Seven States Sue Over $810 Million Federal Funding Rescission
Filed: September 30, 2026
Reported: October 1, 2026
Procedural status: Multistate lawsuit filed; no court ruling on the claims.
California and six other states—Maine, Maryland, Michigan, Nevada, New Mexico and Oregon—filed a federal lawsuit challenging the Trump administration’s withholding of congressionally appropriated funds, including approximately $810 million targeted in a late-fiscal-year rescission request. The case was filed in the U.S. District Court for the Northern District of California.
What the states allege: The coalition argues that the administration’s refusal to spend the funds violates the Constitution’s separation-of-powers, appropriations and presentment provisions, as well as the Administrative Procedure Act. Those are claims in a pending lawsuit; a court has not decided the merits.
Administration’s stated rationale: Reuters reported that the White House described the programs as supporting illegal immigration, stoking racial tensions, or promoting what it called alarmist approaches to the environment. The White House was not immediately available for comment on the lawsuit.
Why it matters: The case puts the limits of presidential authority over congressionally approved spending before a court. The dispute concerns both the funding and the administration’s use of a request made just before the fiscal year ended.
Sources: Reuters | California Attorney General