26 States Challenge Federal Election and Immigration Mandates Tied to Counterterrorism Funding

A coalition of 26 states has filed a sweeping constitutional challenge against the federal government, accusing the Department of Homeland Security (DHS) and the Federal Emergency Management Agency (FEMA) of unlawfully weaponizing counterterrorism funds.[1][3]

At the center of the dispute is the Homeland Security Grant Program, which distributes billions of dollars annually to state and local governments. These funds are traditionally earmarked for preparing for and responding to natural disasters, cyberattacks, and acts of terrorism.[4]

However, new guidelines issued for 2026 attach a controversial set of strings to the money. To receive their full allocation, states must agree to overhaul their election administration and assist federal authorities with civil immigration enforcement.[1][2]

States that refuse to comply with the new directives face a penalty of losing at least 20% of their counterterrorism funding. Furthermore, the updated terms allegedly grant FEMA the authority to terminate any grant at any time for "convenience" or if a state is deemed out of compliance with agency priorities.[1][4]

The election-related mandates are extensive. They require states to transition entirely to paper-ballot systems and conduct a mandatory 5% manual audit of all voting systems.[2]

Additionally, states must reconcile voters and ballots using an undisclosed DHS methodology and run every registered voter and election worker through the federal Systematic Alien Verification for Entitlements (SAVE) database to verify citizenship.[1]

The coalition of states—which includes Colorado, New Jersey, Oregon, and Arizona—argues that these conditions violate both the Administrative Procedure Act and the Spending Clause of the U.S. Constitution.[3][4]

The legal battle strikes at the heart of American federalism and the limits of congressional and executive power. Under the Constitution's Spending Clause, the federal government is permitted to offer money to states and attach conditions to those funds.[5][6]

This mechanism is how the federal government often influences state policy in areas where it lacks the direct constitutional authority to pass nationwide laws. However, the Supreme Court has established strict boundaries on this power to prevent the federal government from commandeering state legislatures.[6][7]

The foundational precedent is the 1987 case South Dakota v. Dole. In that ruling, the Supreme Court upheld a federal law that withheld 5% of federal highway funds from states that refused to raise their minimum drinking age to 21.[6]

The Dole Court established that conditions on federal funds must be unambiguous, promote the general welfare, and be related—or "germane"—to the federal interest in the particular program. Crucially, the financial inducement cannot be so severe that it crosses the line from "pressure" into "compulsion."[6][7]

The states in the current lawsuit argue that the 2026 FEMA conditions fail the Dole test on multiple fronts. First, they contend that election administration and immigration enforcement have no germane connection to the counterterrorism and disaster-relief purposes of the Homeland Security Grant Program.[2][3]

Second, they argue that the threat of losing 20% of vital public safety funding is unconstitutionally coercive. They point to the 2012 landmark Affordable Care Act case, National Federation of Independent Business v. Sebelius, where the Supreme Court ruled that threatening to withhold 100% of a state's existing Medicaid funding was a "gun to the head" and thus unconstitutional.[5][7]

The legal question now is whether a 20% penalty on counterterrorism funds is closer to the "relatively mild encouragement" of the 5% highway fund cut in Dole, or the coercive "gun to the head" of the Medicaid expansion in Sebelius.[5][6][7]

Beyond the constitutional arguments, state officials warn of severe practical consequences. Implementing the mandated election changes would require states to abandon years of work and millions of dollars invested in their current voting systems.[4]

Furthermore, state attorneys general have raised alarms about the SAVE database, arguing that it is not designed for mass voter roll maintenance and can incorrectly flag naturalized U.S. citizens as noncitizens, potentially leading to widespread disenfranchisement.[2][7]

The administration has not yet filed its formal response in court, but proponents of the conditions generally argue that election security and immigration enforcement are intrinsically linked to broader homeland security objectives, justifying the federal government's use of discretionary grants to ensure compliance.[7]

This lawsuit follows similar legal battles in 2025, where federal judges in Rhode Island blocked previous attempts by DHS to condition emergency funding on states' agreement to enforce federal immigration law.[3][4]

As the 2026 grant cycle approaches, the outcome of this litigation will not only determine the distribution of billions in public safety funds but also set a critical precedent for how aggressively the executive branch can use the federal purse to shape state-level policies.[7]