778 F.Supp.3d 578
S.D.N.Y.2025Background
- Nineteen states sued under the Administrative Procedure Act (APA) challenging access granted by the Treasury's DOGE Team to sensitive federal payment systems managed by the Bureau of Fiscal Services (BFS), including data with state and citizen confidential information.
- Plaintiffs alleged breaches of the Privacy Act and the E-Government Act due to risk of unauthorized disclosures and inadequate safeguards, raising both statutory claims and arbitrary-and-capricious process claims under the APA.
- The Court previously granted a preliminary injunction barring DOGE Team access, finding a likelihood of success on the arbitrary and capricious claim but not on the statutory claims, since states' interest in their own or residents’ data was held outside the statutes' “zone of interests.”
- Plaintiffs sought reconsideration, arguing the Court overlooked legislative history and statutory purposes; Defendants moved to dissolve the injunction for a new DOGE Team member who completed vetting and training.
- The Court reviewed detailed declarations on DOGE Team member Wunderly’s training, security clearance, ethics compliance, reporting lines, and mitigation procedures for data access.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do the states fall within the Privacy Act/E-Government Act’s zone of interests? | Yes; states have a protectable interest in sensitive info of residents and their own data in federal systems. | No; statutes protect individuals’ PII, not state financial info or interests. | No; zone of interests covers individuals, not states or government data. |
| Adequacy of process for granting DOGE Team access (APA arbitrary/capricious claim) | Process was hasty, lacked training, vetting, safeguards; risked unauthorized disclosure. | Improved process: proper vetting, training, mitigations now in place. | Government’s submissions now cure procedural concerns for new team member. |
| Relevance of new/expanded arguments (motion for reconsideration) | Court overlooked key intent and legislative history not fully briefed initially. | Plaintiffs are improperly raising new theories after motion decided. | Motion for reconsideration denied; new arguments barred. |
| Propriety of modifying preliminary injunction for a new member | Access remains risky and procedures unclear without completed ethics forms. | New member (Wunderly) completed all but hands-on training (blocked by injunction) and ethics paperwork will be done. | Injunction modified to allow access after training and ethics report submission. |
Key Cases Cited
- Bennett v. Spear, 520 U.S. 154 (Supreme Court: zone of interests test is specific to provision sued upon, not general statutory purpose)
- Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871 (Supreme Court: zone of interests requirement for APA suits)
- FCC v. Fox Television Stations, Inc., 556 U.S. 502 (Supreme Court: courts review agency action for reasonableness, not substance, under APA arbitrary-and-capricious review)
- Encino Motorcars, LLC v. Navarro, 579 U.S. 211 (Supreme Court: agencies may change policy with reasoned explanation)