NYC takes a loss in fight against federal clawback of migrant shelter funding

MANHATTAN (CN) — A federal judge in New York on Wednesday afternoon denied New York City’s request for an order forcing the Trump administration to return $80 million of congressionally approved funding it pulled out the city’s bank account last month.

The city sued President Donald Trump in February, naming as co-defendants the Treasury Department, Department of Homeland Security and U.S. Federal Emergency Management Agency, seeking to recoup $80.5 million in federal reimbursement migrant housing aid that the city says was abruptly rescinded and illegally pilfered from public coffers by Trump’s FEMA.

U.S. District Judge Jennifer Rearden declined to grant the city’s motion for an emergency temporary injunction that sought the immediate return of the clawed-back funds and an injunction barring the federal government from taking back other FEMA reimbursements.

Rearden, a Biden appointee, found the “city had has identified no irreparable harm warranting the extraordinary relief it seeks.”

During oral arguments on Wednesday, New York City lawyer Josh Rubin pointed to Trump’s pronouncements from Tuesday night’s congressional address — specifically his references to “appalling waste” in the federal government, including “$59 million for illegal alien hotel rooms in New York City” — as demonstrations the administration’s “animus” and “intent” to freeze FEMA’s Shelter and Services Program.

“They’re trying to negate the program,” he said. “There seems to be an underlying determination to stop the program.”

The money was authorized to offset costs for providing shelter and other services to noncitizens released into the community by Department of Homeland Security.

Rubin argued that New York City is uncertain that $80 million that was taken from the city’s bank account will be properly preserved during while case proceeds, especially in light of Trump’s stated efforts to dispose of such federal aid.

“We are not sanguine that money is safe absent relief,” he said.“We’re not comfortable ruling anything out.”

Rearden was not persuaded by the city’s worries that the Shelter and Services Program appropriation will lapse or soon be soon be killed off by Congress.

“At this point, the city’s concerns about congressional rescission remain speculative,” she wrote in her opinion Wednesday siding with the federal government’s argument that New York City lacked a strong showing of irreparable harm absent preliminary relief.

“Speculation that Congress might enact a law at some point in the future that might adversely impact plaintiff’s financial interests is not the type of ‘actual and imminent’ harm that can provide a basis for the extraordinary remedy of a temporary restraining order or preliminary injunction,” the Department of Justice wrote in an opposition brief. “In any event, plaintiff provides no authority for its novel position that the court can override Congress’s Appropriations Power or insulate plaintiff from the effect of future legislation through ex ante temporary injunctive relief.”

Rearden suggested in her ruling Wednesday that the city still has “alternative remedies” to retrieve the relevant funds, including a bank reversal of the electronic fund transfer and filing an illegal exaction claim.

In addition to Trump, the suit names Secretary of Homeland Security Kristi Noem, who boasted on social media that she had “clawed back the full payment that FEMA deep-state activists unilaterally gave to NYC migrant hotels.”

Noem claimed the FEMA money “was funding the Roosevelt Hotel serves as a Tren de Aragua base of operations,” referring to the Venezuelan gang whose presence Trump and his allies have seized upon and made the face of the supposed threat from migrants. Trump issued an executive order designating it as a foreign terrorist organization.

The city claims the Trump administration’s withholding of these already-appropriated funds is arbitrary and capricious, exceeds its authority and violates the Constitution’s due process clause, separation of powers doctrine and spending clause.

The migrant shelter at the Roosevelt Hotel in East Midtown Manhattan opened in May 2023 as a centralized intake center for newly arriving asylum seekers.

The site, colloquially dubbed “the new Ellis Island,” provided a variety of supportive services to migrants, including legal assistance, medical care, and reconnection services, as well as served as a humanitarian relief center for families with children.

According to the city, 173,000 immigrant registrations were processed at the Roosevelt between May 2023 and February 2025.

Last month, New York City Mayor Eric Adams announced the forthcoming closure of the Roosevelt shelter site, alongside the planned closures of 53 other emergency shelter sites by June.

Adams on Wednesday was in Washington, where he addressed the House Oversight Committee during a heated hearing on the immigration of policies of sanctuary cities alongside the mayors of Boston, Chicago and Denver.

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