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Immigration

DOJ Says States That Fail to Report Undocumented Immigrants Could Lose Federal Funding

Trump has frequently attempted to withhold federal dollars as a way to ensure so-called sanctuary states comply with his mass-deportation agenda.

Immigration Enforcement Minnesota

The office said all agencies in across the U.S. must now report immigrants they believe illegally came to the country. (Abbie Parr/AP Photo)

By Gavin J. Quinton

September 2, 2026 05:38 p.m.

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The Justice Department sanctioned a powerful new legal tool the Trump administration can use to compel states to assist with the White House’s crackdown on immigration.

The Tuesday opinion by the Office of Legal Counsel sets a framework for the federal government to revoke future welfare grants from states that refuse to report immigrants that did not enter the nation lawfully — another example of the administration threatening to revoke federal funding to force states to provide more data and information about the immigrants who live there.

Funding for federal social services, like Social Security and Temporary Assistance for Needy Families, have largely been dispensed at the discretion of the states since Congress overhauled the national welfare system in 1996. That revamp narrowed certain state reporting requirements in an effort to prevent noncitizens from taking welfare benefits. Previous administrations have agreed that the reporting burden falls only on the specific state agencies that dispense those funds.

The Office of Legal Counsel, which provides legal guidance to the executive branch, reversed that precedent this week.

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Dusting off the decades-old, Clinton-era welfare law, Deputy Assistant Attorney General Joshua Craddock concluded in his 19-page opinion that the previous reporting requirements were too “narrow.”

Specifically, Craddock asserts that all agencies in a state that receives welfare grants — which includes every state in the union, as well as the District of Columbia and U.S. territories — must now report immigrants they believe illegally came to the country.

The office’s announcement relies on a revamped interpretation of the word “state” under the 1996 law, retooling it to encompass “all component agencies,” not just the specific agency administering federal benefits.

“The mandatory reporting obligations … thus apply to all agencies within a state that participates in the Temporary Assistance for Needy Families and Supplemental Security Income programs subject to those requirements,” Craddock wrote.

The DOJ said states not currently compliant with the reporting requirements will not lose federal funding that has already been allocated, but future dollars would be jeopardized should state agencies refuse to report undocumented immigrants.

“States remain free to reevaluate their participation in TANF or SSI going forward in view of today’s opinion,” Craddock wrote.

Trump has frequently attempted to withhold federal dollars as a way to ensure so-called sanctuary states and jurisdictions comply with his mass-deportation agenda, but federal judges have consistently ruled against him. More than a dozen states and D.C. have enacted policies aimed at restricting cooperation with federal immigration enforcement. It is unclear how the new federal precedent will clash with those state-level mandates, though some may choose to sue the administration over its new directive.

In July, a coalition of more than two dozen states sued the administration over attempts by the Department of Homeland Security to condition disaster relief and security grants on compliance with immigration and election policies. And in August, a separate group of 20 states and D.C. sued the Justice Department over a similar dispute regarding grants for crime victims.

Author

Default image for Washington Sun headshot Gavin J. Quinton is a reporter at The Washington Sun.

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