The California law, which gives the state the right of first refusal on sales of federal land, discourages transactions with private developers for resource extraction, the US says.
Eighteen state attorneys general and six cities sued the Census Bureau and the Commerce Department Tuesday over the Trump administration's plan to add a citizenship question to the 2020 count of the nation's population.
The lawsuit seeks an injunction against California Senate Bill 50, which requires the federal government to give the state's land commission the option to buy federal land before it can be transferred to another owner because the Justice Department claims it is unconstitutional.
The Justice Department argues SB 50 violates the Supremacy Clause of the U.S. Constitution, which states federal law "shall be the supreme law of the land; and the judges in every state shall be bound thereby".
The law was part of a series of bills California lawmakers passed a year ago in a bid to preserve federal environmental regulations under state law and protect federal lands from being sold to oil companies.
Lawmakers passed the law in September over concern the Trump Administration would allow more logging, oil drilling, or development on public lands. In California, as in many western states, the status of federal public lands is no minor matter.
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Lt. Gov. Gavin Newsom, who also serves on the state's lands commission and is running for governor, said the Justice Department's legal action against the state amounted to an "attack" on California and challenges "our very way of life".
In a separate statement, Becerra said the state's public lands shouldn't be on the auction block to the highest bidder.
California Attorney General Xavier Becerra said he was "prepared, as always, to do what it takes to protect our people, our resources, and our values".
This is the latest in a series of battles between President Trump and California.
Environmentalists in the state are incensed over a previous presidential order directing the Bureau of Land Management to consider changes to protections for the state's deserts. The state has sparred with the federal government in and out of court over a wide range of immigration and environmental policies, most recently over vehicle emissions standards and offshore drilling.
The move escalates the war between California and the Trump administration. "Jerry "Moonbeam" Brown", highlighted that the crimes he pardoned included "kidnapping and robbery", "badly beating wife", and "dealing drugs".