New York City is pushing back against the Trump administration’s seizure of over $80 million in FEMA funds meant to reimburse and pay the city for asylum seeker-related costs. In a lawsuit filed in a Manhattan federal court on Friday, the city challenged the seizure, calling it “unlawful” and noting that the funds were “applied for, awarded, approved, and paid by the U.S. Federal Emergency Management Agency (FEMA) to the City of New York.”
The lawsuit contends that the federal government retroactively justified the seizure in a belated “noncompliance” letter on Feb. 19, which failed to identify any actual violation. FEMA had originally disbursed the funds on Feb. 4 under a congressional program to support non-federal entities providing shelter and services for migrants released from Department of Homeland Security custody.
“No lawful procedure permits Defendants — as they did here — to take back grant funds previously approved and paid without legitimate basis and without first following and complying with the steps required under the applicable rules, grant terms and conditions,” the lawsuit states. “Defendants have acted lawlessly, but have attempted, after the fact, to mask this fact with a semblance of following procedure.”
The city also disputed the federal government’s claims that it misused funds.
The federal government withdrew the funds from a city account on Feb. 11, 2025, without notice or due process, violating federal regulations and the terms of the Shelter and Services Program (SSP) grant, the lawsuit alleges. The city will seek to recover the funds and prevent future improper withdrawals, according to a statement released on Friday.
“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.”
New York Mayor Eric Adams emphasized the city’s disproportionate financial burden in managing immigration costs, noting the lawsuit seeks the fund’s return. The lawsuit marks the latest escalation in the ongoing clash between the city and federal government, which includes Adams’ federal indictment charges and his willingness to collaborate with Trump’s Border Czar Tom Homan.
“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,” Adams said on Friday. “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.”
The conflict arose after the funds, allocated on Feb. 4, were found missing from a city account. Homeland Security Secretary Kristi Noem stated that she retracted the payment, accusing “deep state activists” within FEMA of unauthorized allocation. “I have clawed back the full payment that FEMA deep state activists unilaterally gave to NYC migrant hotels,” Noem posted on X on Feb. 12.
President Trump and his adviser Elon Musk alleged that a significant portion of the funds was used for “luxury” hotels and other unlawful activities, which city officials deny. Documented reported earlier this month that Brad Lander, the city’s comptroller, said that withdrawing the funds was done with no legal power.
“This is the federal government having already allocated, authorized, awarded, invoiced, and paid $80.5 million to the city of New York, and then Elon Musk, with no legal authority, seizing it back from the city of New York,” Lander said.
