Federal Accountability

Temporary restraining order remains in effect; Attorney General Bonta urges court to continue blocking funding freeze

OAKLAND — California Attorney General Rob Bonta today announced filing a motion for a preliminary injunction in an effort to continue blocking the Trump Administration from illegally freezing over $10 billion in federal funding for child care and family assistance programs, including an estimated $5 billion to California. Alongside the attorneys general of New York, Colorado, Illinois, and Minnesota, Attorney General Bonta sued the U.S. Department of Health and Human Services (HHS) on January 8, 2026 over the funding freeze and its extraordinarily broad requests for data and documents related to the states’ use of the funding, including the personally identifiable information of millions of residents. The attorneys general also sought a temporary restraining order. Less than 24 hours later, the U.S. District Court for the Southern District of New York granted the temporary restraining order, blocking the funding freeze and preventing the broad data and document requests from being enforced. The temporary restraining order remains in effect. In the motion for a preliminary injunction, Attorney General Bonta and his fellow attorneys general urge the court to continue blocking the funding freeze and requests for data and documents because they are unlawful many times over and the states would face irreparable harm without the court’s intervention.

“Last week, the U.S. District Court for the Southern District of New York blocked the Trump Administration from freezing $10 billion in funding for child care and other family assistance programs. We are now asking the court to extend that much-needed protection,” said Attorney General Bonta. “Vulnerable individuals and families would again bear the burden of the Trump Administration’s actions — and as we have consistently in the past, we are continuing to support those individuals and families.” 

The funding at issue benefits millions of Californians — including children, families, seniors, and individuals with disabilities — through Temporary Assistance for Needy Families, the Child Care and Development Fund, and the Social Services Block Grant. According to HHS, the funding freeze was being imposed immediately and exclusively on the five Democratic-led states because of “serious concerns about widespread fraud and misuse of taxpayer dollars.” HHS has not provided any evidence at all to support those claims. 

In their motion, the attorneys general argue that:

• The states are likely to prevail on their claims that the Trump Administration’s actions violate the Administrative Procedure Act, the Separation of Powers, and the U.S. Constitution’s Appropriations Clause and Spending Clause.
• The states will suffer irreparable harm if the Trump Administration is allowed to move forward with its funding freeze and requests for data and documents.
• Granting the preliminary injunction would serve the public interest.

Celebrates preliminary injunction blocking Trump Administration’s latest illegal action. 

OAKLAND — California Attorney General Rob Bonta today celebrated a decision by the U.S. District Court for the District of Minnesota preliminarily enjoining the U.S. Department of Agriculture’s (USDA) demand that Minnesota either recertify 100,000 households for Supplemental Nutrition Assistance Program (SNAP) eligibility within 30 days or face draconian financial penalties, and even possible termination from the SNAP program. USDA’s ultimatum is one of many recent efforts by the Trump Administration to use unsubstantiated allusions to and allegations of “fraud” as an excuse to punish Democratic-led states and the residents who call them home. Attorney General Bonta last night joined a coalition of 17 attorneys general in filing an amicus brief in support of Minnesota, arguing that USDA's recertification demand violates the Administrative Procedure Act and the U.S. Constitution’s Spending Clause, and is inconsistent with the federal-state partnership reflected in the statutes governing SNAP.

“The Trump Administration continues to let his petty, political agenda undermine a vital nutrition assistance program that provides a safety net for millions of Americans,” said Attorney General Bonta. “SNAP helps ensure children across the country do not attend school on empty stomachs, that seniors get the nutrition they need, and that working families have the ability to thrive. The USDA’s demand that Minnesota re-certify 100,000 households in only 30 days disregards decades of established procedures and timelines, without warning or good reason. It’s also impossible to fulfill, as the Trump Administration well knows. The Trump Administration needs to stop putting politics ahead of people and punishing states for serving their residents.  I’m glad to see a court, once again, put a stop to its nonsense.” 

For more than 60 years, the Supplemental Nutrition Assistance Program has been the country’s primary weapon against hunger and an important safety net for low-income Americans, providing monthly food benefits to eligible households. In 2024 alone, SNAP helped more than 41 million people avoid food insecurity. More than 62% of SNAP participants are members of households with children, and more than 37% are members of households with seniors or disabled individuals. Since SNAP’s inception, the federal government and state agencies have worked together to build a robust process for ensuring that only eligible individuals receive benefits. In fact, the USDA itself has described SNAP as having “one of the most rigorous quality control systems in the federal government.”

