diff --git a/xds/src/main/java/io/grpc/xds/LookasideLb.java b/xds/src/main/java/io/grpc/xds/LookasideLb.java
index f0c87115ed..416d009104 100644
--- a/xds/src/main/java/io/grpc/xds/LookasideLb.java
+++ b/xds/src/main/java/io/grpc/xds/LookasideLb.java
@@ -410,7 +410,6 @@ final class LookasideLb extends LoadBalancer {
     @Override
     public void onError(Status error) {
       channelLogger.log(ChannelLogLevel.ERROR, "EDS load balancer received an error: {0}",  error);
-      lookasideLbHelper.updateBalancingState(TRANSIENT_FAILURE, new ErrorPicker(error));
       endpointUpdateCallback.onError();
     }
   }
diff --git a/xds/src/main/java/io/grpc/xds/XdsLoadBalancer2.java b/xds/src/main/java/io/grpc/xds/XdsLoadBalancer2.java
index 564b085fdb..fdbfdf5149 100644
--- a/xds/src/main/java/io/grpc/xds/XdsLoadBalancer2.java
+++ b/xds/src/main/java/io/grpc/xds/XdsLoadBalancer2.java
@@ -28,7 +28,6 @@ import io.grpc.Status;
 import io.grpc.SynchronizationContext.ScheduledHandle;
 import io.grpc.util.ForwardingLoadBalancerHelper;
 import io.grpc.xds.LookasideLb.EndpointUpdateCallback;
-import io.grpc.xds.XdsSubchannelPickers.ErrorPicker;
 import java.util.concurrent.TimeUnit;
 import javax.annotation.CheckForNull;
 import javax.annotation.Nullable;
@@ -119,10 +118,6 @@ final class XdsLoadBalancer2 extends LoadBalancer {
 
         @Override
         public void run() {
-          helper.updateBalancingState(
-              ConnectivityState.TRANSIENT_FAILURE,
-              new ErrorPicker(Status.UNAVAILABLE.withDescription(
-                  "Channel is not ready when timeout for entering fallback mode happens")));
           useFallbackPolicy();
         }
       }
diff --git a/xds/src/test/java/io/grpc/xds/LookasideLbTest.java b/xds/src/test/java/io/grpc/xds/LookasideLbTest.java
index 2c1ce73d98..42080404ae 100644
--- a/xds/src/test/java/io/grpc/xds/LookasideLbTest.java
+++ b/xds/src/test/java/io/grpc/xds/LookasideLbTest.java
@@ -666,12 +666,9 @@ public class LookasideLbTest {
   public void verifyErrorPropagation() {
     deliverResolvedAddresses(new XdsConfig(null, null, "edsServiceName1", null));
 
-    verify(helper, never()).updateBalancingState(
-        eq(TRANSIENT_FAILURE), any(SubchannelPicker.class));
     verify(edsUpdateCallback, never()).onError();
     // Forwarding 20 seconds so that the xds client will deem EDS resource not available.
     fakeClock.forwardTime(20, TimeUnit.SECONDS);
-    verify(helper).updateBalancingState(eq(TRANSIENT_FAILURE), any(SubchannelPicker.class));
     verify(edsUpdateCallback).onError();
   }
 
diff --git a/xds/src/test/java/io/grpc/xds/XdsLoadBalancer2Test.java b/xds/src/test/java/io/grpc/xds/XdsLoadBalancer2Test.java
index 694f5e5707..db8b82e2ff 100644
--- a/xds/src/test/java/io/grpc/xds/XdsLoadBalancer2Test.java
+++ b/xds/src/test/java/io/grpc/xds/XdsLoadBalancer2Test.java
@@ -19,9 +19,6 @@ package io.grpc.xds;
 import static com.google.common.truth.Truth.assertThat;
 import static io.grpc.ConnectivityState.CONNECTING;
 import static io.grpc.ConnectivityState.READY;
-import static io.grpc.ConnectivityState.TRANSIENT_FAILURE;
-import static org.mockito.ArgumentMatchers.any;
-import static org.mockito.ArgumentMatchers.eq;
 import static org.mockito.ArgumentMatchers.same;
 import static org.mockito.Mockito.doReturn;
 import static org.mockito.Mockito.mock;
@@ -147,9 +144,7 @@ public class XdsLoadBalancer2Test {
     fakeClock.forwardTime(9, TimeUnit.SECONDS);
     edsUpdateCallback.onWorking();
     verifyNotInFallbackMode();
-
     fakeClock.forwardTime(1, TimeUnit.SECONDS);
-    verify(helper).updateBalancingState(eq(TRANSIENT_FAILURE), any(SubchannelPicker.class));
     verifyInFallbackMode();
 
     SubchannelPicker subchannelPicker = mock(SubchannelPicker.class);