President Donald Trump arrives at Palm Beach International Airport in unincorporated Palm Beach County, Fla., for another visit to Mar-a-Lago., on March 28, 2025.
San Diego, California – San Diego is among more than 70 jurisdictions nationwide suing federal agencies for allegedly withholding billions of dollars in grant funding unless local governments agree to politically charged conditions that critics say have little to do with the programs the money was meant to support.
The lawsuit, filed this week in the U.S. District Court for the District of South Carolina, argues that the federal government is unlawfully conditioning access to over $12 billion in already-awarded grants on compliance with policy positions tied to former President Donald Trump’s agenda. Those conditions, the plaintiffs say, include opposition to diversity and inclusion efforts, participation in aggressive immigration enforcement, restrictions on transgender rights, and limiting access to abortion services.
At stake for San Diego: roughly $362 million in federal transportation and housing grants. According to the city, those funds were expected to support affordable housing projects, infrastructure repair, homelessness services, and environmental initiatives already underway.
“These funds are essential to providing housing, maintaining infrastructure, and delivering services our residents rely on every day,” said City Attorney Heather Ferbert. “San Diego cannot afford to have these vital programs stalled indefinitely.”
Much of the federal funding at issue is reimbursement-based, meaning cities and nonprofits carry out work under the terms of the grant agreement and are later paid back by the federal government. That model has left local governments in a bind: millions have already been spent, but now the funds needed to recoup those costs are being withheld.
One San Diego project already feeling the impact is “Ready, Set, Grow San Diego,” a five-year urban forestry initiative launched with a $10 million grant from the U.S. Department of Agriculture. The effort aims to plant and maintain trees in neighborhoods such as City Heights, Bay Terraces, and Otay Mesa-Nestor—areas historically lacking in green space and disproportionately affected by pollution and extreme heat.
City officials argue that the freeze threatens not only the project’s future, but the broader public health and climate resilience benefits it was designed to deliver.
“These are communities that were promised long-overdue environmental investment,” said Ferbert. “Now that investment is being politicized.”
The lawsuit claims that the conditions now being attached to the grants were not part of the original agreements and represent an unconstitutional overreach by the executive branch. The plaintiffs are asking the court for injunctive relief to unfreeze the funds and prevent similar conditions from being imposed in the future.