The Trump Administration’s demand that Minnesota recertify 100,000 households during a single 30-day period is impossible to meet. Typically, states recertify SNAP recipients on a rolling basis as households come up for recertification throughout the year, which makes the task manageable. Large and small states alike are not equipped to carry out the enormous and unprecedented task of conducting in-person interviews and recertifying huge numbers of households all at once. If USDA imposed similar demands on other states, they would need to devote an enormous amount of resources to SNAP recertifications, diverting attention from new SNAP applications and putting other strains on social service programs. Mass recertification on a compressed timeline would also inevitably result in more mistakes being made, possibly causing some households to erroneously lose their SNAP benefits or see their benefit allotments reduced. Upending the existing recertification process and forcing recipients to recertify ahead of schedule without warning or good reason would also undermine public trust that state agencies have built up over time, and ultimately lead to fewer eligible households enrolling in SNAP and other social service programs.  

In the amicus brief, the coalition argues that the recertification demand is unlawful and undermines the federal-state partnership by: 

• Upending the existing recertification system by forcing recertifications of all households in four of Minnesota’s largest counties by January 15, 2026. 
• Forcing a state to take part in a “pilot project” against its will or lose statutorily mandated federal funding. 
• Using unsupported allegations of widespread “fraud” in federal benefits programs to justify dramatic program cuts and penalties against Democratic-led states. 

Attorney General Bonta has vigorously defended SNAP recipients from attacks by the Trump Administration. In July 2025, Attorney General Bonta sued USDA for demanding that states turn over personal and sensitive information of millions SNAP recipients. He subsequently secured a preliminary injunction blocking the unlawful data grab, and more recently, filed a motion to enforce the court’s order and reject the Trump Administration’s renewed demand for the data.

During the recent government shutdown, Attorney General Bonta sued USDA again, this time to force it to fund November SNAP benefits. Not one, but two federal district courts determined that the Trump Administration acted unlawfully by suspending SNAP benefits for the first time ever. And when the Administration responded by asking the U.S. Supreme Court to pause one court’s order requiring USDA to pay full benefits, Attorney General Bonta vigorously challenged that request, which was ultimately withdrawn after the government reopened. The SNAP program is now fully funded through September 2026. 

That same month, Attorney General Bonta sued USDA a third time over guidance that erroneously excluded certain lawfully residing non-citizens from SNAP eligibility. In response to that lawsuit, USDA backed down and issued correcting guidance, and a district court issued a preliminary injunction requiring that the agency adhere to its own regulations that provide for a 120-day “hold harmless” period.

In filing the amicus brief, Attorney General Bonta joins the attorneys general of Nevada, New York, Arizona, Colorado, Connecticut, Delaware, Hawai‘i, Illinois, Maryland, Michigan, New Jersey, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia.

Pending court approval, case will be fully and permanently resolved in California’s favor

OAKLAND – California Attorney General Rob Bonta today issued the following statement after the U.S. Department of Justice filed a motion to dismiss its appeal of the final judgment permanently blocking the Trump Administration’s effort to unlawfully impose immigration enforcement requirements on billions of dollars in annual U.S. Department of Transportation grants. By dropping its appeal, the Trump Administration concedes the case, fully resolving it in favor of California and the 21 other states that sued the Administration.  

“The Trump Administration attempted to use vital transportation dollars as a bargaining chip for its political agenda,” said Attorney General Bonta. “That is why my fellow attorneys general and I stepped in to stop these illegal actions – winning a permanent injunction in the lower court. I am pleased that the Trump Administration has accepted defeat and agreed to drop its appeal of this decision. California is not playing games when it comes to vital transportation dollars that support our public infrastructure, and we will continue taking the President to court each time he weaponizes federal funding to bully our communities.”  

California receives billions in grant funding from the Department of Transportation to build and maintain vital travel infrastructure like the roads, highways, airways, and bridges that connect communities and carry Californians to their workplaces and homes. This includes funding necessary to prevent fatal traffic accidents and stop drunk drivers, to provide transit for seniors and those with disabilities, and that protects and restores roads after environmental disasters like fires or flooding. Neither the purpose of these grants, nor their grant criteria, are in any way connected to immigration enforcement.  

