(Corrects day of the week in paragraph 1)
By Nate Raymond
Dec 15 (Reuters) - A federal judge on Monday ordered U.S. President Donald Trump's administration to extend a deadline for states to implement new immigration-related eligibility restrictions on food aid benefits, allowing them to avoid potentially severe financial penalties for failing to do so in time.
U.S. District Judge Mustafa Kasubhai in Eugene, Oregon, at the behest of a group of Democratic-led states, issued an injunction requiring the U.S. Department
of Agriculture to extend the expiration date of a grace period for the states to comply with the new restrictions on Supplemental Nutrition Assistance Program benefits from November 1 to April 9.
The judge, who was appointed by Democratic President Joe Biden, said guidance USDA issued on October 31 concerning who is eligible for the SNAP benefits, or food stamps, contributed to "confusion" that impeded states' ability to implement the new restrictions.
The guidance interpreted a provision in Trump's tax cuts and domestic policy law that restricts SNAP benefits to U.S. citizens and lawful permanent residents, also known as green card holders, aligning with the president's hardline immigration stance.
GUIDANCE SPARKS LEGAL CHALLENGE
Attorneys general from 21 states and the District of Columbia in a lawsuit filed last month had said the guidance unlawfully deemed permanent residents who were initially granted asylum or admitted as refugees to the United States as ineligible for SNAP benefits.
USDA contended it never intended for its guidance to go beyond the new immigration-related eligibility restrictions set forth in the law, and a lawyer for the Justice Department on Monday said that reflected a "misunderstanding" by the states.
USDA revised its guidance last week, which Kasubhai said corrected what he said had been a policy on ineligibility that was contrary to the One Big Beautiful Bill Act, which Trump signed into law in July.
But USDA continued to stand firm on a related issue raised by the states, which administer the benefits on a day-to-day basis, of when a 120-day grace period for them to comply with the law's provisions was to expire, saying it ended November 1, the day after it issued the initial guidance.
Kasubhai at the close of a nearly four-hour hearing agreed, saying USDA's position was unlawful, contrary to past practice, and would expose the states' budgets to irreparable harm if the grace period was not extended.
"The inability to provide compliance in the time period in which they were forced to by virtue of the guidance contributed to an erosion of trust," Kasubhai said.
(Reporting by Nate Raymond in Boston, Editing by Alexia Garamfalvi and Bill Berkrot)
