Federal government won't hold up funds over HB2

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White House spokesman Josh Earnest said the feds won't withhold funds to the state for now.

The Obama administration made clear Thursday it won't withhold money for North Carolina while a legal fight plays out over House Bill 2.

The Justice Department sued North Carolina over the state's bathroom law 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.

Read more: McCrory wants courts to clarify on HB2 in lawsuit

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

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.

RELATED: SUPPORTERS, OPPONENTS PREPARE NEXT STEPS IN HB2 BATTLE

"Sometimes the only way to stop a bully is to stand your ground and stare them down," said Russell Peck, campaign manager for North Carolina Gov. Pat McCrory. "While Governor McCrory continues to defend North Carolina and fight Washington, D.C.'s unprecedented overreach, Roy Cooper and his allies continue to try and trash our state's reputation and economy for their own political benefit."

North Carolina Attorney General Cooper said after the White House announcement that it was "good news," 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 said. "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."

Read all HB2 stories here

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.

"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," said Josh Ellis, the governor's communications director.

The Associated Press contributed to this report.

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