The Constitution is clear: Congress, not the President, decides how federal money is spent. And for decades, Congress has passed laws guaranteeing funding to states like California to improve their roads and protect those who use them — funds that the federal government generally has by virtue of the taxes paid to it by states like California. Yet despite the constraints imposed by Congress and the Constitution, the Trump Administration attempted to seize Congress’s power of the purse by imposing unlawful conditions on transportation grants. In doing so, the Trump Administration violated two key principles that underlie the American system of checks and balances: agencies in the Executive Branch cannot act contrary to the authority conferred on them by Congress, and the federal government cannot use the spending power to coerce states into adopting its preferred policies.

On November 4, 2025, the district court issued final judgment in favor of California and the states that challenged this unlawful conduct, issuing an order permanently enjoining the Trump Administration from unlawfully imposing the conditions and vacating the conditions across all U.S. Department of Transportation grants. In issuing its decision, the Court found that the Trump Administration has “blatantly overstepped their statutory authority, violated the APA, and transgressed well-settled constitutional limitations on federal funding conditions. The Constitutions demands the Court set aside this lawless behavior.” 

OAKLAND — California Attorney General Rob Bonta today issued the following statement after a three-judge panel of the U.S. Court of Appeals for the First Circuit unanimously affirmed a lower court’s decision, which permanently barred the Trump Administration from decimating funds that support cutting-edge medical and public health research at universities and research institutions across the country — including at the University of California (UC) and at the California State University (CSU). The funds at issue — known as “indirect cost” reimbursements — cover expenses to facilitate biomedical research, such as lab, faculty, infrastructure, and utility costs. As part of a coalition of 22 attorneys general, Attorney General Bonta sued the U.S. Department of Health and Human Services (HHS) and the National Institutes of Health (NIH) on February 10, 2025 to block the attempted funding cuts from taking effect.

“The Trump Administration wanted to eviscerate funding for medical research that helps develop new cures and treatments for diseases like cancer, diabetes, and Alzheimer’s. Let that sink in: Life-saving research — proudly happening at UCs and CSUs across our state — was under attack,” said Attorney General Bonta. “My fellow attorneys general and I stepped in to stop these illegal actions. The district court sided with us, and now, the First Circuit has, too. We’re starting the new year by building on our previous successes and securing yet another important victory against the Trump Administration.”

On Friday, February 7, 2025, the NIH announced in Supplemental Guidance that it would abruptly slash indirect cost rates to an across-the-board 15% rate, which is significantly less than the cost required to perform critical medical research. The NIH purported to make this cut effective the very next business day, Monday, February 10, giving universities and institutions no time to plan for the enormous budget gaps they would be facing. Less than six hours after Attorney General Bonta filed suit against the Trump Administration on February 10, the U.S. District Court for the District of Massachusetts issued a temporary restraining order against NIH, barring its attempts to cut the critical research funding. The court subsequently issued a nationwide preliminary injunction, which was converted into a permanent injunction at the parties’ request. The Trump Administration appealed that ruling to the First Circuit. 

In today’s decision, the First Circuit wrote that “the public-health benefits of NIH-funded research are enormous” and concluded that:

• “[T]he district court properly exercised subject-matter jurisdiction over the plaintiffs' claims,” and
• “NIH’s attempt, through its Supplemental Guidance, to impose a 15% indirect cost reimbursement rate violates the congressionally enacted appropriations rider and HHS’s duly adopted regulations.”

OAKLAND — California Attorney General Rob Bonta secured a multistate settlement agreement with the U.S. Department of Health and Human Services (HHS) that permanently resolves claims made in a lawsuit he co-led in April challenging the Trump Administration’s unlawful delays in reviewing National Institutes of Health (NIH) grant applications. As part of the agreement, which remains subject to court approval, HHS commits to resuming the usual process for considering NIH grant applications on a prompt, agreed-upon timeline. The aforementioned lawsuit filed by Attorney General Bonta also alleged that NIH had terminated large swaths of already-issued grants for projects that are currently underway based on the projects’ perceived connection to “diversity, equity, and inclusion (DEI),” “transgender issues,” “vaccine hesitancy,” and other topics disfavored by the current Administration. Today’s agreement limits NIH from applying those directives while reviewing applications for new grants.

