States suing FEMA | Bond Buyer

GAO

The Federal Emergency Management Agency is facing more turmoil as 25 states filed a lawsuit against the agency on Thursday over allegations of withholding grant money based on immigration policies. 

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“Congress allocated these funds to the states for preparing for and responding to emergencies including counterterrorism and natural disasters, and the executive branch has no legal say in the matter,” said Rhode Island Attorney General Peter Neronha.

“Federal emergency funding cannot and will not be held hostage from states who are lawfully resisting the President’s illegal attempts to force them into compliance. We’ll make sure of it.”

FEMA has responded to the suit by calling it “partisan pushback.”

An unnamed spokesperson for the Department of Homeland Security said, “We fully expected these left-wing politicians to oppose common-sense measures designed to protect election security and safeguard the integrity of American democracy.”

According to the states, FEMA’s conditions would require them to change the way they conduct elections by transmitting lists of all registered voters to the DHS and assisting with enforcing federal immigration law. Federal grants could be terminated at any time, for any reason.

Rhode Island has successfully led two similar suits in 2025. In addition to the reliably blue participants in the lawsuit, Kentucky, North Carolina, and Maine are also onboard. 

States that don’t comply risk losing at least 20% of their Homeland Security Grant Program funding. 

Reliable FEMA funding is critical for state and localities trying to rebuild after a natural disaster as delays could lead to credit downgrades and increased borrowing costs.  

The new lawsuit will likely land in Cameron Hamilton’s lap. Hamilton is a former Navy Seal and the current nominee to serve as the agency’s administrator, a job he held briefly in 2025 before being fired by President Trump.

On Wednesday, Hamilton’s nomination was advanced by the Homeland Security and Governmental Affairs Committee by an 8-4 vote. He needs a full Senate confirmation to officially take over which may or may not happen by the August 8^th recess.

During Hamilton’s nomination hearing in June, he testified as a believer in FEMA reform as imagined by the President and raised concerns about how the agency works with the states.

“FEMA is all too often used by states, and public officials as a financial backstop for routine issues that should be handled locally,” said Hamilton. 

During the same hearing Hamilton directly faced charges of political bias in deciding which states received disaster assistance. 

FEMA reform is a front-burner issue for the states, county governments and both parties in the House, but hasn’t got much traction in the Senate. 

The House Transportation and Infrastructure Committee has already weighed in with their recommendations which includes moving away from the current reimbursement system toward a grant system that provides relief funds upfront.

In 2025 the Trump administration appointed the FEMA Review Council to prepare its own list for reforming the agency. 

The suggestions received poor marks from the public power sector and the National Association of Counties. 

Earlier this month S&P Global Ratings addressed the council’s suggestions with concerns they could lead to “long-term structural changes to the federal-state funding partnership related to disaster preparedness.”