Treasury Access Policy Ruling

Date: February 8, 2025
Court: United States District Court, Southern District of New York
Judge: Paul A. Engelmayer

Executive Summary

The U.S. District Court for the Southern District of New York has issued a temporary restraining order (TRO) against a Treasury Department policy that expands payment system access to political appointees and special government employees. Nineteen state Attorneys General sued, arguing the policy violates federal law, exceeds Treasury’s authority, and raises constitutional concerns. The Court found the States would face irreparable harm, citing data security risks and a strong likelihood of success on the merits. A hearing on a preliminary injunction is set for February 14, 2025.

Key Rulings

• Legal Challenge and Plaintiffs’ Claims

  • The lawsuit, led by 19 state Attorneys General, argues that the Treasury’s new policy:
    • Violates the Administrative Procedure Act (APA) by implementing the policy without proper rulemaking procedures.
    • Exceeds the Treasury’s statutory authority by granting expanded system access without congressional approval.
    • Violates the separation of powers doctrine by allowing executive branch appointees access to sensitive data.
    • Contradicts the Take Care Clause of the U.S. Constitution, which requires the President to enforce laws properly. (pg. 1)

• Court’s Ruling on the Temporary Restraining Order (TRO)

  • The Court determined that the States would suffer irreparable harm if the policy remained in place.
  • The ruling cited two main risks:
    • Exposure of sensitive and confidential information due to expanded access.
    • Increased vulnerability to hacking because of the policy’s security risks. 
  • The Court found that the plaintiffs had a strong likelihood of success on the merits, particularly regarding statutory violations.
  • The balance of equities favored granting emergency relief. (pg. 2)

• Orders Issued by the Court

  • Defendants must appear before Judge Jeannette A. Vargas on February 14, 2025, at 2 p.m. to argue against a preliminary injunction.
  • Until then, the Treasury Department is restrained from granting access to:
    • Treasury Department payment systems and records.
    • Any data containing personally identifiable information (PII) and confidential financial records.
  • Access is limited to civil servants within the Bureau of Fiscal Services who meet all background and security clearance requirements.
  • All unauthorized individuals who accessed the system since January 20, 2025, must destroy any downloaded materials immediately. (pg. 3)

• Next Steps and Deadlines

  • Defendants must submit opposition materials by February 11, 2025, at 5 p.m.
  • Plaintiffs must file replies by February 13, 2025, at 5 p.m.
  • Plaintiffs must post a $10,000 security bond before the hearing on February 14, 2025.
  • The order must be personally served on the defendants by February 8, 2025, at 12 noon. (pg. 4)