The Trump administration racked up yet another lawsuit this week thanks to the City of New York. It’s the latest fallout from the shitshow debacle involving migrants housed at the Roosevelt Hotel in midtown Manhattan under FEMA’s Shelter and Service Programs.
On February 10, Elon Musk “discovered that FEMA sent $59M LAST WEEK to luxury hotels in New York City to house illegal migrants.” The acting director of FEMA, Cameron Hamilton, thanked the DOGE Dauphin for the hot tip, acknowledged that the money had been appropriated by Congress to house migrants — although the $156/night rates paid by the City could hardly be called “luxury” — and promised to put an end to it. Then Homeland Security Secretary Kristi Noem bigfooted in to say that she had “clawed back the full payment that FEMA deep state activists unilaterally gave to NYC migrant hotels.”
Gen AI: Your Legal Research Assistant, Not Your Replacement
Here's how you can spend more time practicing law, and less time sorting, sifting, and summarizing.
Which she had, and then some! In fact, Noem reversed the entire $80,481,861.42 payment made on February 4 to reimburse New York City under FEMA’s Shelter and Services Program. Under the SSP, Congress allocated $650 million for DHS to reimburse local governments that provide shelter and other services to non-citizens released into the community.
The Trump administration has been on a bender canceling grants and refusing to disburse congressionally allocated funds. But this time they went one better and stole the money back after it had already been paid.
Aware that they are under multiple court orders barring them from doing exactly this, DHS raced to back-formulate a justification. They first filed an emergency motion to Judge John McConnell in Rhode Island, supported by a declaration from Hamilton, in which they pointed to vague media reports about the hotel and asked for the court’s permission to end the grant. They failed to mention that they’d already grabbed the cash at the time of filing. But the judge refused to play ball, noting that, if what they were doing was really legal, they didn’t need his permission.
A week later, DHS set about trying to retcon a justification for the cash grab. On February 18, they sent a “Noncompliance Letter” to the city, referring to “media reports” of gang activity at the Roosevelt Hotel and expressing “concern” that “entities receiving payment under this program may be guilty of encouraging or inducing an alien to come to, enter, or reside in the United States in violation of law.”
Calculate Your Firm’s Time-Saving Potential
Want more time for what matters most? MyCase streamlines your firm so you can focus on winning cases. See how much time you could save with our Law Firm Time Savings Calculator—try it now!
As the City points out in its complaint, it’s a truly bizarre allegation regarding a program specifically designed to house migrants processed by DHS and released with identification documents pending review. It’s also not how any of this goes.
In grabbing back funds that were used for the purposes Congress intended and that were reviewed, analyzed and determine allowable by FEMA, without providing notice or an opportunity to be heard, Defendants thumb their nose entirely at the most basic requirements for agency action under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. (“APA”). The action must be set aside as unlawful because it was plainly arbitrary and capricious and contrary to law, in violation of 5 U.S.C. § 706(2)(A). Further, it was in excess of Defendants’ statutory authority and ultra vires. It was done without complying with any of the procedures set out in the governing grant regulations and terms and conditions. Id. §§ 706(A), (B), (C). Defendants grabbed back SSP funds that were used for their intended purposes because Defendants wished to thwart the Congressional purpose of the program. In doing so, Defendants violated the Separation of Powers of the United States Constitution. And, by imposing new, retroactive grant conditions, Defendants violated the Spending Clause.
In short, the whole thing is a gobsmackingly illegal attempt to steal congressionally-allocated funds in response to Musk’s outraged tweet. Notably, the defendants include “U.S. Department or Agency of Unknown Identity” and “JOHN OR JANE DOE, in his or her official capacity as head of U.S. Department orAgency of Unknown Identity” — a clear reference to the DOJ’s steadfast refusal to say who is in charge of DOGE, even as Musk spends all day vomiting orders to government workers on his social media site.
And so New York is now asking Judge Jennifer Rearden for a TRO and then permanent injunctive relief ordering the government to return the $80 million and barring it from stealing any more cash from the City’s bank accounts.
Oral argument is set for next Wednesday, March 5. Maybe by then the government will figure out who’s in charge here.
City of New York v. Trump [Docket via Court Listener]
Liz Dye lives in Baltimore where she produces the Law and Chaos substack and podcast.