“I am pleased that the Trump Administration has agreed to stop delaying the review process for NIH grants. That, of course, should have never happened in the first place, and it’s why my fellow attorneys general and I took the Administration to court earlier this year,” said Attorney General Bonta. “Going forward, we remain committed to ensuring HHS fulfills its obligations under the agreement.”

NIH grant applications typically undergo several rounds of rigorous review by subject-matter experts and agency officials who assess each proposal’s scientific merit in light of funding availability and agency priorities. Earlier this year, the Administration took the unprecedented step of cancelling upcoming meetings for the agency’s review panels and delaying the scheduling of future meetings. The Administration also indefinitely withheld issuing final decisions on applications that had already received approval from the relevant review panels, leaving the plaintiff states awaiting decisions on billions of dollars in requested research funding.  

As a result of the Administration’s delays and terminations, the states alleged that their public research institutions experienced significant harm. In California, NIH funding creates over 50,000 jobs and billions of dollars in economic activity. Over the decades, this funding has brought humanity the eradication of polio, discovery of genes that cause breast and ovarian cancer, and the transformation of HIV from a fatal disease into one people can live with.

Today’s agreement complements the coalition’s victory in an earlier phase of the lawsuit, in which the plaintiff states challenged unlawful directives that targeted NIH projects based on their perceived connection to “DEI,” “transgender issues,” “vaccine hesitancy,” and other topics disfavored by the Trump Administration. The U.S. District Court for the District of Massachusetts found for the plaintiff states and set aside the unlawful directives; a hearing on the federal government’s appeal of that decision is scheduled for January 6, 2026.

Joining Attorney General Bonta in reaching this settlement are the attorneys general of Arizona, Colorado, Delaware, Hawaiʻi, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, and Wisconsin.

Following Supreme Court decision, Trump Administration withdraws motion to stay, allows lower court order ending the extended federalization of the California National Guard to go fully into effect 

OAKLAND – California Attorney General Rob Bonta today celebrated the Trump Administration’s decision to withdraw its legal effort to block an order by the U.S. District Court for the Northern District of California ending the continued federalization and deployment of California National Guard troops in and around Los Angeles. The Trump Administration’s capitulation comes on the heels of a ruling by the U.S. Supreme Court in a related case, Illinois v. Trump, rejecting its nearly limitless conception of presidential authority to federalize the National Guard and the activities those troops can engage in.  

The deployment of California National Guard troops ended earlier this month after the U.S. Court of Appeals for the Ninth Circuit refused to pause the District Court’s preliminary injunction order with respect to the deployment, but the troops remained federalized. With today’s filing, the Trump Administration agrees to allow the District Court’s order with regard to the federalization of these troops to go into effect, allowing for the return of command of these troops to Governor Newsom for the first time since they were initially federalized in early June. 

“For six months, California National Guard troops have been used as political pawns by a President desperate to be king. From the political display in MacArthur Park to their unlawful participation in indiscriminate immigration raids, the militaristic deployment of National Guard troops to Los Angeles streets has left lasting scars in Angeleno communities. There is a reason our founders decided military and civilian affairs must be kept separate; a reason that our military is, by design, apolitical,” said Attorney General Bonta. “Now, in the face of a stinging rebuke by the U.S. Supreme Court, the Trump Administration is backing away from its efforts to federalize and deploy California National Guard troops. I’m incredibly proud of my team who worked nights and weekends to defend the Constitution and bring about an end of the President’s unlawful overreach of executive power. While our rule of law remains under threat, our democratic institutions are holding. My office is not backing down — and we’re ready for whatever fights lie ahead.”

OAKLAND — California Attorney General Rob Bonta today celebrated a ruling by the U.S. Supreme Court rejecting the Trump Administration’s nearly limitless conception of presidential authority to federalize the National Guard and the activities those troops can engage in. In rejecting the Trump Administration’s request for a stay in Illinois v. Trump, the Supreme Court leaves in place a temporary court order blocking the deployment of federalized National Guard troops in Chicago, Illinois, finding the Trump Administration failed to establish that “regular forces” — the military — were unable to execute the law. The Supreme Court further finds that 10 U.S.C. 12406 does not authorize the President to use the Guard for protective functions at federal property and that the military had no lawful role to play in executing the laws either.

