FEMA Disaster Funds Wrongly Tied to Anti-DEI Order, Cities Say

The US Homeland Security Department unlawfully implemented compliance with anti-DEI requirements as part of its terms and conditions for local governments to receive emergency relief funding, a new lawsuit from several cities claims.

The new conditions “compel grantees to abandon policies and programs that encourage diversity, equity, inclusion, and accessibility despite clear statutory and decisional law that many such programs are lawful,” Chicago, Boston, New York, Denver, and five other localities say in a Monday complaint filed in the US District Court for the Northern District of Illinois.

The suit is another effort by state and local officials to respond to the Trump administration tying the receipt of federal funds with compliance with President Donald Trump’s executive orders and policies. Twice in the past month, federal judges have blocked FEMA from linking the award of disaster relief funds to Democratic-leaning states with immigration enforcement. In August, a coalition of cities—including Los Angeles, Chicago, and Boston—also was granted an injunction blocking the defunding of local governments who refuse to cooperate regarding immigration enforcement.

The department’s DEI requirements apply to multiple Federal Emergency Management Agency grant programs supporting the cities’ ability to mitigate and prevent natural disasters, terrorist attacks, mass shootings, and other complex emergencies, the Monday complaint says.

Spokespeople for DHS and FEMA didn’t immediately respond to a request for comment.

The “Standard DHS Terms” were adopted in April to ensure 2025 grant recipients comply with an executive order prohibiting all federal agencies from implementing DEI policies. It includes a “discrimination condition” and “executive order condition” that threaten to terminate federal awards if a recipient runs any programs that advance or promote “discriminatory equity ideology” deemed unlawful by the administration, the complaint says.

FEMA’s 2025 Grant Manual also allegedly includes a “DEI disclosure requirement” that awardees must explain whether their subrecipients have DEI practices.

Grantees who sign these certifications are then potentially liable under the False Claims Act for noncompliance, the complaint says, citing the discrimination condition. The cities allege that, if DHS concludes a recipient violated the grant’s conditions, all money previously awarded to that party would “‘constitute a debt to the Federal Government that may be pursued to the maximum extent permitted by law.’”

State and local governments rely on tens of millions of federal dollars to pay and train first responders, obtain safety equipment, conduct search and rescue efforts, prepare for high-risk events, and more, the lawsuit claims.

“Without that funding, people across the country will face greater risk of suffering and death from disasters,” the complaint says. “State and local governments will suffer significant economic consequences to their budgets and workforces as well as their ability to best address their communities’ unique needs.”

The cities allege DHS and FEMA are violating separation of powers principles, taking action not authorized by Congress, and violating Congress’ authority over federal spending—all in violation of the US Constitution. The cities also allege violations of the Administrative Procedure Act.

The lawsuit seeks declaratory and injunctive relief barring the implementation of the discrimination condition, executive order condition, and the DEI disclosure requirement for emergency grant programs. The cities also request an order enjoining the federal government from retaliating against them by, for example, reducing the amount of an award in response to their lawsuit.

The Public Rights Project represents all the plaintiffs. Each city and Ramsey County, Minnesota, is also represented by its respective corporation counsel.

The case is Chicago v. Noem, N.D. Ill., No. 1:25-cv-12765, complaint filed 10/20/25.