The Justice Department’s brewing legal battle with North Carolina’s governor over the state’s controversial “bathroom bill” has escalated a state-by-state fight over transgender rights into a new national one, with enormous financial implications for residents in North Carolina and other states.
White House officials emphasized Thursday that several agencies were reviewing whether they would deny funding to the state on the grounds that its new law constitutes sex discrimination under the 1964 Civil Rights Act. But the letter from the department asking Gov. Pat McCrory (R) to halt the law’s implementation by Monday or face a possible lawsuit sets up an unavoidable political battle between the Obama administration and conservatives.
North Carolina House Speaker Tim Moore (R) told reporters that lawmakers “will take no action by Monday.”
“That deadline will come and go,” he said. “We don’t ever want to lose any money, but we’re not going to get bullied by the Obama administration to take action prior to Monday’s date. That’s not how this works.”
And while McCrory did not respond to requests for comment, Lt. Gov. Dan Forest (R) said in an interview that he did not think the governor would use an executive order to change the law in response to the deadline. He “hasn’t even hinted at that,” Forest said.
The Justice Department sent a similar letter to the president of the University of North Carolina system, Margaret Spellings, who said she will respond by the Monday deadline.
For weeks, administration officials have been working behind the scenes to assess their options and consult privately with officials in several states, warning of repercussions that could follow adoption of measures that appear to target individuals on the basis of their gender identity or sexual orientation. Now the administration faces the prospect of denying billions of dollars in federal funds to state residents.
Each of the federal agencies reviewing the matter — including the Departments of Education, Housing and Urban Development, Agriculture, Health and Human Services, Labor, and Transportation — have their own civil rights officials, who must determine whether the North Carolina is not complying with the requirements for the funding it now receives, and whether those agencies will withhold that money.
Ian Thompson, a legislative representative at the American Civil Liberties Union, noted that many federal programs specify that grant recipients cannot receive funds if they engage in sex discrimination. The North Carolina law requires people to use bathrooms that correspond to the gender on their birth certificates, which the Justice Department has found is discriminatory.
One example of a possible repercussion is related to the Labor Department-administered Workforce Innovation and Opportunity Act, which provides $83 million to fund 103 centers in North Carolina. In addition to language banning sex discrimination, the department issued a proposed rule in January that specifically prohibits singling people out on the basis of their gender identity when it comes to bathroom access and other matters.
Agencies cannot pick and choose where they would withhold funds, Thompson argued. “These violations are happening all over the state, so the government response needs to be statewide in scale,” he said.
Winnie Stachelberg, executive vice president at the liberal think tank Center for American Progress, said there is no reason to expect that the agencies will challenge Justice’s finding that the North Carolina law constitutes discrimination. “The administration has sent a clear signal about the direction in which it’s heading,” she said.
Speaking to reporters Thursday, White House press secretary Josh Earnest said he was “not aware of any pending decisions” that the agencies are prepared to make regarding the money they provide to North Carolina.
“But, when it comes to enforcement actions, those are decisions that are made entirely by attorneys at the Department of Justice,” he said, emphasizing that the White House did not weigh in on the notice that Justice served North Carolina. “More generally, in terms of other states considering these kinds of laws, I’m not aware of any specific message that’s been directed by the White House with regard to discouraging other states from pursuing these kinds of rules.”
“But I think any other state that has observed the economic impact on the state of North Carolina would draw their own conclusions about the wisdom of pushing laws like this,” Earnest added, noting that entertainers, businesses and sports leagues are boycotting the state in response to the law.
Several activists and former administration officials said that just as White House officials privately encouraged lawmakers in key states to back legalization of same-sex marriage while largely refraining from commenting on pending bills, they had lobbied quietly against bills viewed as anti-LGBT.
One administration ally, who spoke on the condition of anonymity, said, “They have understood that they are not always the most effective messenger for things” and have opted to criticize these bills in public while maintaining a lower profile while lobbying on the state level.
Freedom for All Americans executive director Matt McTighe said that while many of the states pressing ahead with transgender bills are dominated by Republicans less inclined to heed the advice of Obama administration officials, the officials are “definitely continuing to weigh in.”
Groups such as McTighe’s typically advise White House officials about key decision-makers they can contact, although the administration does not disclose whom it contacts as a result.
The Education Department rarely withholds funds from states on civil rights grounds; usually, it reaches settlements on disputes. In the case of Palatine, Ill., for example, the school district recently reached a settlement with the department after initially barring a transgender student from using the bathroom of her choice.
Congressional Republicans have remained largely quiet on the Justice Department’s action: Neither North Carolina GOP Sens. Richard Burr or Thom Tillis commented on the matter Thursday.
But the state’s politicians, for their part, said they are exploring their options. “We’re going to move at the speed that we’re going to move at to look at what our options are,” Moore said.
Mark Berman and Emma Brown contributed to this report.