A federal appeals court said the Trump administration can withhold funds from New York City and seven states that have declared themselves sanctuaries from federal immigration policies, setting the stage for possible U.S. Supreme Court action.

Wednesday’s decision by the 2nd U.S. Circuit Court of Appeals in New York said President Trump acted within his authority when he signed an executive order in January 2017 to withhold federal funds from states that resisted helping federal efforts to enforce immigration laws.

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