The attorneys general (AG) of 19 states successfully moved for an emergency temporary restraining order that blocks Elon Musk and his Department of Government Efficiency (DOGE) team from accessing Treasury payment systems.
States sue.
Filed February 7 with the U.S. District Court for the Southern District of New York, the AGs’ lawsuit against President Trump and Treasury Secretary Scott Bessent alleges that the administration’s policy allowing DOGE to view information maintained by Treasury’s Bureau of Fiscal Services (BFS) violates the Administrative Procedure Act (APA).
As the filing explains, the BFS oversees payment files used to “disburse funds” from various federal agencies “to tens of millions of Americans every year.” Examples of such funds include those for “social security benefits, veteran’s benefits, childcare tax credits, federal employee wages, and federal tax refunds.”
The payment files also contain what the suit calls “sensitive personally identifiable information,” or PII, like bank account numbers, as well as “Federal Tax Information (FTI)” protected from unlawful disclosure under Code Sec. 6103 and “Automated Clearing House (ACH) data.”
While the administration claims the purpose of DOGE’s involvement is to identify, stop, and prevent fraudulent payments — potentially by freezing funds — the states say the “new expanded access policy poses huge cybersecurity risks” to their residents. Treasury claimed last week, the filing continued, that a 25-year-old DOGE associate, Mark Elez, only gained “read-only” access to the payment systems. Elez has since resigned from DOGE.
The suit also raises concerns from reports that the data feeds into an open-source AI system “owned and controlled by a private third party without measures taken to ensure the privacy and security of U.S. citizens’ and residents’ data.”
The AGs claimed states have not been briefed on specifics regarding information viewed and shared by DOGE under the policy. They fear sensitive data may unconstitutionally fall in the hands of third parties, with no safeguards or protections for taxpayers.
The policy runs afoul of the APA “in numerous ways: the change is a final agency action that exceeds statutory authority, is contrary to law, and is arbitrary and capricious,” according to the lawsuit. Further, the policy violates the Constitution’s Separation of Powers doctrine and the Take Care Clause by allowing DOGE to interfere with congressionally appropriated funds.
Temporary block.
On February 8, Judge Paul Engelmayer in a court order agreed with the AGs that the states “will face irreparable harm in the absence of injunctive relief” because the policy “risks the disclosure of sensitive and confidential information” and renders the affected systems “more vulnerable to hacking.”
The court also agreed that the states demonstrated a “likelihood of success on the merits of their claims.”
Engelmayer ordered in favor of the states, blocking the policy until February 14. Until then, only BFS civil servants with proper security clearance who need to access the payment systems to perform their duties can do so. But “all political appointees, special government employees, and government employees” outside of Treasury are prohibited access.
Prohibited individuals who have obtained such information since January 20 must destroy copies in accordance with the order.
The government was instructed to submit its opposition response by 5 p.m. ET Tuesday. The states may then file their reply brief until February 13 by the same time.
Reactions.
Musk swiftly took to social media platform X (formerly Twitter), calling for the judge’s impeachment. In a separate post, Musk wrote: “How on Earth are we supposed to stop fraud and waste of taxpayer money without looking at how money is spent?”
He especially took issue with how the order also bars Bessent from accessing the systems and proceeded to claim that Treasury officials believe roughly $50 billion in fraudulent payments reach those without a Social Security number or “even a temporary ID number.”
Five former Treasury secretaries, including Bessent’s immediate predecessor Janet Yellen, penned an op-ed in the New York Times on Monday. The previous Treasury leaders are “alarmed about the risks of arbitrary and capricious political control of federal payments, which would be unlawful and corrosive to our democracy.”
They continued that Treasury’s role “is not to make determinations about which promises of federal funding made by Congress it will keep, and which it will not.”
Also on February 10, the Tax Law Center at the New York University School of Law explored the Section 6103 implications of the matter. Protections under Section 6103 “are complemented by statutory protections against political interference with IRS operations.”
For example, Code Sec. 7217 “bars top officials within the Executive Branch, including the President, from requesting an audit or investigation of a particular taxpayer, or from interfering with an ongoing audit or investigation,” the Center wrote.
But the post says it is currently unclear whether DOGE associates were “specifically authorized” to inspect or disclose tax return information “for an authorized purpose.”
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