“We’ve argued for months against the Trump Administration’s sweeping militarized vision of America. The Supreme Court has now agreed, rejecting the Trump Administration’s unprecedented invocation of a seldom-used statute to justify the limitless deployment of National Guard troops on American soil,” said Attorney General Bonta. “Today, Americans can breathe a huge sigh of relief. While this is not necessarily the end of the road, it is a significant, deeply gratifying step in the right direction. We plan to ask the lower courts to reach the same result in our cases—and we are hopeful they will do quickly.” 

OAKLAND — California Attorney General Bonta today joined a multistate amicus brief in support of the plaintiffs in Global Nurse Force, et al. v. Trump, who are challenging the Trump Administration’s unlawful policy imposing a $100,000 fee on new H-1B visa petitions. H-1B visas allow U.S. employers to hire highly skilled foreign national workers in roles that require specialized skills, including as physicians, researchers, nurses, and other vital workers, to alleviate nationwide labor shortages. The new fee would create a costly barrier for employers, especially public sector and government employers, trying to fill these positions. In the brief, the attorneys general urge the U.S. District Court for the Northern District of California to grant a preliminary injunction blocking the policy, arguing that it is contrary to the public interest, as it would make it harder to address workforce shortages, weaken the economy, and disrupt essential services. Attorney General Bonta separately led a coalition of 20 attorneys general in challenging the Trump Administration’s unlawful H-1B policy in a lawsuit filed earlier this month.

“The Trump Administration’s $100,000 visa fee imposes unnecessary and unlawful financial burdens on public employers and will leave essential positions in critical sectors unfilled,” said Attorney General Bonta. “My office has challenged this fee in court, and today, we’re supporting a related challenge. We won’t stop fighting to protect our world-class universities, schools, and hospitals, which thrive by attracting and retaining skilled talent from around the world.”

The H-1B visa program allows employers to petition for high-skilled foreign workers to temporarily fill positions in specialty occupations that require at least a bachelor’s degree. In petitioning for an H-1B worker, the employer must submit an application, certified by the U.S. Department of Labor, that employment of the H-1B worker will not negatively affect the wages and working conditions of similarly employed U.S. workers. Congress limits the number of H-1B visas available each year for most private employers, with the current cap set at 65,000, with an exemption of 20,000 for individuals with a master’s degree or higher. Many government and non-profit research organizations are exempt from the 65,000-person cap to ensure that the organizations are fulfilling their public service missions. 

Since its inception, the H-1B visa program has been continually tailored by Congress to carry out its purpose of meeting employers’ labor needs, while protecting the interests of American workers to ensure that they are not wrongfully displaced. Congress has repeatedly enhanced enforcement, increased penalties, and legislated on fees for H-1B petitions to prevent misuse of the program. Given its careful structure, the H-1B program has proven to be massively beneficial to the United States. H-1B workers and their dependents contribute $86 billion annually to the economy - and pay $24 billion in federal and payroll taxes, on top of $11 billion in state and local taxes.

On September 19, 2025, the Trump Administration imposed an unprecedented $100,000 fee for new H-1B visa petitions, undermining the very purpose of the H-1B visa by making it harder to address severe labor shortages in critical fields such as education and healthcare and ultimately worsening the staffing crisis. As implemented by the U.S. Department of Homeland Security, through a series of written documents, the policy affects any application filed after September 21, 2025, and grants the Secretary of Homeland Security broad discretion to determine which petitions are subject to the fee or are exempt from it, raising concerns that the enforcement could be applied selectively against employers disfavored by the Trump Administration.

The $100,000 visa fee is devastating for all states, including California, and threatens the quality of education, healthcare, and other core services available to our residents. For example, the United States faces a nationwide teacher shortage, and in the 2024-2025 school year, 74% of school districts in the U.S. reported having trouble filling open positions, particularly in special education, physical sciences, ESL or bilingual education, and foreign languages. Educators are the third-largest occupation for H-1B visa holders, with nearly 30,000 educators on the visas, and nearly a thousand colleges and universities employ hundreds of H-1B personnel to support their research and education missions. Because K-12 schools, colleges, and universities are generally government or non-profit entities, they are incapable of absorbing an additional $100,000 for each H-1B hire. Ultimately, American students will be harmed by larger class sizes, less time with teachers, cuts to programs and course offerings, compromising the quality of education in California. 

