According to the Institute on Religion and Democracy, the Judicial Council of the United Methodist Church has refused to rule one way or the other on whether annual conferences can appoint transsexual ministers:

Meeting in San Francisco, the Judicial Council of the United Methodist Church declined to intervene in the recent re-appointment of a transsexual to be pastor of a church in Baltimore. Citing the lack of a formal complaint against the transsexual minister, the denomination’s highest court said the minister still was qualified for a church appointment. The court said it was not ruling on the permissibility of transsexuality among the clergy because that specific issue was not before the court.

The Rev. Drew Phoenix, pastor of St. John’s United Methodist Church in Baltimore, professes to have changed from female to male.

The Judicial Council is the highest court in the United Methodist Church, which has 7.9 million members in the United States.

The United Methodist Church officially does not ordain into the ministry practicing homosexuals or others who are sexually active outside of marriage. United Methodism affirms God’s love and civil rights for all people, while also affirming marriage as the lifelong union of man and woman. The church has no official policy in its Book of Discipline regarding transsexuality or sex change procedures.

It sounds like the council used a technicality to avoid the decision, but based on this I think that was the right thing for them to do. The 2008 General Conference will undoubtedly face this issue, and being the body most representative of the whole church, it’s the proper forum in which to decide it. Whether bishops will then abide by the GC decision–they haven’t always abided by the Book of Discipline‘s prohibition on sexually active gay clergy–is another story.