Introduction
California and six other states filed a lawsuit Wednesday against the Trump administration, alleging the White House unlawfully withheld approximately $810 million in federal funds that Congress had already approved. The lawsuit, filed in the U.S. District Court for the Northern District of California, opens a new legal battle over the limits of presidential spending authority and Congress’s constitutional power of the purse.
The States and the Funds at Issue
The lawsuit was filed on Wednesday, September 30, 2026, by California, Maine, Maryland, Michigan, Nevada, New Mexico, and Oregon. California Attorney General Rob Bonta is leading the legal effort.
The dispute centers on $810 million in federal funding across 11 accounts spanning seven federal agencies, including the Departments of Health and Human Services, Education, Homeland Security, Commerce, Housing and Urban Development, and Justice.
The largest single reduction targets the Department of Health and Human Services’ Refugee and Entrant Assistance account, with $567 million proposed for cancellation. This account funds refugee resettlement services through grants to nonprofit organizations. According to New York state data, 10,654 refugees received services in that state alone during federal fiscal year 2024.
Other affected programs include:
- Department of Education: $69.5 million from International Education and Foreign Language domestic programs, and $24.9 million from Special Programs for Migrant Students
- Department of Justice: $20 million from the Community Relations Service
- Department of Housing and Urban Development: $56.1 million from Housing Counseling Assistance
- Department of Homeland Security: $15 million from Alternatives to Detention and $10 million from Citizenship and Integration grants
How the Administration Attempted to Cancel the Funds
President Trump submitted a special rescission message to Congress on Friday, September 25, 2026, seeking to cancel the $810 million in previously appropriated funds. The White House employed a technique known as a “pocket rescission”—sending Congress a request to cancel funds so close to the end of the fiscal year that the money expires before lawmakers can act.
The federal fiscal year ended September 30, 2026, less than a week after the administration submitted its request. Under the Impoundment Control Act of 1974, the president may propose rescissions, but Congress has 45 days of continuous session to review them. Funds cannot be permanently withheld unless Congress approves the cancellation.
The timing meant that even if Congress wished to reject the rescission, the fiscal year would end before lawmakers could complete their review, causing the funds to expire without being spent.
The States’ Argument: Constitutional Violation
The states argue in their lawsuit that the administration’s refusal to spend appropriated money violates the Constitution’s separation of powers, appropriations, and presentment clauses. They contend that the executive branch cannot unilaterally override Congress’s exclusive authority over federal spending.
“I continue to be appalled by President Trump’s blatant disregard for the basic Constitutional framework of our government,” Attorney General Bonta said in a statement. “Just because the President doesn’t like a program doesn’t mean he can defund it”.
The states’ legal theory rests on the principle that the Constitution vests the power of the purse in Congress. Once funds are appropriated and signed into law, the executive branch generally must spend them unless Congress itself rescinds the appropriation. The plaintiffs argue that allowing a president to effectively cancel funding through a procedural maneuver would undermine this constitutional structure.
The Administration’s Position: Executive Discretion and Program Opposition
The White House has defended its action on policy grounds. The administration stated that the targeted programs “supported illegal immigration, stoked racial tensions and promoted alarmist approaches to the environment”. The administration argues that its immigration and refugee policies have reduced the number of people entering the United States, making the remaining funds excess money that is no longer needed.
The Office of Management and Budget, led by Director Russ Vought, has rejected the interpretation that pocket rescissions are unlawful. Vought responded to the Government Accountability Office’s contrary finding by accusing the agency of becoming “hyper partisan”.
The administration has argued that the Impoundment Control Act does not expressly prohibit the use of pocket rescissions.
GAO’s Finding: A Separate Legal Assessment
Before the states filed their lawsuit, the Government Accountability Office—Congress’s nonpartisan watchdog—issued a legal opinion on September 29, 2026, concluding that the administration’s action was unlawful.
In a letter to congressional leaders, GAO General Counsel Edda Emmanuelli Perez wrote: “The Constitution vests in Congress the power of the purse, and Congress did not cede this important power through the ICA”.
