Blocking Lawlessness from Undermining Enforcement Act or the BLUE Act This bill generally prohibits the use of Highway Safety Program or National Priority Safety Program funds for traffic control or enforcement by a state or locality that defunds the police (i.e., reduces its police budget and reallocates the funds to other government agencies). However, states and localities may use such funds for traffic control and enforcement if (1) reducing the police budget is part of an overall budget reduction, or (2) the police chief decides to reallocate a portion of the police budget for mental health programs. Additionally, a state or locality may request an exemption from the prohibition.