STATES Act: Federal Guard Deployments Could Now Cost States 100% of the Bill, Retroactively

The STATES Act (States Taking Accountability for Troops Engaged in Safety Act) changes the rules for when the President can call up the National Guard into federal service, but the real headline is the massive financial accountability it imposes on state governments. Essentially, the bill clarifies that the President can federalize the Guard during major emergencies like invasion or rebellion, or when federal laws can’t be enforced otherwise (Section 2).

However, there’s a new, high-stakes catch: if the President determines that the federal call-up was necessary because of "some action or negligence by that specific state government," the state has to pay the entire federal bill. We’re talking 100% of the costs incurred by the federal government, which they will recoup by reducing or eliminating federal funds otherwise destined for that state. This is a massive financial hammer, and it shifts the cost of federal intervention back to the state level if the state is deemed responsible for the mess.

The Negligence Clause: A New Financial Minefield

Let’s break down what this means for regular people. When a state faces a crisis—say, a civil disturbance or a failure to maintain critical infrastructure—and the situation escalates to the point where the President needs to federalize the Guard, the resulting deployment is incredibly expensive. Historically, the federal government absorbed these costs. Under the STATES Act, if the President decides the state government’s failure to act (or bad action) caused the need for intervention, the state gets the tab.

Consider a state that fails to properly secure a federal facility during a protest, leading to a massive deployment. If the President determines the state’s inaction was negligent, that state could suddenly lose millions in federal highway or education funding to cover the military costs. For the average resident, this is a double whammy: a crisis caused by state failure, followed by a loss of federal funding for essential services because the state has to pay the federal government back. This provision, which requires the Secretary of Defense to calculate the costs and the President to direct the fund reduction, creates an immediate, high-stakes financial risk for every state budget (Section 2).

Waivers and the Retroactive Twist

The bill does include some escape hatches. The President can waive the 100% reimbursement requirement if the state is facing “extreme financial hardship” or if the deployment was primarily to protect federal property or enforce federal law, rather than addressing the state’s specific negligence. While this offers some flexibility, the power to define “negligence” and grant the waiver remains solely with the executive branch, which adds a layer of political subjectivity to what could be a crippling financial decision.

Perhaps the most jarring detail is the effective date. This Act is retroactive to June 1, 2025 (Section 3). This means that any National Guard deployments that have occurred since that date could potentially be subject to this new 100% cost recovery rule. State governments could face unexpected, massive bills for events that happened months ago, before this law was even enacted. For state finance departments, that level of retroactive liability is a major budget headache, forcing them to re-evaluate past expenditures and potential exposure.