States Sue to Block Federal Data Sharing of Benefits

More than 20 states and the District of Columbia filed a lawsuit Monday against the Trump administration to block a new federal policy that would allow the government to share the personal information of millions of Americans receiving Temporary Assistance for Needy Families (TANF) benefits. The coalition, led by Democratic attorneys general, filed suit in federal court in Washington, D.C., arguing the data-sharing policy violates federal privacy laws, the Administrative Procedure Act, and the Spending Clause of the U.S. Constitution.

The Policy at Issue

The lawsuit challenges a June 2026 notice issued by the Administration for Children and Families (ACF) that claims to dramatically expand federal oversight of state TANF programs. Under the new policy, ACF would be permitted to share recipients’ Social Security numbers, home addresses, immigration status, marital status, and other sensitive personal information with other federal agencies—including the Department of Homeland Security—and potentially with private organizations.

The policy is set to take effect August 11, 2026. A Federal Register notice published June 23 states that ACF needs to share records to “ensure compliance with all TANF program requirements” and “the requirement to verify TANF recipients’ citizenship and immigration status.”

TANF, created by Congress in 1996 as part of the Personal Responsibility and Work Opportunity Reconciliation Act, provides more than $16 billion annually to states, the District of Columbia, territories, and tribal governments. States have broad discretion in how they use the funds, deploying them for cash assistance, childcare subsidies, emergency housing for families fleeing domestic violence, emergency food assistance, and job training.

States Take Legal Action

According to NBC News, the coalition includes New York, the District of Columbia, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, with the governors of Kentucky and Pennsylvania also signing on.

New York Attorney General Letitia James, who co-led the lawsuit, said in a statement: “Instead of helping families struggling with the rising cost of living, this administration is trying to turn antipoverty programs against the people they’re supposed to serve. TANF funds provide critical assistance to help families put food on the table, find safe housing, and make ends meet, but this administration is weaponizing TANF to illegally use millions of people’s most private personal information.”

California Attorney General Rob Bonta echoed those concerns, saying, “People who are struggling to get by shouldn’t be afraid to turn to their government for support to feed and clothe their kids, put a roof over their family’s head or get critical medical care. They shouldn’t worry that accessing the help they need may result in the exploitation of their personal information and violation of their privacy.”

Legal Arguments

The states argue that ACF’s new policy violates the Administrative Procedure Act by ignoring restrictions on data sharing in TANF programs and enacting arbitrary new conditions on federal funding. They also contend it violates the Spending Clause of the U.S. Constitution, the Privacy Act of 1974, the Social Security Act, and the Computer Matching Act, which regulates how federal agencies can use computerized records.

A key argument centers on federal authority. Under the law enacting TANF, state agencies—not the federal government—are explicitly tasked with verifying applicant eligibility. The Colorado Attorney General’s office stated that ACF’s position represents an “extravagant claim of authority” and a “gross breach of personal privacy.”

Colorado Attorney General Phil Weiser said: “Allowing TANF recipients’ private data to be illegally shared across the federal government would erode the trust that states’ programs have built with communities and deter legally qualified low-income families from seeking assistance.”

Michigan Attorney General Dana Nessel added: “Weaponizing federal funds to push a political agenda, with no regard for the tens of thousands of Michigan children caught in the crosshairs, is not only shameful but unlawful.”

Broader Pattern of Conflict

The lawsuit is the latest in a series of legal battles between states and the federal government over TANF. Earlier this year, a federal judge prevented the Trump administration from withholding TANF and other subsidy program funding from five Democratic-controlled states after the federal government said there was “reason to believe” the states were granting benefits to people in the country illegally. A federal government lawyer later said the move was largely in response to news reports about possible fraud.

As AP News reported, the current dispute is part of a broader pattern under the Trump administration of pursuing unprecedented access to federal benefit data across agencies. Earlier legal challenges have addressed efforts to share Medicaid data with immigration authorities and demands for information about food assistance recipients.

White House spokesperson Kush Desai defended the policy, saying, “Democrats are once again admitting that their top priority is ensuring illegal immigrants can receive taxpayer-funded benefits meant for American citizens. The Trump administration will continue to protect and preserve these key federal programs for American citizens.”

The Administration for Children and Families declined to comment on the lawsuit.

What’s Next

The lawsuit seeks a court order declaring ACF’s policy illegal and preventing it from being implemented. With the policy scheduled to take effect August 11, the court’s ruling could have significant implications for how beneficiary information is handled across the federal government.

Privacy advocates and state officials have raised concerns about the potential consequences of compiling sensitive personal information about vulnerable populations. The case highlights the ongoing tension between federal oversight and state authority over antipoverty programs—a battle that is likely to continue regardless of the outcome of this particular lawsuit.