Hospitals and other healthcare centers also rely on the H-1B visa program to hire physicians, surgeons, and nurses, often in low-income and working-class neighborhoods. About 11.4 million Californians — roughly one quarter of California’s population — live in areas with primary care shortages. Over the years, nearly 23,000 H-1B physicians worked in underserved communities. The United States is projecting a shortfall of 86,000 physicians by 2036. There will not be enough doctors to care for older adults, many of whom suffer increased rates of chronic disease and have other complex medical needs. In California, access to specialists and primary care providers in rural areas is already extremely limited and projected to worsen as physicians retire and these communities struggle to attract new doctors. At a time when many hospitals are already facing cuts in health insurance subsidies and reduced Medicaid payments, a $100,000 fee for H-1B healthcare workers is simply not feasible. As a result of the fee, these institutions will be forced to operate with inadequate staffing leading to decreases in the quality of patient care, increased errors, wait times, and mortality rates, and even facility closures. 

In filing the amicus brief, Attorney General Bonta joins the attorneys general of Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Hawai’i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, and Wisconsin.

OAKLAND — California Attorney General Rob Bonta today secured a permanent injunction stopping the unlawful reallocation of hundreds of millions of dollars in Federal Emergency Management Agency (FEMA) Homeland Security Grant Program funding away from states like California based on their adoption of policies the Trump Administration does not like. 

“Over and over, the courts have rebuked the Trump Administration’s unlawful attempts to punish states for adopting policies it doesn’t like,” said Attorney General Bonta. “The Trump Administration may go down in history as the most anti-public safety administration in history, yanking funding that states like California use to help us prepare for and protect against terrorism and other threats. I’m gratified the court saw through the President’s flimsy excuses and issued an order that ensures we get the funding we’re legally entitled to.” 

For decades, California has relied on Homeland Security Grant Program funding to prevent, protect against, respond to, and recover from terrorism and other catastrophes. And across each presidential administration, this funding had been allocated even-handedly and on the basis of need and risk, as required by Congress. Yet in September, California and other states received award notifications that were significantly lower than anticipated — without justification and seemingly based on their states’ decision to use their law enforcement resources to protect public safety rather than assist in federal immigration enforcement. 

Attorney General Bonta and a coalition promptly sued and secured a temporary restraining order stopping the unlawful reallocation of the homeland security funding while their litigation continued. The coalition later amended the complaint to include FEMA’s attempt to impose an illegal new condition on Emergency Management Performance Grants requiring states to certify to their current populations — instead of relying on census data—making an impossible ask for data the states do not have in order to receive critical emergency management funding. 

Today’s decision resolves the case, vacating the unlawful agency actions and granting permanent injunctive relief to the Plaintiff States, subject to appeal. The decision orders FEMA to re-issue award letters to the states that reflect the amounts the states were originally set to receive and removes the unlawful population certification requirement.

The Consumer Financial Protection Bureau was created to protect consumers from unfair, deceptive, and abusive acts or practices, and from discrimination by Big Corporations. 

OAKLAND — California Attorney General Rob Bonta co-led a coalition of 22 attorneys general in filing a lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB) Acting Director’s unlawful decision not to fund the agency’s operations, preventing it from performing legally mandated functions. The lawsuit, filed in the U.S. District Court for the District of Oregon, challenges the decision by CFPB Acting Director Russell Vought to refuse to request the necessary funding for the agency from the Federal Reserve, in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The CFPB was created to protect consumers in the financial marketplace, and it performs critical functions necessary to the functioning of the financial system. For 14 years, the CFPB has served as an invaluable partner to state attorneys general and state banking regulators, as an enforcer, regulator, and resource for consumers. Shortly after taking office, the Trump Administration launched a campaign of destruction and systemic shuttering of the CFPB, threatening catastrophic harm to hardworking families and consumer financial markets nationwide. Today's lawsuit challenges the latest step in the Trump Administration campaign to shutter the agency.

“President Trump seems intent on making life more unaffordable for Americans — whether by withholding food assistance, pushing policies that would make energy more expensive, or by placing chaotic tariffs on essential items. At the same time, the Administration continues to abandon its responsibility to protect and defend American consumers being taken advantage of by Big Corporations, dismantling the agency that stands up for consumers against big banks, debt collectors, and credit reporting companies,” said Attorney General Bonta. “The Trump Administration’s latest effort to destroy the CFPB means that hundreds of thousands of consumer complaints will fall on deaf ears. If you have ever had issues with your car loan, mortgage loans, or bank fees, if you have ever disputed a credit score error and expected to have the federal government on your side, this impacts you. By refusing to fund the CFPB, even when legal and appropriate funding mechanisms are available, the Trump Administration has sharpened its message that it does not care about affordability, that it does not care to be on the side of families and working Americans. California cares. With this lawsuit, we demand that the federal government keep up its side of the deal by lawfully funding the Bureau and its critical work.”  

