New York City is taking legal action against the Trump administration over the revocation of $80 million in FEMA funding that was initially allocated to house migrants. The lawsuit, filed in the U.S. District Court for the Southern District of New York, argues that the federal government improperly rescinded the funds without due process, labeling it a “money grab.”
The funding in question was granted under the Shelter and Services Program (SPP), a $650 million federal initiative designed to assist local governments struggling with the ongoing migrant crisis. New York City had previously been awarded two grants:
- $58.6 million under one grant
- $21.9 million under another
The city has spent over $7 billion of its own funds in the past three years to house migrants, many of whom were sent by Texas officials in response to the Biden administration’s border policies.
The controversy began when Elon Musk alleged that New York City was misusing FEMA funds to house migrants in luxury hotels. Trump echoed Musk’s claims, calling it evidence of “massive fraud.” Shortly afterward, FEMA retracted the funds from the city’s bank account on Feb. 11, without prior notice or an administrative hearing.
The lawsuit alleges that the federal government:
Acted unlawfully by withdrawing funds that were already approved and distributed.
Failed to provide clear justification, only issuing a “noncompliance” letter after the fact on Feb. 19.
Used political motivations as a pretext for withholding money that Congress had already allocated.
New York City is seeking a temporary restraining order (TRO), as well as a preliminary and permanent injunctionto recover the funds.
FEMA and the Department of Homeland Security (DHS) have not yet publicly responded to the lawsuit. However, the federal government appears to be reevaluating how these funds were used, amid claims of mismanagement and potential fraud.
This case could have major implications for how federal emergency funds are allocated and withdrawn. If New York City succeeds, it could set a legal precedent protecting local governments from sudden federal funding reversals. However, if the Trump administration prevails, it may reshape how migrant-related federal aid is handled nationwide.
