Trump’s plan to curtail federal agencies troubles First Circuit

The president’s attempt to shutter what he considers wasteful bureaucracies might not survive — but he might also get another bite at the apple.BOSTON (CN) — President Donald Trump’s DOGE-era plan to severely curtail operations at four federal agencies ran into opposition in the First Circuit Wednesday, with the court suggesting the cuts went too far — but having trouble articulating what “too far” means, and whether the administration could try again with a less drastic approach.At issue was an executive order signed shortly after Trump began his second term that severely limited operations at the Federal Mediation and Conciliation Service, the Institute of Museum and Library Services, the U.S. Interagency Council on Homelessness and the Minority Business Development Agency.The mediation service, which employers and unions can use on a voluntary basis to help them resolve disputes, became a poster child for claims of government waste, fraud and abuse after a March 2025 Daily Wire article — widely circulated in conservative media — that accused the agency of having no real purpose “other than to provide luxurious lifestyles for its employees.”Accusations in the article included that employees did very little work but operated out of sumptuous suites with full baths and a private gym with a $3,867 ice-maker; billed their personal living expenses to the government; took “endless junkets to resort destinations”; authorized large cash grants to insiders; and purchased champagne, jewelry and expensive oil portraits of themselves on the taxpayers’ dime.The agency denied the suggestions of mismanagement, claiming in a news release it had a “pristine” record of “flawless financial stewardship.”Trump’s order required the agencies to be cut back to the minimum operations required by statute, but in practice several of the agencies fired virtually every employee, slashed grants in the works and informed callers the agency was closed.Last November an Obama-appointed federal judge in Rhode Island determined the cutbacks were arbitrary and capricious in violation of the Administrative Procedure Act and ordered the grants and employees reinstated.The issue on appeal was that executive orders can’t be challenged under that act and the agencies never adopted a formal plan for implementing Trump’s order. So a coalition of 21 states insisted the cutbacks amounted to an “unwritten policy” the judge could permanently enjoin.But that doesn’t make any sense, Simon Jerome of the Justice Department told the panel. An agency policy is “something circumscribed, something discrete,” he said, but here “there’s no evidence of a policy, just a lot of individual things happening and a presumption that there must be a policy.”The judges weren’t having it, however. “You’re saying if it’s done on the down low, we just do the acts but we don’t say this is how we’re going to do it, then it becomes unreviewable?” asked U.S. Circuit Judge Seth Aframe.Jerome said individual personnel and grant decisions were reviewable, but under other statutes, not the Administrative Procedure Act.“Why aren’t the individual acts just pieces of evidence for the larger policy?” asked U.S. Circuit Judge Julie Rikelman. “That’s what I don’t understand. It’s important to be practical. Two agencies have zero employees right now. Another has 15. They’re functionally closed. Even if that wasn’t written down in a single policy somewhere, that’s the fact of the matter, and yet you want us to conclude that there was no decision by these agencies to close themselves. I just don’t understand how that works.”On the other side, New York Deputy Solicitor General Ester Murdukhayeva also ran into trouble when she claimed the executive order itself was unlawful and the agencies could be barred from complying with it at all, a position the judges seemed to think went too far.“What’s bothering me is, going forward they might do the right thing,” Aframe, a Joe Biden appointee, said. “The executive order can be read to just scale things back to what Congress said.”Murdukhayeva was forced to concede that, even though the judge’s injunction permanently barred the “policy” of implementing the executive order, the agencies could try again to implement it differently.But Jerome complained the injunction was so unclear agencies would be afraid to implement it differently because they might be held in contempt.“If we agree that the order is unclear, what would you suggest?” asked Rikelman, also a Biden appointee.“There’s a whole lot of analysis that needs to be done,” Jerome answered. “I don’t see how this court could issue a narrower injunction, simply because none of the work was done below.”“So a remand would be in order” to ask the judge for clarification, Rikelman said.U.S. Circuit Judge William Kayatta, who was appointed by Barack Obama, rounded out the panel.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads