Trump appeals judge's block on mass layoffs at federal agencies

(Reuters) - U.S. President Donald Trump's administration on Friday appealed a federal judge's block on mass layoffs by federal agencies, a key piece of the Republican president's plans to downsize the government.

In an order late on Thursday, U.S. District Judge Susan Illston barred agencies from mass layoffs pending the outcome of a lawsuit by unions, nonprofits and municipalities, saying Trump needed permission from Congress before reorganizing federal agencies.

The Trump administration appealed the decision to the San Francisco-based 9th U.S. Circuit Court of Appeals, asking the court to pause Illston's ruling pending the outcome of the appeal, saying it "rests on a fundamentally flawed understanding of the separation of powers."

White House spokesman Harrison Fields said Congress has granted the president the authority to implement mass layoffs and called Illston's decision "extreme judicial overreach."

"The President must retain the ability to manage the Executive Branch, including implementing reductions in force when necessary, as has been the practice for nearly 150 years," Fields said in a statement.

The decision was the latest instance of a federal judge checking an aggressive push by Trump and billionaire adviser Elon Musk to drastically shrink or eliminate many federal agencies, make it easier to fire government workers and strip them of the ability to join unions.

On May 9, Illston blocked about 20 agencies from making mass layoffs for two weeks and ordered the reinstatement of workers who had lost their jobs.

In Thursday's order, she largely continued the relief provided in the temporary restraining order.

"The President has the authority to seek changes to executive branch agencies, but he must do so in lawful ways and, in the case of large-scale reorganizations, with the cooperation of the legislative branch," wrote Illston, an appointee of then-President Bill Clinton, a Democrat.

Illston said her order "shall not limit federal agency defendants from presenting reorganization proposals for legislative approval or engaging in their own internal planning activities" without direction from the White House.

The administration had asked the Supreme Court to pause Illston's May 9 ruling, saying she improperly infringed on Trump's constitutional powers to control the executive branch. It withdrew that request on Friday in light of the newer ruling.

'WHAT TO CUT'

Federal agencies have broad authority to implement large-scale layoffs, government lawyer Andrew Bernie said at a hearing on Thursday.

He said an executive order issued by Trump had merely asked agencies to determine what cuts could be made without calling for any concrete actions such as layoffs or office closures that plaintiffs could sue over at this point.

"Those decisions will be disclosed when they are made, and when they are made, the plaintiffs can challenge them. Indeed, the plaintiffs have challenged individual decisions,” Bernie said, citing pending lawsuits over cuts at the departments of Education, Health and Human Services and Homeland Security.

Danielle Leonard, who represented the plaintiffs, said directives from Trump and other White House officials made clear that agencies had little say in whether to gut their workforces.

"They are saying what to cut, when to cut, where to cut, and all they’re asking the agencies to do is come forward with a plan," she said.

The case involves the departments of Agriculture, Health and Human Services, Treasury, Commerce, State and Veterans Affairs, among others.

Trump has urged agencies to eliminate duplicative roles, unnecessary management layers, and non-critical jobs while automating routine tasks, closing regional offices and cutting back on outside contractors.

About 260,000 federal workers, most of whom have taken buyouts, have left or will leave by the end of September. Several agencies have been earmarked for deep cuts, such as more than 80,000 jobs at the Department of Veterans Affairs and 10,000 at the Department of Health and Human Services.

Dozens of lawsuits have challenged the administration's efforts, and Illston's ruling earlier this month was the broadest yet of its kind.

An appeals court has paused another judge's March ruling requiring agencies to reinstate nearly 25,000 probationary employees, who typically have been in their current roles for less than a year or two.

(Reporting by Daniel Wiessner in Albany, New York and Shubham Kalia in Bengaluru; Editing by Alexia Garamfalvi, Clarence Fernandez, Nia Williams and Diane Craft)