Seven states have taken the Trump administration’s $810 million spending cancellation to federal court, turning a dispute between the White House and Congress over budget authority into a direct constitutional challenge over who ultimately controls money that lawmakers have already appropriated.
California, Maine, Maryland, Michigan, New Mexico, Nevada, and Oregon filed suit in the US District Court for the Northern District of California. The complaint seeks declaratory and injunctive relief against President Donald Trump, Office of Management and Budget Director Russell Vought, and OMB.
The case targets the administration’s September 25 request to cancel $810 million across 11 appropriations accounts, submitted just five days before the fiscal year ended. The affected spending covers the Departments of Commerce, Education, Health and Human Services, Homeland Security, Housing and Urban Development, and Justice, along with international assistance programs.
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The largest proposed reduction is approximately $567.4 million from HHS’s Refugee and Entrant Assistance account. Other cuts include roughly $69.6 million for international education programs, $56.1 million for housing counseling, $27.7 million for HHS research programs, and $15 million for a Homeland Security program.
The White House calls the maneuver a “pocket rescission.” Under the Impoundment Control Act, a president can ask Congress to rescind appropriated funds and temporarily withhold them while lawmakers consider the request. The administration argues that the statute permits the funds to remain withheld even when their availability expires before the congressional review period ends. It has characterized the targeted programs as wasteful or contrary to its policy priorities.
GAO reached the opposite legal conclusion. The congressional watchdog said the law does not authorize the president to keep the funds withheld through their expiration and calculated that Congress’s review period would extend until at least November 9.
The states now argue that allowing the money to expire violates constitutional provisions governing appropriations, separation of powers, and the legislative process, as well as the Administrative Procedure Act.
The multistate case is not the first legal challenge to this rescission package. Ten housing nonprofits sued separately on September 29 over the proposed $56.1 million cancellation of HUD housing-counseling funds.
