A fierce legal battle is underway over the future of nearly a billion dollars in federal counterterrorism and emergency preparedness funding, as a coalition of Democratic-led states has secured a temporary restraining order halting the Trump administration’s attempts to drastically cut their share of Homeland Security Grant Program (HSGP) funds. The order, issued on September 30, 2025, by U.S. District Judge Mary S. McElroy in Rhode Island, preserves the status quo while litigation over the fate of the grants proceeds—a move that has significant implications for public safety, federal-state relations, and the scope of executive power.
At the heart of the dispute is the Trump administration’s abrupt decision to halve payments to blue states, while simultaneously increasing allocations to several Republican-led states. The HSGP, administered by the Department of Homeland Security (DHS) and its subagency FEMA, supplies roughly $1 billion annually to state and municipal governments to prevent and respond to acts of terrorism. According to the lawsuit filed by 12 states and the District of Columbia—including New York, Illinois, California, and New Jersey—the administration’s move was not only politically motivated but also legally unsupported, violating both statutory requirements and a recent court order.
Judge McElroy, a Trump appointee herself, found the states had demonstrated “a strong likelihood of success on the merits, irreparable harm, and that the balance of equities and public interest favor the Plaintiffs.” Her two-page order barred DHS and Secretary Kristi Noem from “distributing, processing, returning to the U.S. Treasury, reprogramming, reallocating, or otherwise making unavailable by any means all fiscal year 2025 Homeland Security Grant Program funds appropriated by Congress.” The parties are scheduled to meet by Friday to discuss next steps, according to court records.
The states’ complaint, filed just one day before the restraining order, paints a stark picture. New York, for instance, was promised $460 million in HSGP funds but was only awarded $226 million after the administration’s recalculation—a 79% reduction. Illinois faced a 69% cut. Across New York State, the cuts totaled $187 million, or 86% of all federal counterterrorism and Homeland Security funding for 2024, according to Governor Kathy Hochul’s office. The reductions would hit local police K-9 units, tactical teams, bomb squads, license plate readers, and critical active shooter drills hard. Nassau and Suffolk counties would see their grants slashed from $2.3 million and $1.2 million to just $326,000 and $112,000, respectively. New York City’s NYPD and FDNY would lose $100 million and $15 million, respectively, with the NYPD warning that even a $79 million cut would be “a devastating blow to our capabilities and our efforts to protect all Americans from terrorist attacks.”
Jackie Bray, commissioner of the New York State Division of Homeland Security and Emergency Services, described the situation as dire. “They will make our region and our state less safe,” she said, noting that state officials were initially told in August to expect an $87 million cut, only to discover on September 27 that the reduction would be more than double that amount. Bray also questioned the allocation formula, pointing out that upstate Charlotte, with fewer than a million residents, was awarded $14 million, while the New York City metropolitan area, home to 8.5 million, received just $22 million. “Tell me if that makes sense,” she said, according to Newsday.
The administration’s rationale for the cuts was brief and, to the states, unsatisfying. FEMA’s September 27 award notifications cited only: “Adjusted per DHS directive.” The states allege that the real motivation was to punish “sanctuary jurisdictions” that refused to cooperate with the administration’s mass deportation agenda—a claim bolstered by the fact that red states like Texas, Missouri, North Carolina, Indiana, Iowa, North Dakota, and Tennessee saw their allocations rise. North Carolina, for example, received $21 million, up from $9 million the previous year.
New York Attorney General Letitia James, a leading voice in the coalition, called the restraining order “an important win for New Yorkers and for every state that relies on those critical funds to stop dangerous threats.” She added, “The federal government cannot play politics with the safety of our communities and the hardworking law enforcement officers who protect them every day.” Illinois Governor JB Pritzker echoed that sentiment, directing state agencies to report on the effects of what he labeled “illegal and unconstitutional federal funding cuts.”
On the other side, Secretary of Homeland Security Kristi Noem defended the administration’s actions, stating that nearly $3.5 billion had been “returned” to Americans by empowering local leaders to prepare for emergencies themselves, rather than relying on federal grants. Noem accused the Biden administration of using FEMA as “its own personal piggy bank to fund far-left radical organizations, house criminal illegal aliens and support pseudo-science.” She insisted, “Recipients of grants will no longer be permitted to use federal funds to house illegal immigrants at luxury hotels, fund climate change pet projects or empower radical organizations with unseemly ties that don’t serve the interest of the American people.” DHS Assistant Secretary Tricia McLaughlin added, “Cities and states who break the law and prevent us from arresting criminal illegal aliens should not receive federal funding.”
The legal wrangling comes on the heels of a related decision by U.S. District Judge William Smith, who ruled on September 24 that DHS’s attempt to tie disaster aid to immigration enforcement compliance was unlawful. Smith found the new conditions “arbitrary and capricious” and unconstitutional under the Spending Clause, a decision that directly informed the states’ subsequent lawsuit over the HSGP cuts. Judge McElroy noted the suspicious timing and process of the reductions, describing them as “slapdash” and likely in violation of the Administrative Procedure Act, which prohibits arbitrary or capricious agency decisions. “It’s yet another case where the administration is saying … I’m going to do what I want to do and not what the law says and make the court make me,” she said from the bench, as reported by Newsweek.
Republican lawmakers have expressed mixed reactions. Rep. Andrew Garbarino, chairman of the House Homeland Security Committee, voiced concern that “abrupt and drastic cuts to vital DHS programs like the Urban Area Security Initiative will undermine our capabilities, embolden our enemies, and ultimately increase the danger facing our communities.” Meanwhile, Rep. Nick LaLota criticized New York’s leadership, saying, “America’s Worst Governor can’t have it both ways—pushing a shutdown while expecting Washington to bankroll New York. And she certainly can’t push reckless sanctuary policies, back a defund-the-police mayoral candidate, and then stick federal taxpayers with the bill for the chaos she created.”
As the case moves forward, the court must decide whether the Trump administration’s last-minute reallocations violated federal law and the Administrative Procedure Act. The outcome will not only determine whether the contested $233 million in grants is permanently restored but also set broader limits on how future administrations can alter risk-based emergency funding. For now, Judge McElroy’s order ensures that vital counterterrorism and preparedness programs remain funded, at least until a final decision is reached—a relief for states facing what they describe as an unprecedented threat to their ability to protect their residents.