BACKGROUND

After the 2008 financial crisis, Congress enacted the Dodd-Frank Act, establishing the CFPB as a federal financial regulator whose first priority is protecting consumers. The CFPB is tasked with enforcing numerous federal consumer protection statutes and enacting regulations to further these efforts. 

As the cornerstone of federal consumer financial protections for 14 years, the CFPB has been an invaluable enforcement partner to California, working to protect hardworking families and make the marketplace fairer here in California and across the country, returning over $20 billion to Americans since its creation. Among other important functions, the CFPB maintains a publicly available online complaint handling system and database through which consumers can submit complaints about financial products and services and receive responses from regulated entities.   

The Trump Administration has taken a series of actions intended to debilitate the CFPB, including issuing a suspension of work across the agency, terminating probationary employees, attempting to issue reduction in force notices to 90% of the CFPB’s workforce — a move that was swiftly blocked by the courts. The continued gutting of the CFPB leaves no oversight over large, national banks and credit unions, guts oversight of payday lenders, the mortgage markets, and credit reporting agencies — and dramatically shrinks the Bureau’s supervisorial oversight of the markets for auto finance, consumer reporting, debt collection, and international money transfer services — leaving millions of consumers unprotected. 

THE LAWSUIT 

On November 10, the CFPB gave notice that it would not request funding from the Federal Reserve to continue its operations based on legal analysis it had received from U.S. DOJ advising that it could not lawfully draw funds from the Federal Reserve because the Federal Reserve is “unprofitable.” The CFPB also stated it has sufficient funds to operate until at least December 31, 2025. At that time, the CFPB is expected to imminently cease operations, including taking its online consumer complaint handling system and database offline.   

U.S. DOJ’s interpretation of the statute has been widely criticized by consumer advocates as well as former CFPB and Federal Reserve officials as being unlawful. The attorneys general argue U.S. DOJ’s advice comes from a misreading of language in the Dodd-Frank Act authorizing the CFPB to draw its funding from “the combined earnings of the Federal Reserve System.” The CFPB and U.S DOJ’s conclusion that the term “combined earnings of the Federal Reserve System” refers to the Federal Reserve’s profits, calculated by subtracting its interest expenses from its revenues, is an incorrect and unlawful interpretation.  

In the lawsuit today, the attorneys general allege that CFPB’s refusal to seek funding to continue its operations, including operating its consumer complaint database is ultra vires, contrary to law, and arbitrary and capricious as the Dodd-Frank Act clearly provides a mechanism for funding the CFPB to perform its statutorily mandatory functions — which include: 

• Rooting out unfair, deceptive, or abusive acts or practices by writing rules, supervising companies, and enforcing the law;
• Enforcing laws that outlaw discrimination in consumer finance;
• Taking consumer complaints;
• Enhancing financial education;
• Researching the consumer experience of using financial products; and
• Monitoring financial markets for new risks to consumers.  

The attorneys general argue that CFPB’s failure to seek funding for continued operations, including operations of its consumer complaints database, will harm consumers and result in the above statutorily mandated functions not being performed. The attorneys general ask the court to declare this action unlawful and ensure CFPB is properly funded.

Attorney General Bonta is leading this lawsuit along with the attorneys general of New York, Oregon, New Jersey, and Colorado. They are joined by the attorneys general of Arizona, Connecticut, Delaware, the District of Columbia, Hawai‘i, Illinois, Maine, Maryland, Massachusetts, Michigan, Nevada, New Mexico, North Carolina, Rhode Island, Vermont, and Wisconsin. 

Attorney General Bonta has been an outspoken critic amid the attempts of the Trump Administration’s CFPB to shrink its responsibilities and has submitted amicus briefs in Mayor and City Council of Baltimore v. Consumer Financial Protection Bureau and in National Treasury Employees Union v. Vought, lawsuits challenging the Trump Administration’s efforts to dismantle the CFPB.