The Obama administration will not halt federal funding to North Carolina – at least until the looming court battle over the state’s “bathroom bill” is finished, a White House spokesman said Thursday.

Press Secretary Josh Earnest told reporters at a regular media briefing that the Justice Department’s decision to sue over the law – which bans transgender people from using bathrooms that don’t match the gender on their birth certificates – had spurred the administration to put on hold any decision about stripping North Carolina of federal money.

“The administration will not take action to withhold funding while this enforcement process is playing out in the courts,” Earnest said.

That decision is significant since it gives North Carolina at least a reprieve from the threat of losing billions of dollars in education and other funding. No matter how the administration responded, though, the high-profile dispute was always likely to be resolved in court. On Monday, North Carolina and the Justice Department announced dueling lawsuits over the bill with the state asserting the Justice Department was reaching too far and that its legislation was not discriminatory, and the Justice Department firing back that North Carolina was violating federal civil rights law.

The court battle could be a long one, as each side must serve the other with summonses and make more detailed arguments in written filings. As of Thursday, no definitive hearing or briefing schedule had been set.

Josh Ellis, the communications director for Republican Gov. Pat McCrory, said in a statement: “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 resolve this issue.”

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