Perez added: “Any withholding of appropriated funds beyond their date of expiration, regardless of size, subverts both the constitutional process for enacting federal law and Congress’s constitutional power of the purse. The President may not force the expiration of budget authority Congress has already enacted and did not rescind”.
The GAO is not a court, and its finding does not compel the administration to release the funds. However, the opinion carries weight as an official legal interpretation from a nonpartisan agency and has been cited by critics of the administration’s action.
Bipartisan Criticism of the Maneuver
The pocket rescission has drawn criticism from members of both parties, including Republicans on the Senate Appropriations Committee. Senator Susan Collins (R-Maine), chair of the committee, almost immediately called the process “unlawful” when the proposal was announced.
Her concerns were echoed by other Republicans on the Senate Appropriations Committee who are working with Collins to oppose the rescissions and potentially include guardrails against the process in future appropriations bills.
The bipartisan criticism reflects concern that the technique could be used to circumvent Congress’s role in the appropriations process regardless of which party controls the White House.
The Constitutional Issue: Power of the Purse
The case raises fundamental questions about the separation of powers and the extent of presidential authority over federal spending.
Article I of the Constitution grants Congress the power to levy taxes, borrow money, and appropriate funds. The executive branch’s role is generally to execute laws enacted by Congress, not to decide independently which appropriated funds to spend.
The Impoundment Control Act of 1974 was enacted specifically to prevent presidents from unilaterally withholding funds Congress had approved. The law was passed in response to President Richard Nixon’s use of impoundment to achieve policy goals by refusing to spend appropriated money.
Under the ICA, the president may propose rescissions to Congress, but the funds must be made available for obligation unless Congress approves the cancellation within a specified period.
The administration’s use of a pocket rescission—submitting the request so late in the fiscal year that the funds expire before Congress can act—appears designed to achieve the practical effect of a rescission without Congress’s approval.
What Happens Next?
The lawsuit has been filed in the U.S. District Court for the Northern District of California. The case will now proceed through the federal court system.
The administration will have the opportunity to respond to the states’ complaint. The court may consider requests for temporary or preliminary relief, such as an order requiring the administration to make the funds available while the litigation proceeds.
Separately, the Senate Appropriations Committee has indicated it may include provisions in future appropriations bills to constrain the use of pocket rescissions.
The dispute over the $810 million is part of a broader disagreement between the Trump administration and Congress over presidential authority to withhold appropriated funds. A similar dispute involving foreign aid reached the U.S. Supreme Court in 2025, which allowed the funding to remain withheld in an emergency order but did not issue a final ruling on the legality of pocket rescissions.
Frequently Asked Questions
What is a “pocket rescission”?
A pocket rescission is a procedural maneuver in which a president submits a request to Congress to cancel appropriated funds so close to the end of the fiscal year that the funds expire before lawmakers have time to act on the request. Critics argue it circumvents Congress’s constitutional authority over spending.
Which states are involved in the lawsuit?
California, Maine, Maryland, Michigan, Nevada, New Mexico, and Oregon. The lawsuit was filed in the U.S. District Court for the Northern District of California and is led by California Attorney General Rob Bonta.
What federal programs are affected by the $810 million in proposed cuts?
The largest portion—$567 million—targets the Department of Health and Human Services’ Refugee and Entrant Assistance account. Other affected programs include education programs for migrant students, international education and foreign language programs, housing counseling assistance, community relations service, and citizenship and integration grants.
What did the Government Accountability Office conclude?
The GAO concluded that the administration’s use of a pocket rescission to cancel the $810 million was unlawful. GAO’s general counsel wrote that the Constitution vests the power of the purse in Congress and that the president cannot force the expiration of budget authority Congress has already enacted and did not rescind.
What is the Impoundment Control Act?
The Impoundment Control Act of 1974 is a federal law that governs how presidents may seek to withhold or cancel funds appropriated by Congress. It was enacted in response to President Nixon’s use of impoundment to achieve policy goals and establishes procedures requiring congressional approval for permanent cancellations of appropriated fund