Judge Extends Restrictions on Musk’s Access to Sensitive Treasury Data

A case that could test the ability of other branches of government to act as checks on the Trump administration began on Friday with a hearing on whether Elon Musk and his young aides should have access to the Treasury’s most sensitive payment and data systems.

The hearing, in federal court in Manhattan, came a week after 19 state attorneys general led by Letitia James of New York sued to block the administration’s policy of allowing political appointees and “special government employees” led by Mr. Musk access to the systems.

The judge presiding over the hearing extended an earlier judicial order that had temporarily restricted Mr. Musk’s team’s access to the Treasury systems. She said she would decide soon whether to keep the restrictions in place until a final ruling is made, which could take months.

The attorneys general’s suit is one of dozens challenging the sweeping agenda President Trump has initiated since taking office, and the federal courts have proved to be the fastest path to temporary relief for federal employees, states and individuals concerned with the president’s new policies.

Government lawyers representing Mr. Trump and the Treasury have argued that the courts do not have the right to usurp the president’s power to give access to federal agencies to whomever he chooses.

On Friday, a representative of the Treasury’s inspector general said the office was examining the activities of Mr. Musk’s team, the Department of Government Efficiency, or DOGE. Lawyers for the government said in court that there were emails the team had sent to recipients outside the Treasury but that they didn’t “presently know” what the emails said or if they contained sensitive information.

When questioned by the judge overseeing the hearing, Jeanette A. Vargas, about whom the team members answered to, the lawyers cited the Treasury. However, they said, the group also communicated with its own leaders in the executive branch, who set priorities.

“There is nothing unlawful about the Treasury carrying out the new policies of the new administration using Treasury employees,” said Jeffrey Stuart Oestericher, one of the lawyers.

At a news conference before the hearing, Ms. James said Congress, not Mr. Musk, had sole discretion over government funding, and that states had a special role to play in preserving the constitutional order.

“We’ve come together because we believe in the Constitution and the rule of law,” Ms. James said of her fellow attorneys general, “and we believe that no one is above the law.”

The attorneys general argue in their suit that Mr. Musk’s cost-cutting team has been given “unfettered access” to the Treasury’s most fundamental systems, which include Americans’ bank account and Social Security data. In the past, the attorneys general say, access to the systems was limited to a small number of career civil servants with security clearances.

The suit also says Mr. Musk’s team intends to cancel Treasury payments that have already been authorized by Congress.

The Trump administration has defended the cost-cutting efforts. Over the weekend, Vice President JD Vance, a Yale Law School graduate, said that judges were not allowed “to control the executive’s legitimate power.”

On Friday, William Tong, Connecticut’s attorney general and a party to the suit, said at the news conference that Mr. Vance’s comments were “utterly false and untrue.” Judges, Mr. Tong said “have always had the power of judicial review for more than 200 years in this country.”

“JD Vance knows better,” Mr. Tong added. “His first day in law school, he learned that judicial review is a bedrock right. It’s what keeps us free.”

In court filings this week, the lawyers representing the Trump administration said that only two people designated as special government employees had been given access to the Treasury systems and that the access was “over the shoulder,” meaning the workers could not edit any information and did not have access to the underlying code.

But Joseph Gioeli, the deputy commissioner of the Treasury’s Bureau of the Fiscal Service, later said there had been a mistake that allowed one member of the team, Marko Elez, greater access.

Mr. Elez, a 25-year-old former X employee, had been designated as a temporary Treasury employee and had briefly been given “read/write permissions instead of read-only.” Mr. Gioeli said Mr. Elez was unaware that he had that level of access.

At the center of the legal battle between the administration and the attorneys general is “the nerve center of our payment systems,” said Yesha Yadav, a law professor and associate dean at Vanderbilt University. The importance of these systems, she said, “cannot be overstated.”

If promised payments are delayed or unpaid, government agencies could be vulnerable to legal action, she said, and there could be ripple effects for people who depend on benefits like Social Security.

“We’ve never imagined the U.S. government being in potential default in these kinds of domestic obligations,” Ms. Yadav said, adding: “This is about as precious of a data source that we have.”

When working with such systems, it is important to “operate with extreme care,” said Jacob Leibenluft, who held senior positions at the Treasury and Office of Management and Budget during the Biden administration. “I think there are many reasons to doubt that this particular team is doing so,” he said.

At the hearing, lawyers for the attorneys general said that their concern was that Mr. Musk’s team intended to flag and pause payments based on an “ideological litmus test” and that to do so, they had been given “unlawful” access to sensitive information.

“We are here because the state’s banking information has been accessed; that has happened,” Andrew Stuart Amer, one of the lawyers, said. “We know it has happened.”

The federal lawyers countered that Mr. Elez was only able to alter code in a “sandbox” environment, meaning he could not affect Treasury systems. Mr. Oestericher said that the team’s activities had created “some level of increased risk,” but that officials were aware of them and had taken mitigation steps.

When questioned by the judge about how it appeared that the two men had gone through a rushed process to get access, Mr. Oestericher said that the men had received training but that he was unsure what kind of security training they had received to prevent a data breach.

“Time is of the essence because the executive order made time of the essence and compliance with them made time of the essence,” he replied.