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The Trump administration is suing the state of Maine for refusing to ban transgender athletes from participating in women's sports.
The move is an escalation in the public battle between the state's governor and Donald Trump that has included threats from the president to cut funding to Maine's education department.
"The Department of Justice will not sit by when women are discriminated against in sports," US Attorney General Pam Bondi said on Wednesday. "This is also about these young women's personal safety."
In response, Maine's Governor Janet Mills said the issue has "never been about school sports of the protection of women and girls".
She also accused the federal government of "imposing its will" on states.
The dispute centres around Title IX, an American civil rights law that prohibits sex-based discrimination in education programs.
In February, Trump signed an executive order mandating that the statute be interpreted as prohibiting the participation of transgender women and girls in female sports.
The federal government claims Maine's education department is violating the law.
During a press conference, Pam Bondi said the administration wanted to strip titles from transgender athletes.
"We are also considering whether to retroactively pull all the funding that they [the education department] have received for not complying in the past," Bondi said.
The suit comes days after the Trump administration attempted to cut off all federal funding for Maine's public schools and school lunch program.
That move appeared to be in response to a public spat between the state's governor and Trump during a meeting of US governors on 21 February.
During the meeting, Trump threatened the state's funding if Mills did not comply with an executive order banning transgender women from female sports.
Mills responded: "We'll see you in court."
She said the federal government had been "acting unlawfully" on Wednesday.
"For nearly two months, Maine has endured recriminations from the federal government that have targeted hungry school kids, hardworking fishermen, senior citizens, new parents, and countless Maine people," Mill said in a statement.
"We have been subject to politically motivated investigations that opened and closed without discussion, leaving little doubt that their outcomes were predetermined."
Mills has said two transgender athletes are competing in Maine schools.
Less than 1% of people over 13 years old in the US are transgender, according to a study by the UCLA Williams Institute.
The lawsuit is the latest in a series of actions taken by Trump to roll back policies around transgender people put in place by the Biden administration.
In February, Trump has signed an executive order that prevents transgender women from competing in female categories of sports.
Following that decision, the NCAA, the governing body for US college sports, banned transgender women from competing in women's sports.
Also on Wednesday, in the UK, the Supreme Court ruled that the legal definition of a woman is based on biological sex. The court said transgender people still have legal protection from discrimination.
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