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Written by

Corrigan Salerno

Published on

October 1, 2025

With both parties failing to reach an agreement on how to extend appropriations for federal agencies last night, we’ve entered a government shutdown, the first since 2019. While the main driver of this shutdown stems from Democrats’ intent to prevent the expiration of certain healthcare tax credits under the Affordable Care Act, the chaos affecting the federal transportation program over the course of the year should be reason enough to think twice about throwing more money at USDOT. Plus, will there be road closures?

On September 30, 2025, the last day of Federal Fiscal Year 2025, the Senate failed in its second attempt to pass the Congressional majority’s bill to continue funding federal agencies at current levels. As we entered into Federal Fiscal Year 2026 at 12:01 a.m. on October 1, funding for many government agencies and programs lapsed, including for several agencies within USDOT.

Smart Growth America outlined the basics of a government shutdown, but to be quick, Congress had the chance to extend a “clean Continuing Resolution,” or CR, proposed by Republicans, but Democrats rejected it in an attempt to negotiate for some of their priorities to be included in the CR.

Not so clean funding extension

It’s not exactly normal for Congress to battle over a clean funding extension. But considering the way federal agencies, including USDOT, are implementing existing federal programs, we’re no longer operating under normal circumstances. Federal programs deemed insufficiently aligned with the Trump administration’s priorities have already been shut down for months now. Here are three key reasons why simply extending the current funding levels would mean continuing the broken status quo that has allowed USDOT to illegally cancel, delay, and reprogram federal funds as it sees fit.

  1. USDOT has overruled Congress on what its “federal priorities” are and has cancelled an unprecedented number of project awards.
    Since March, USDOT has undertaken a project-by-project review of awarded competitive grants to ensure alignment with the administration’s priorities. They have screened projects for infrastructure improvements they dislike, including bike lanes, multi-use paths, and sidewalks, and forced awardees to remove them from designs or outright cancelled grants. USDOT Deputy Secretary Bradbury has justified this by stating that these projects do not constitute a federal interest, despite these priorities for active transportation projects like these being explicitly eligible for federal funding since at least ISTEA 1991. Is USDOT trying to wind the status quo back to 1956?
  2. The administration intentionally delayed implementation of grants to allow appropriations to lapse. This is an example of impoundment and a pocket rescission.
    In addition to directly cancelling grants, USDOT has implemented IIJA programs at a drastically reduced pace compared to previous administrations. Thanks to this intentional slowdown, numerous Fiscal Year 2022 grants were never obligated before the end of their period of availability and have now expired. This is likely an illegal impoundment of funds and against Article 1 of the U.S. Constitution, and mirrors the Nixon-era circumstances that resulted in the Impoundment Control Act’s passage in the first place.
  3. The USDOT is not implementing programs that the administration dislikes and is ignoring its responsibilities put forward explicitly in law.
    Several programs under USDOT seem to have effectively been “frozen,” with the staff required to implement their statutorily required projects either fired or forced onto other priorities. Frozen programs in USDOT include—but are certainly not limited to—the Charging and Fueling Infrastructure Program and those mandated to modernize the system under Section 11205 and Section 13010 of the Infrastructure Investment and Jobs Act.

What do we anticipate the shutdown to look like at USDOT?

Unless the Office of Management and Budget  (OMB) has drastically different plans, most workers’ jobs at the USDOT’s surface transportation modal administrations should continue. While federally funded projects might be administratively affected in some cases, work on most projects will continue

Recently released FY26 shutdown plans indicate that while USDOT plans to furlough over 12,000 workers, the majority of furloughed workers are in the Federal Aviation Administration. There are no listed plans to furlough workers in the Federal Highway Administration, Federal Transit Administration, and National Highway Traffic Safety Administration, but 239 workers at the Federal Railroad Administration and 31 staff members in the Office of the Secretary will be furloughed.

While OMB Director Russell Vought has injected tension into the shutdown showdown by threatening to enact further firings through reductions in force (RIFs) during the shutdown, USDOT Secretary Duffy has not identified what sort of jobs would be at risk of an additional round of firings. Much of USDOT’s staff is fully funded by revenues from the Highway Trust Fund and the Infrastructure Investment and Jobs Act’s advanced appropriations, and therefore may be insulated from this political fight, although this is very much not guaranteed.

Business as unusual

While it seems like USDOT staff can look forward to regularly scheduled work, the months of firings (and court-ordered rehirings) of workers under OMB-directed RIFs have redefined what constitutes the department’s business as usual. Though the sheer number of people employed at an organization does not directly indicate capacity to execute projects, preparation documents from the most recent near-shutdowns in FY24 and FY25 help to illustrate the extent to which the department’s capacity to enact grants, develop policy, implement programs, and advance projects may have been diminished due to reduced staffing.


 

Shut down the system

How to keep USDOT accountable is likely to remain low on the list of questions that Congress must answer before overcoming this shutdown, but this remains a growing, multibillion-dollar problem for grantees who depend on the federal government to be a partner. With negotiations over the upcoming surface transportation reauthorization bill expected to begin this fall, Congress must determine if USDOT itself is a worthy steward of federal funds.

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2026 budget federal funding