By Jon Herskovitz

AUSTIN, Texas (Reuters) - A U.S. judge blocked an Obama administration policy that public schools should allow transgender students to use the bathrooms of their choice, granting a nationwide injunction sought by 13 dissenting states just in time for the new school year.

While a setback for transgender advocates, the ruling is only the latest salvo in a larger legal and cultural battle over transgender rights that could be headed toward the U.S. Supreme Court.

In early July, Montana Attorney General Tim Fox also attached the state to a similar but separate lawsuit.

Following milestone achievements in gay rights including same-sex marriage becoming legal nationwide in 2015, transgender rights have become an increasingly contentious issue in the United States, with advocates saying the law should afford them the same rights extended to racial and religious minorities.

U.S. District Court Judge Reed O'Connor of the Northern District of Texas, an appointee of Republican President George W. Bush, issued a nationwide injunction siding with the 13 states and blocking the Obama administration's bathroom guidelines on Sunday, the evening before students in much of Texas and some of the other affected states were due back in school.

O'Connor found the federal government failed to provide states with sufficient notice and opportunity for comment before issuing the guidelines. He also said the guidelines had the effect of law and contradicted existing legislative and regulatory texts.

The U.S. Department of Justice said in a statement it was disappointed by the decision and was reviewing its options. Legal experts expected it to appeal, likely asking to put O'Connor's ruling on hold until the case could be litigated.

In May, the Justice and Education departments issued guidance that public schools must allow transgender students to use bathrooms, locker rooms and other intimate facilities of their choice rather than those matching their gender assigned at birth. The Justice Department has called the guidelines non-binding, saying they had no legal consequences.

But they were also backed up by a threat to withhold federal education money from states that refused to comply, drawing objections from 13 states, led by Texas, that sued.

Some conservatives have fought an expansion of transgender rights which thy see as an attack on privacy and an example of federal government overreach.

In test cases around the country, various lower courts have differed in their interpretation on whether anti-discrimination laws apply to transgender people, potentially sending the matter to the U.S. Supreme Court for a definitive resolution.

O'Connor's ruling is "just one small part of an unfolding process," said Aaron Bruhl, a professor at William & Mary Law School in Virginia.

"This won't be the last word on this subject, obviously," he said. "There's a decent chance the U.S. Supreme Court could address this issue in the near future."

Katherine Franke, a law professor at Columbia University, said it was "shocking" that O'Connor had applied his injunction to the entire nation, especially since "there's an opposite decision from the 4th Circuit (Court of Appeals) and eight other lawsuits pending."


The office of Texas Attorney General Ken Paxton, a Republican who frequently sues the Democratic Obama administration, said he was pleased with a decision against "illegal federal overreach."

But a group of five civil rights organizations supporting the Obama policy said legal precedent protects transgender students from discrimination, which a single judge cannot overturn.

"The court's misguided decision targets a small, vulnerable group of young people - transgender elementary and high school students - for potential continued harassment, stigma and abuse," said the five groups, including the American Civil Liberties Union and Lambda Legal.

The judge's decision came about eight hours before Jennifer Campisi took her 9-year-old son E.J., a transgender student, to the first day of school in the Dallas-Fort Worth area. E.J. is not allowed to use the boys' bathroom and instead must use either the nurse's bathroom or a faculty bathroom.

"These policies just keep kids separate and they put unnecessary stress on parents," she said, adding that allowing transgender students to use the bathroom of their choice is the best solutions for all.

Another mother, Alison Kelley, who has two children in the Fort Worth Independent School District, said she opposed the Obama guidelines and that local school authorities should decide what is best case by case.

"I am not anti-transgender," Kelley said. "I am anti big government getting into my backyard."

(Reporting by Jon Herskovitz, Joseph Ax, Lawrence Hurley and Julia Harte; Writing by Daniel Trotta; Editing by Bill Trott and Bill Rigby)