The U.S. Department of Justice issued a legal opinion on Wednesday, September 2, 2026, warning that states may lose billions of dollars in welfare funding if they do not report all immigrants without legal status to the Department of Homeland Security (DHS). The opinion, released by the Office of Legal Counsel, states that any state agency with knowledge of such individuals must share that information with federal authorities to remain eligible for specific federal grants.
This directive marks a departure from a 1998 rule that applied reporting requirements only to the specific state agencies administering welfare funds. Under the new interpretation, the requirement extends to all state government entities, including departments of motor vehicles and state universities. The Trump administration has previously attempted to penalize states that limit cooperation with federal immigration enforcement, though some efforts have faced restrictions in court.
Deputy Assistant Attorney General Joshua Craddock, who signed the opinion, stated that failure to comply could lead to "serious consequences, including loss of program funding." The opinion argues that the 1998 rule incorrectly narrowed the 1996 Personal Responsibility and Work Opportunity Reconciliation Act by defining "State" as a single agency rather than the entire state government. While the opinion is binding for federal agencies, it is not established law and is expected to face legal challenges.
For residents, the day-to-day change would involve increased data sharing between state entities and federal immigration authorities. A person without legal status might have their information transferred to the DHS when they apply for a driver's license in one of the 19 states that permit it, or when enrolling in a state university. The policy requires agencies unrelated to welfare administration to act as conduits for federal immigration enforcement as a condition for receiving social service funding.
The next steps likely involve litigation, as Democratic-led states have previously sued to prevent the DHS from accessing personal details of TANF recipients. Though courts have allowed the sharing of some data, such as Medicaid records, other efforts to mandate information sharing have been limited by judicial rulings. The DOJ opinion became binding on federal agencies upon its release on September 2, but the timeline for enforcement actions against noncompliant states remains not reported.