New York City Law Department Announces Lawsuit Against Trump Administration for Unlawful $80 Million "Money-Grab" Involving Migrant Funding

February 21, 2025

Suit Outlines How Federal Government Grabbed Back Funding for  
Migrant Crisis Without Following Agency Procedures and Federal Regulations 

Lawsuit Would Require Federal Government to Return $80 Million in Migrant  
Funding and Prevent Them from Clawing Back Additional Funding in Future 

City Government Has Already Spent $7 Billion to Manage National Migrant Crisis,  
While Federal Government Assistance Has Been Minimal 

NEW YORK – The New York City Law Department today announced its federal lawsuit challenging the Trump administration’s unlawful seizure of over $80 million previously applied for, awarded, approved, and paid by the U.S. Federal Emergency Management Agency (FEMA) to the City of New York. These funds were paid to reimburse expenses already spent on the asylum seeker international humanitarian crisis that came to New York City’s doorstep in the spring of 2022 under a FEMA program to assist localities bearing the brunt of costs of providing shelter and services to individuals released by the U.S. Department of Homeland Security (DHS) into U.S. communities. The suit, motion for a preliminary and permanent injunction, and motion for a temporary restraining order (TRO)against the federal government argues that the funds that were previously reviewed, approved, and paid out by FEMA were removed out of a city bank account on February 11, 2025, without notice or administrative process of any kind, violating federal regulations and terms of the Shelter and Service Program (SSP) grant terms, as well as abusing the federal government’s authority and obligations to implement congressionally-approved and funded programs. The city seeks to recoup the funds and ensure the federal government does not, again, improperly withdraw disbursed funds or hold future funds that the city is entitled to receive.  

“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 New York City Mayor Eric Adams. “With very little help from the federal government, our administration has skillfully managed an unprecedented crisis, which has seen over 231,000 people enter our city asking for shelter. The $80 million that FEMA approved, paid, and then rescinded — after the city spent more than $7 billion in the last three years — is the bare minimum our taxpayers deserve. And that’s why we’re going to work to ensure our city’s residents get every dollar they are owed. Thank you to Corporation Counsel Goode-Trufant and the entire team at the Law Department for working to ensure New York taxpayers can start to be made whole again.” 

“As alleged in the complaint, the Trump administration, without any notification or administrative process, and in violation of federal regulations and grant terms, unilaterally took back more than $80 million, which they attempted to justify in a belated ‘noncompliance’ letter,” said New York City Corporation Counsel Muriel Goode-Trufant. “We are seeking relief to recoup the money and prevent this from happening again.” 

On February 4, 2025, FEMA disbursed $80,481,861.42 to the City of New York to reimburse the city under a program that Congress funded to “support sheltering and related activities provided by non-federal entities, in support of relieving overcrowding in short-term holding facilities of the U.S. Customs and Border Protection.” FEMA awarded the city the grants to ensure “the safe, orderly, and humane release of noncitizen migrants from DHS short-term holding facilities.” But on February 11, 2025, the federal government, without any notice or explanation, clawed back those funds. On February 19, 2025, the federal government belatedly provided the city a “noncompliance” letter that did not identify any noncompliance by the city. Rather, it announced “concerns,” which are unfounded and do not comport with how the city has managed the unprecedented crisis brought to its doorstep.    

Today’s suit — filed in the U.S. District Court for the Southern District of New York — argues that the letter is a mere cover to mask the real purpose of defendants’ “money-grab,” which — as many have stated publicly — is to withhold the funds permanently because they oppose the purposes for which the funds were appropriated, awarded, approved, and paid.  

The Law Department is further arguing that the federal defendants’ withholding of these funds is arbitrary and capricious, contrary to law, ultra vires, and in excess of authority, without observance of lawful procedures. Further the Law Department claims that the actions by these defendants violate the Due Process Clause, the separation of powers doctrine, and the Spending Clause of the U.S. Constitution.  

The city is seeking a preliminary and permanent injunction, as well as a TRO from the court 1) ordering the defendants to return the $80 million to the city’s bank account, 2) enjoining defendants from taking any further money from any city bank account in connection with these SSP grants, and 3) enjoining them from withholding SSP funds.  

The City of New York has already spent $7 billion to successfully manage the asylum seeker crisis and has achieved great success. There are currently less than 45,000 migrants receiving city shelter services, down from a high of 69,000 in January of 2024 and out of the more than 231,000 that have arrived in New York City seeking city services since the spring of 2022. The city's efforts have directly resulted in approximately 24,000 fewer asylum seekers in the city's care on a day-to-day basis, and allowed the city to announce multiple additional site closures in December 2024, January 2025, and, most recently, in February 2025, marking the end of tent-based emergency response shelters. 

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