The New York City Law Department has filed a federal lawsuit challenging the withdrawal of more than $80 million in Federal Emergency Management Agency (FEMA) funds that were previously awarded to the city to support its response to the ongoing asylum seeker crisis. The lawsuit, filed in the U.S. District Court for the Southern District of New York, argues that these funds were legally applied for, approved, and disbursed to reimburse the city’s expenses related to providing shelter and services for migrants.
According to the lawsuit, FEMA had allocated the funds under the Shelter and Services Program (SSP), a federally funded initiative designed to assist local governments in managing costs associated with sheltering and supporting individuals released into U.S. communities by the Department of Homeland Security (DHS). The city claims that on February 11, 2025, the federal government withdrew the funds from a city bank account without prior notice or an administrative process.
Mayor Eric Adams emphasized the financial burden on the city, stating, “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. 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 The $80 million that FEMA approved, paid, and then rescinded—after the city spent more than $7 billion in the last three years—is the bare minimum our taxpayers deserve.”
New York City Corporation Counsel Muriel Goode-Trufant also commented on the case, stating, “As alleged in the complaint, the federal government, 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. We are seeking relief to recoup the money and prevent this from happening again.”
New York City Comptroller Brad Lander also weighed in, stating, “After my office discovered that Elon Musk and his DOGE goon squad stole $80 million out of the City’s coffers, we successfully pressured Mayor Adams to allow the City’s lawyers to sue the federal government to get our money back. The lawyers who are standing up to President Trump and Eric Adams’ collusion deserve praise, and we look forward to Donald Trump returning the money he stole from New York.”
On February 4, 2025, FEMA disbursed $80,481,861.42 to New York City under a program designed to support non-federal entities in managing migrant arrivals and alleviating overcrowding in U.S. Customs and Border Protection holding facilities. However, a week later, on February 11, 2025, the federal government clawed back the funds without notice. The city later received a “noncompliance” letter on February 19, 2025, which officials argue did not identify any specific violations but rather expressed general concerns about the program’s administration.
The lawsuit contends that the federal government’s actions were “arbitrary and capricious, contrary to law, and in excess of authority,” and violate the Due Process Clause, the Spending Clause, and the separation of powers doctrine under the U.S. Constitution. The city is requesting a preliminary and permanent injunction, as well as a temporary restraining order, to prevent further withdrawals and to secure the return of the $80 million.
New York City has already spent over $7 billion managing the asylum seeker crisis and has seen a reduction in the number of migrants receiving city shelter services, from a peak of 69,000 in early 2024 to fewer than 45,000 as of February 2025. Officials state that these efforts have allowed the city to close multiple emergency shelter sites in recent months.
Susan Shrestha
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