NEW YORK — The New York City Law Department has filed a federal lawsuit against the Trump administration, alleging the unlawful seizure of more than $80 million in federal funds previously awarded to the city by the U.S. Federal Emergency Management Agency (FEMA). These funds were intended to reimburse costs already incurred in managing the unprecedented influx of asylum seekers since spring 2022.
The lawsuit, filed in the U.S. District Court for the Southern District of New York, challenges the federal government’s decision to remove the funds—already approved, awarded, and paid—directly from a city bank account on February 11, 2025, without prior notice or due process. City officials claim the action violates federal regulations, grant agreements, and constitutional protections, and they are seeking a preliminary and permanent injunction to prevent future seizures.
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Background: FEMA Funding for Humanitarian Crisis Response
The dispute centers on FEMA’s Shelter and Services Program (SSP), a congressional initiative designed to support cities and local governments providing shelter and assistance to migrants released from U.S. Department of Homeland Security (DHS) custody. These funds help cover costs such as housing, transportation, and essential services to alleviate the burden on local resources.
On February 4, 2025, FEMA disbursed $80,481,861.42 to New York City as reimbursement for services provided during the ongoing asylum seeker crisis. The city had already spent billions—over $7 billion in the last three years—addressing the humanitarian challenge, which saw more than 231,000 migrants enter New York seeking shelter since 2022.
However, just one week after disbursement, the federal government withdrew the full amount from the city’s account. It was only on February 19 that federal officials issued a so-called “noncompliance” letter, which city lawyers say failed to specify any actual violations and merely cited vague “concerns.”
City’s Legal Argument: An Unlawful ‘Money-Grab’
New York City argues that the withdrawal was arbitrary, capricious, and unlawful. According to the lawsuit, FEMA’s belated letter served only as a post-hoc justification for a politically motivated decision to withhold funds intended for humanitarian relief.
City attorneys contend that the action breaches multiple legal and constitutional protections, including:
- Federal Grant Regulations – FEMA allegedly violated the SSP grant terms by rescinding funds without prior administrative process or valid compliance findings.
- Due Process Clause – The city claims it was denied the procedural fairness required before the government can take such actions.
- Separation of Powers – By effectively reversing Congress’s funding decision, the administration allegedly undermined legislative authority.
- Spending Clause – The city asserts that the executive branch improperly interfered with how appropriated federal funds are distributed.
The city’s legal team is seeking a temporary restraining order (TRO) and permanent injunction compelling the federal government to:
- Return the $80 million to the city’s bank account.
- Stop any further withdrawals from city accounts related to SSP grants.
- Prevent withholding of future grant funds.
Mayor Adams: “Our Taxpayers Deserve Every Dollar”
Mayor Eric Adams condemned the federal government’s actions, emphasizing the city’s strained resources in managing the crisis with minimal federal assistance.
“Without a doubt, our immigration system is broken, but the cost of managing an international humanitarian crisis should not overwhelmingly fall onto one city alone,” said Mayor Adams. “With very little help from the federal government, our administration has skillfully managed an unprecedented crisis… The $80 million that FEMA approved, paid, and then rescinded is the bare minimum our taxpayers deserve. That’s why we’re fighting to get every dollar we are owed.”
Corporation Counsel Muriel Goode-Trufant reinforced this stance, saying the Trump administration acted without notice or lawful authority, attempting to retroactively justify its decision with an unfounded “noncompliance” claim.
Crisis Management Efforts and Achievements
Since the first wave of asylum seekers arrived in spring 2022, New York City has implemented one of the largest humanitarian responses in the nation. The city’s initiatives have included:
- Establishing emergency shelters and humanitarian centers across the five boroughs.
- Providing housing, food, medical care, and legal support for asylum seekers.
- Coordinating with nonprofits, religious organizations, and community groups to deliver aid.
At its peak in January 2024, the city was sheltering 69,000 migrants daily. By February 2025, that number had dropped to fewer than 45,000, thanks to relocation programs, faster processing, and expanded housing solutions.
These improvements have allowed the closure of multiple emergency facilities, including the final tent-based shelters, marking a significant milestone in the city’s recovery efforts.
Political and Policy Implications
The case is more than a financial dispute—it highlights ongoing tensions between local and federal authorities over immigration policy and funding responsibilities.
Federal officials have long debated the scope of FEMA’s role in migrant assistance, with some critics arguing that such funds should focus on natural disaster recovery. Supporters, however, point to the humanitarian nature of the crisis, which strains local infrastructure similarly to disaster situations.
If New York City prevails, the ruling could set a precedent limiting federal agencies’ ability to retroactively revoke disbursed funds, especially when they have already been spent on approved purposes.
Next Steps in the Legal Battle
The court will first consider the city’s request for a temporary restraining order, which could force the immediate return of the $80 million while the case proceeds. If granted, the TRO would also block any further interference with the city’s FEMA funding.
Legal experts note that the city’s case hinges on demonstrating both the unlawfulness of the withdrawal and the urgency of preventing further financial harm. The decision could come within weeks, potentially shaping federal-local relations for years to come.
The Broader Immigration Funding Challenge
New York City’s lawsuit also underscores a larger national issue: how the costs of immigration enforcement and humanitarian care are distributed. While border states have long demanded more federal support, northern cities like New York are now facing similar financial strains as migrant relocation policies disperse asylum seekers across the country.
Mayor Adams and other city leaders continue to call for long-term federal funding solutions, including:
- Increased congressional appropriations for local migrant assistance.
- Streamlined federal grant processes to ensure timely disbursements.
- Collaborative planning between DHS, FEMA, and city governments to prepare for future surges.
Frequently Asked Questions:
What is the lawsuit about?
The New York City Law Department is suing the Trump administration for allegedly seizing over $80 million in FEMA funds that had already been approved, awarded, and paid to the city. The money was intended to reimburse costs related to managing the asylum seeker crisis.
Where did the funds come from?
The funds were provided under FEMA’s Shelter and Services Program (SSP), a federal initiative that helps local governments cover expenses for shelter, transportation, and services for migrants released from U.S. Department of Homeland Security custody.
When were the funds seized?
FEMA disbursed $80,481,861.42 to the city on February 4, 2025. On February 11, 2025, the federal government withdrew the entire amount from the city’s bank account without prior notice.
What reasons did the federal government give?
On February 19, 2025, the government issued a “noncompliance” letter citing unspecified “concerns.” The city says the letter provided no concrete examples of wrongdoing and was issued after the funds had already been taken.
How much has New York City spent on the migrant crisis so far?
The city reports spending over $7 billion since 2022 to provide shelter, care, and services to more than 231,000 migrants.
How has the city managed the crisis?
At its peak in January 2024, NYC sheltered 69,000 migrants daily. By February 2025, that number dropped below 45,000 thanks to relocation programs, additional housing solutions, and emergency shelter closures.
What happens next in the case?
The court will decide whether to grant the TRO, which could temporarily return the funds and prevent future seizures while the case moves forward. A decision may come within weeks.
Conclusion
New York City’s lawsuit against the Trump administration over the $80 million FEMA fund seizure is more than a financial dispute—it is a direct challenge to the federal government’s authority to retroactively revoke approved, awarded, and disbursed funds. The case raises critical constitutional and administrative law questions while underscoring the city’s ongoing struggle to balance humanitarian obligations with limited resources.
