verb (used with object), defederalized, defederalizing.
to shift the functions or powers of (an agency, service, etc.) from the jurisdiction of the federal government to that of state or local government: to defederalize construction loans.
Also, especially British, defederalise.

de- + federalize

defederalization, noun Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2014.
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