Federal government won't hold up NC funds over HB2 fight

The Justice Department sued North Carolina over House Bill 2 on Monday alleging the law violates the Civil Rights Act. The law says transgender people must use public bathrooms, showers and changing rooms that correspond to the sex on their birth certificate.

North Carolina Gov. Pat McCrory has argued that the state law is a "commonsense privacy policy" and that the Justice Department's position is "baseless and blatant overreach." His administration also filed a lawsuit Monday against the federal government.

On a separate track, another review involving multiple agencies is taking place to determine whether federal money should be withheld to comply with a provision of the 1964 civil rights law.

"The administration will not take action to withhold funding while this enforcement process is playing out in the courts," White House spokesman Josh Earnest told journalists during the daily press briefing.

President Barack Obama has said he believes the law is "wrong and should be overturned."

U.S. Attorney General Loretta Lynch said Monday in announcing the lawsuit that her agency has the power to withhold funding but wasn't ready to take action.

The McCrory administration quickly declared victory in the first battle with the government over House Bill 2.

"As Governor McCrory has said all along, his administration's assertive action against Washington overreach will protect federal funding for schools and other services while allowing the courts to resolve this issue," McCrory spokesman Josh Ellis said in a statement.

Meanwhile, the campaign of McCrory's opponent in the November election, Democratic Attorney General Roy Cooper, criticized the governor for prolonging the war over the controversial state law.

"It's good news that the White House will not withhold federal funding for now. North Carolinians shouldn't have to miss out on essential funding for our schools and our roads because of this discriminatory law," Cooper campaign spokesman Ford Porter said in a statement. "It's disappointing that Governor McCrory is continuing to put billions in funding at risk, but the reality is he can end all this by working to repeal HB2 immediately."