First Circuit: Hears Trump Agency Shutdown Challenge

• Former President Trump's executive order aimed to severely curtail four federal agencies, including the Federal Mediation and Conciliation Service, following accusations of waste.
• A Rhode Island federal judge initially ruled the resulting agency cutbacks were arbitrary and capricious under the Administrative Procedure Act, ordering reinstatement of employees and grants.
• On appeal, the First Circuit grappled with whether de facto agency closures, implemented without a formal written policy, could be challenged under the Administrative Procedure Act.
• Judges pressed the Justice Department on the practical reality that agencies were functionally closed, questioning how individual actions could not collectively form an unwritten policy subject to review.
• The court indicated the administration's actions likely went "too far" but struggled to define the precise legal limits of such executive power and the path for judicial intervention.

Judges pressed the Justice Department on the practical reality that agencies were functionally closed, questioning how individual actions could not collectively form an unwritten policy subject to review.

Shortly after commencing his second term, former President Donald Trump issued an executive order aimed at significantly curtailing the operations of four federal agencies. These included the Federal Mediation and Conciliation Service (FMCS), the Institute of Museum and Library Services, the U.S. Interagency Council on Homelessness, and the Minority Business Development Agency. The directive mandated that these entities reduce their activities to the bare minimum required by statute.

The impetus for this executive action stemmed, in part, from a March 2025 article in the Daily Wire, widely disseminated across conservative media outlets. This article leveled severe accusations against the Federal Mediation and Conciliation Service, portraying it as a prime example of government waste, fraud, and abuse. Specific allegations included claims that employees performed minimal work while enjoying luxurious office suites equipped with full baths and private gyms, including a $3,867 ice-maker. Further accusations detailed employees billing personal living expenses to the government, embarking on numerous resort junkets, authorizing substantial cash grants to insiders, and purchasing champagne, jewelry, and expensive oil portraits of themselves using taxpayer funds. The agency, however, vehemently denied these suggestions of mismanagement, asserting in a news release that it maintained a "pristine" record of "flawless financial stewardship."

Despite the order's stated intent to merely reduce operations to statutory minimums, its practical implementation led to more drastic outcomes. Several of the affected agencies proceeded to terminate virtually all their employees, canceled grants that were already in progress, and informed callers that their offices were effectively closed. This resulted in a de facto shutdown for many of these federal entities, raising immediate questions about the scope and impact of the executive order.

The severe cutbacks prompted legal challenges, leading to a ruling last November by an Obama-appointed federal judge in Rhode Island. The judge determined that the administration's actions were "arbitrary and capricious," constituting a violation of the Administrative Procedure Act (APA). Consequently, the court ordered the reinstatement of both the affected grants and employees, aiming to reverse the practical effects of the executive order.

However, the case escalated to the First Circuit, where a complex legal question emerged: the Administrative Procedure Act typically does not permit direct challenges to executive orders themselves. Furthermore, the agencies in question had not adopted any formal, written plan for implementing President Trump's directive. This procedural gap became central to the appeal, as a coalition of 21 states argued that the extensive cutbacks amounted to an "unwritten policy" that the lower court judge possessed the authority to permanently enjoin. This argument sought to bring the de facto agency closures under the purview of judicial review, despite the absence of formal documentation.

This legal posture highlighted a critical tension between executive authority and the mechanisms of accountability, particularly when government actions significantly alter the operational status of federal bodies without explicit, reviewable policies. The states contended that the practical consequences of the order, rather than its formal structure, should dictate its susceptibility to legal challenge.

During the First Circuit hearing, Simon Jerome of the Justice Department countered the states' argument, asserting that there was no discernible "policy" to challenge. He contended that a policy must be "circumscribed, something discrete," and in this instance, there was "no evidence of a policy, just a lot of individual things happening and a presumption that there must be a policy." Jerome maintained that while individual personnel and grant decisions might be reviewable, such review would fall under other statutes, not the Administrative Procedure Act.

However, the appellate judges expressed significant skepticism regarding this position. U.S. Circuit Judge Seth Aframe pointedly asked whether actions taken "on the down low"—without formal documentation—would render them unreviewable. U.S. Circuit Judge Julie Rikelman further pressed the Justice Department, questioning why individual acts should not be considered "pieces of evidence for the larger policy." She emphasized the practical realities, noting that two agencies currently had zero employees and another only fifteen, rendering them "functionally closed." Judge Rikelman expressed difficulty understanding how the court could conclude there was no deliberate decision by these agencies to effectively cease operations, despite the lack of a written directive.

New York Deputy Solicitor General Ester Murdukhayeva, representing the states, also encountered difficulties when she attempted to argue that the executive order itself was unlawful. The court's deliberations underscored a struggle to define the precise limits of executive power when actions lead to de facto agency shutdowns without formal, reviewable policies, suggesting the cuts likely went "too far" but without a clear legal framework for intervention.

This **First Circuit Trump agency shutdown challenge** underscores a critical legal dilemma concerning the boundaries of executive authority and the scope of **judicial review unwritten agency policy**. The appellate court's struggle to articulate what constitutes "too far" in the context of presidential directives that effectively dismantle federal agencies without formal rulemaking highlights a significant gap in legal precedent. The case probes whether the practical outcomes of an executive order, particularly the functional closure of government bodies, can be challenged as **arbitrary capricious agency action appeal** under the Administrative Procedure Act, even when no explicit, written policy dictates those closures.

The implications extend beyond the immediate fate of the affected agencies, touching upon the broader oversight of **Trump executive order agency operations** and future presidential administrations. The court's difficulty in reconciling the Justice Department's argument—that individual actions do not constitute a reviewable policy—with the undeniable reality of agencies being functionally shuttered, reveals the complexities of challenging de facto government actions. The outcome of this case will likely shape the standards for scrutinizing executive power when it impacts the operational status of federal entities, particularly when actions are taken without formal, transparent policies, thereby influencing the landscape of administrative law and accountability.

This case highlights the First Circuit's struggle with defining the limits of executive power to curtail federal agencies, particularly when actions are taken without formal written policy. Lawyers should monitor the outcome to understand the evolving standards for challenging de facto agency shutdowns and the scope of judicial review over unwritten government policies that significantly impact their clients or regulated entities.

Source: Original reporting via Associated Press and Courthouse News Service.