By Dan Rosenzweig-Ziff and Kristina Cooke
WASHINGTON, Sept 2 (Reuters) - The U.S. Justice Department warned that states risk losing billions of dollars in welfare funding if they do not report all immigrants known to state agencies who are in the country illegally, according to a legal opinion released on Wednesday.
In a major shift that would increase pressure on states to comply with the administration's immigration crackdown, the DOJ's Office of Legal Counsel said all states that receive funding
for two key welfare programs must report people unlawfully present in the U.S. to the Department of Homeland Security.
Previously, only the state agencies that administered the funding for those programs had to do so. Other state agencies that might know of such immigrants, including universities and departments of motor vehicles, did not.
"Failure to comply may lead to serious consequences, including loss of program funding," Deputy Assistant Attorney General Joshua Craddock, who signed the opinion, said in a statement.
Since taking office in January 2025, President Donald Trump has carried out a sweeping crackdown on both legal and illegal immigration, including deploying immigration agents into cities around the country and increasingly partnering with state and local law enforcement and outside companies to track down immigration violators.
The administration has repeatedly sought to penalize states that have tried to limit their cooperation with federal immigration enforcement.
The change could face legal challenges from Democratic states, which have already sued to block DHS from seeing personal details of people receiving funds under one of the programs, Temporary Assistance for Needy Families.
Courts have also limited other Trump administration efforts requiring the sharing of information on immigrants with DHS, although in some cases judges allowed immigration authorities to receive certain information, such as Medicaid data.
All 50 states, the District of Columbia and many U.S. territories receive funding from the two programs, which include Supplemental Security Income. Reuters contacted eight state attorneys general, who did not immediately reply to requests for comment on how they might respond.
Federal TANF grants exceed $16.5 billion annually, and SSI federal benefits exceed $60 billion annually. Immigrants without legal status are not eligible for either program.
In the DOJ opinion, which is not law but is binding on federal agencies, Craddock said the previous rule, issued in 1998, wrongly narrowed the scope of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act by using the word "State" to mean a specific state agency, rather than every agency in a state government.
States could have knowledge of millions of people without legal immigration status inside their borders — at least 19 states and Washington, D.C., allow immigrants without lawful status to obtain driver’s licenses, while many state universities also admit such students.
(Reporting by Dan Rosenzweig-Ziff in Washington, D.C. and Kristina Cooke in San Francisco; Editing by Michael Learmonth and Edmund Klamann)
