New York City Sues Trump Administration Over Unlawful $80 Million Migrant Funding Seizure

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City Accuses Federal Government of Violating Regulations in ‘Money-Grab’

Feb 21, 2025: New York City has filed a federal lawsuit against the Trump administration, accusing it of unlawfully seizing over $80 million in previously awarded funding meant to assist with the city’s response to the migrant crisis. The lawsuit, announced by the New York City Law Department, aims to recoup the funds and prevent similar clawbacks in the future.

The funds in question were originally allocated through the U.S. Federal Emergency Management Agency (FEMA) to reimburse the city for expenses incurred in managing the influx of asylum seekers. These expenses stem from a federally funded program designed to aid localities providing shelter and services to migrants released into U.S. communities by the Department of Homeland Security (DHS). Despite having been reviewed, approved, and disbursed, the funds were suddenly withdrawn from a city bank account on February 11, 2025, without prior notice or due administrative process, according to the lawsuit.

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Mayor Eric Adams Condemns Federal Action

New York City Mayor Eric Adams criticized the federal government’s actions, highlighting the city’s extensive efforts to address the migrant crisis.

“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, 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 The $80 million that FEMA approved, paid, and then rescinded — after the city spent more than $7 billion in the last three years — is the bare minimum our taxpayers deserve. That’s why we’re fighting to ensure our residents get every dollar they are owed.”

Legal Basis for the Lawsuit

Corporation Counsel Muriel Goode-Trufant, who is leading the city’s legal effort, explained that the federal government’s actions violated both federal regulations and the grant terms.

“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 Goode-Trufant. “We are seeking relief to recoup the money and prevent this from happening again.”

According to the lawsuit, FEMA disbursed $80,481,861.42 to New York City on February 4, 2025, to support sheltering and related services for migrants. Just one week later, on February 11, 2025, the funds were withdrawn without explanation. It was not until February 19, 2025, that the federal government issued a “noncompliance” letter—one that failed to identify any actual violations by the city, instead citing vague “concerns.”

The lawsuit, filed in the U.S. District Court for the Southern District of New York, asserts that the federal government’s actions were arbitrary and capricious, unlawful, and beyond its legal authority. It further argues that the seizure of funds violates the Due Process Clause, the Spending Clause, and the separation of powers doctrine in the U.S. Constitution.

City Seeks Immediate Court Intervention

In addition to seeking the return of the $80 million, New York City is requesting an injunction to prevent the federal government from seizing any additional funds tied to the Shelter and Services Program (SSP) grants. The city is also asking the court to prohibit further withholding of funds that it is entitled to receive under the program.

New York City has already spent over $7 billion to manage the ongoing migrant crisis, achieving significant reductions in the number of asylum seekers relying on city services. From a peak of 69,000 migrants in city shelters in January 2024, that number has since dropped to less than 45,000 as of February 2025.

City officials maintain that their efforts have resulted in more than 24,000 fewer asylum seekers in daily care, leading to multiple shelter closures, including the elimination of tent-based emergency response shelters.

As the legal battle unfolds, New York City leaders are standing firm in their demand that the federal government uphold its commitments and reimburse the city for the substantial financial burden it has shouldered alone.

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