A coalition of 12 states has filed a lawsuit against the Trump administration, seeking to block new federal grant conditions that state officials argue would force them to discriminate against people who identify as transgender and gender diverse.
The lawsuit, filed on January 13 by attorneys general from across the country, challenges a new policy from the Department of Health and Human Services that ties federal funding for health care, education, and research programs to compliance with a recent executive order signed by President Donald Trump.
At the center of the dispute is an executive order issued on January 20, 2025, which mandates that federal documents, policies, and communications recognize only two sexes—male and female. The states argue that the policy goes far beyond symbolic language changes and threatens billions of dollars in federal funding tied to essential public services.
What the States Are Challenging
According to the lawsuit, the HHS policy applies not only to new grants but also to existing funding agreements. That means programs already operating with federal support could face penalties or termination if states fail to comply with the new requirements.
The states warn that noncompliance could lead to severe consequences, including the loss of funding, repayment demands for previously awarded grants, and potential civil or criminal penalties.
State officials argue that the federal government lacks the authority to impose such sweeping conditions on funds that were already appropriated by Congress without those requirements.
“Congress funded these programs without requiring states or recipients to exclude or deny recognition to transgender, nonbinary, intersex, or gender diverse individuals,” the lawsuit states. “The federal government cannot retroactively impose vague and unprecedented conditions on funding that states have already accepted.”
Legal Authority at the Heart of the Dispute
A major focus of the lawsuit is the balance of power between Congress and the executive branch. The states argue that only Congress has the authority to attach conditions to federal spending and that the administration is attempting to rewrite federal statutes through executive action.
They also argue that the policy fails to provide clear guidance on what compliance actually requires, leaving states uncertain about how to avoid penalties.
Legal experts note that courts have historically required funding conditions to be clearly stated and directly related to the purpose of the funding. The states argue that the new HHS policy fails both tests.
States Seek Injunction and Court Declaration
The lawsuit asks the court to declare the HHS policy unlawful and to issue an injunction preventing the agency from enforcing it.
If successful, the injunction would halt enforcement of the policy nationwide, preserving existing funding arrangements while the legal challenge proceeds.
The coalition is being led by New York Attorney General Letitia James, who said the policy conflicts with laws in multiple states and undermines protections that have been in place for years.
“This policy threatens health care for families, life-saving research, and education programs that help young people thrive,” James said in a statement. “It does so in favor of denying the dignity and existence of transgender people.”
Who Is Involved in the Lawsuit
In addition to New York, the lawsuit includes attorneys general from California, Colorado, Delaware, Illinois, Michigan, Minnesota, Nevada, Oregon, Rhode Island, Vermont, and Washington.
Together, these states represent tens of millions of residents and oversee a wide range of federally funded programs, including Medicaid services, public health initiatives, higher education research, and K-12 education support.
Officials from the coalition argue that the policy could disrupt services relied upon by families, hospitals, schools, and research institutions.
Federal Response and Broader Policy Changes
The Department of Health and Human Services has not publicly commented on the lawsuit. However, the agency has recently announced broader regulatory actions aligned with the president’s executive order.
Last month, HHS announced steps aimed at ending what it described as “sex-rejecting procedures” for children. Health Secretary Robert F. Kennedy Jr. signed a declaration stating that such procedures are neither safe nor effective as treatments for minors experiencing gender-related distress.
The Centers for Medicare and Medicaid Services, a division of HHS, has also proposed new rules that would prevent hospitals participating in Medicare and Medicaid from performing those procedures and would block federal funding for them.
Supporters of the administration argue that these actions are necessary to protect children and ensure consistency across federal programs. Critics argue that the changes undermine medical discretion and threaten access to care.
Political and Social Implications
The lawsuit highlights the deep divide between states and the federal government over gender identity policy, a debate that has increasingly moved from legislatures into the courts.
Legal analysts say the outcome could have far-reaching consequences, not only for how federal funding is administered but also for how executive orders can be used to shape national policy.
If the states prevail, the decision could limit the administration’s ability to attach conditions to federal grants without congressional approval. If the administration succeeds, it could strengthen executive authority over federal funding programs.
What Happens Next
The case is expected to move quickly, given the potential impact on existing programs. Courts may be asked to issue temporary relief while the legal questions are resolved.
In the meantime, states and program administrators are left navigating uncertainty, unsure whether compliance with the new policy is required or whether enforcement will be paused.
As the legal battle unfolds, the case is likely to become a focal point in ongoing national debates about federal power, civil rights, and the role of government in defining policy related to sex and gender.
What is clear is that the lawsuit marks another major legal challenge to the Trump administration, one that could shape the future of federal funding and state-federal relations for years to come.
Emily Johnson is a critically acclaimed essayist and novelist known for her thought-provoking works centered on feminism, women’s rights, and modern relationships. Born and raised in Portland, Oregon, Emily grew up with a deep love of books, often spending her afternoons at her local library. She went on to study literature and gender studies at UCLA, where she became deeply involved in activism and began publishing essays in campus journals. Her debut essay collection, Voices Unbound, struck a chord with readers nationwide for its fearless exploration of gender dynamics, identity, and the challenges faced by women in contemporary society. Emily later transitioned into fiction, writing novels that balance compelling storytelling with social commentary. Her protagonists are often strong, multidimensional women navigating love, ambition, and the struggles of everyday life, making her a favorite among readers who crave authentic, relatable narratives. Critics praise her ability to merge personal intimacy with universal themes. Off the page, Emily is an advocate for women in publishing, leading workshops that encourage young female writers to embrace their voices. She lives in Seattle with her partner and two rescue cats, where she continues to write, teach, and inspire a new generation of storytellers.
