In a filing in the Fifth Circuit Court of Appeals, the U.S. Justice Department said the states, led by Texas, had agreed to drop the lawsuit, and it was dropping its appeal against a federal judge's August stay on the Obama directive.
In their suit in May, the states said Democratic President Barack Obama's administration overstepped its authority by ordering public schools to let transgender students use bathrooms matching their gender identity, rather than their birth gender, or risk losing federal funding.
