Gregory Korte

USA TODAY

WASHINGTON — The Obama administration said Thursday it would not withhold federal funding to North Carolina as a result of its state law regulating the use of public bathrooms by transgender people and allowing discrimination against gays and lesbians.

White House Press Secretary Josh Earnest said North Carolina will continue to receive federal funding while the Department of Justice pursues a separate enforcement action in federal court.

On Monday, the state and federal governments exchanged lawsuits over the law, which preempts local gay rights ordinances and requires people to use the restroom that corresponds with their gender at birth.

N.C., federal government sue each other over transgender bathroom law

The White House and the Department of Justice had also been conducting a multi-agency review of federal funding, based on a provision of the Civil Rights Act of 1964 that allows the government to withhold education and other funding on civil rights grounds..

"And what has been concluded as a result of that effort is that the administration will not take action to withhold funding while this enforcement action is playing out in the courts," Earnest said. "All that has been separate from the Department of Justice conclusion that they needed to take action to enforce the Civil Rights Act of 1964. These are two separate actions that the government is taking."