between executing the law and rewriting it. As the complaint emphasizes, “Congress “has not granted OMB or OPM the authority to order federal agencies to downsize or reorganize themselves…or to RIF employees.” Yet the Lapse Memorandum “takes the legally unsupportable position that a temporary interruption of appropriations eliminates the statutory requirement for all unfunded government programs” and directs agencies to “use this opportunity” to consider permanent RIF. In doing so, the administration weaponizes fiscal inaction to consolidate executive control over the federal workforce. What appears to be an administrative response to a shutdown is instead a deliberate use of a temporary funding gap to pursue permanent restructuring, undermining established statutory constraints and weakening institutional checks on executive power. 

As of December 12, the procedural outcome marked a provisional win. Federal district judge Susan Illston issued a temporary restraining order (TRO) halting certain layoffs. It protects employees covered by the unions’ lawsuit and indicates that the judge found a likelihood of legal merit in the unions’ claims: while the temporary restraining order does not represent a final ruling on the legality of the layoffs, it shows that the court views the unions’ arguments as sufficiently justified to warrant immediate judicial intervention. This partial win underscores the case’s claim that the government’s interpretation of its shutdown powers likely conflicts with federal law, although the ultimate resolution is still pending. Notably, while the administration has publicly vowed to comply with the court’s injunction, it simultaneously signalled that cuts may still be imminent for workers outside the scope of the TRO. According to the Government Executive, the Interior Department disclosed plans to “abolish positions” in 68 “competitive areas” and indicated it could proceed with reductions for employees not represented by the unions. As of November 3, the unions secured further relief: the AFGE announced that the court had granted a preliminary injunction, which broadened the protections and barred the administration from issuing any new RIFs or carrying out previously filed ones during the shutdown. 

The federal shutdown demonstrates executive overreach under the guise of fiscal necessity. By misinterpreting the Antideficiency Act, disregarding statutory notice and procedural protections, and acting without reasoned justification, the OMB and OPM likely violated the Administrative Procedure Act (APA). While the TRO offers temporary relief, the ongoing case will determine whether these firings are permanently deemed unlawful. And because the administration’s actions reflect a reevaluation ––and potential transformation–– of the executive’s authority to restructure the civil service, the stakes are constitutional and extend beyond individual layoffs to the balance of power between Congress and the executive. 

Under the Constitution, the separation of powers rests on the division of legislative, executive, and judicial authority. Congress’s appropriations authority, through which it “defines the contours of federal power” and checks executive action, is essential. Therefore, when the executive uses fiscal necessity to justify bypassing statutory procedures, it attempts to exercise authority that the Constitution assigns to Congress alone. What appears to be an administrative dispute thus ultimately implicates a blurred boundary between the branches when the executive encroaches on legislative authority. The judiciary’s means of resolving this problem will define the limits of executive authority in times of fiscal uncertainty and the constitutional boundaries between the branches.