A federal court rejected an appeal by the Trump administration Thursday to deny transgender and nonbinary Americans passports reflecting their gender identity, upholding a preliminary injunction against a policy requiring identity documents to reflect a person’s sex “at conception.”

In an order, a three-judge panel of the 1st U.S. Circuit Court of Appeals wrote that the Trump administration had failed to argue the policy does not violate federal law and that the government would be “irreparably injured” if the policy were enjoined. The........

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