<p>A federal appeals court reviewed the Trump administration's attempt to overturn a ruling that prevented the reduction of three federal agencies deemed "unnecessary" by the administration. The hearing took place on September 16, 2026.</p>
<p>In March 2025, President Donald Trump signed an executive order aimed at reducing the size of several agencies, including the Minority Business and Development Agency, the Federal Mediation and Conciliation Service, and the U.S. Interagency Council on Homelessness. This order was challenged by a coalition of Democratic-led states, resulting in a federal district court ruling that deemed the order unlawful. The U.S. Court of Appeals for the 1st Circuit heard arguments from the Justice Department and the coalition of states regarding the administration's appeal.</p>
<p>DOJ lawyer Simon Jerome argued that the federal government should have the authority to minimize the agencies' workforces and grant allocations, countering claims from the Democratic states that the executive order effectively closed the agencies. Jerome stated, "The agencies are free to streamline their operations within the bounds of federal statutory law... the order in this case prevents the three agencies in the appeal from doing that by complying with Executive Order 14238, a facially valid executive order."</p>
<p>The panel questioned Jerome on the DOJ's stance that the district court overstepped its authority in reinstating grants and ordering the rehiring of terminated employees. Ester Murdukhayeva, deputy solicitor general at the New York attorney general’s office, contended that the Trump administration's actions had led to the functional closure of the agencies, urging the panel to uphold the lower court's decision. She stated, "The uncontested record in this case shows that defendants functionally shut down three congressionally created agencies by indiscriminately firing all or nearly all of their staff and ceasing to provide programs and services."</p>
<p>The 1st Circuit panel did not provide a timeline for its ruling. The panel included U.S. Circuit Judges Julie Rikelman, William Kayatta, and Seth Aframe, all of whom have been appointed by Democratic presidents. The Trump administration has experienced several notable losses at the 1st Circuit, which is recognized as the most liberal federal appeals court, although some of those decisions have been successfully appealed to the Supreme Court.</p>
<p>The Federal Mediation and Conciliation Service, one of the agencies targeted for reduction, has faced scrutiny for alleged wasteful spending. The agency is primarily responsible for mediating disputes between labor unions and employers. Trump's executive order aimed to eliminate "non-statutory functions" of what he referred to as "unnecessary governmental entities."</p>