Federal Agency Warns States They Could Lose Funding Over Immigration, DEI Policies

States were advised by the transportation secretary to ‘enforce ... immigration rules, end anti-American DEI policies, and protect free speech.’

Transportation Secretary Sean Duffy speaks to reporters in the Brady Press Briefing Room at the White House on Jan. 30, 2025. Elizabeth Frantz/Reuters

The federal government on April 24 warned states that they could lose federal transportation funding if they do not comply with its policies on illegal immigration and discrimination.

A letter sent by the Department of Transportation (DOT) to states and other grant recipients of the agency’s financial assistance said they must ensure that personnel practices are merit-based and must cooperate with federal immigration enforcement efforts.

“Federal grants come with a clear obligation to adhere to federal laws,” Transportation Secretary Sean Duffy said in a statement. “It shouldn’t be controversial—enforce our immigration rules, end anti-American [diversity, equity, and inclusion] policies, and protect free speech. These values reflect the priorities of the American people, and I will take action to ensure compliance.”

President Donald Trump in January signed orders targeting diversity, equity, and inclusion (DEI) policies and practices in the federal government, which he described as “illegal and immoral” forms of discrimination. A number of orders were signed by Trump to curb illegal immigration and implement bolstered security around the U.S.–Mexico border.

“Any policy, program, or activity that is premised on a prohibited classification, including discriminatory policies or practices designed to achieve so-called ‘diversity, equity, and inclusion,’ or ‘DEI,’ goals, presumptively violates Federal law,” Duffy wrote in the letter, noting that states that receive DOT assistance have to ensure that their personnel policies are “merit-based” and do not “discriminate based on prohibited categories.”

“Any discriminatory actions in your policies, programs, and activities based on prohibited categories constitute a clear violation of Federal law and the terms of your grant agreements,” the letter reads.

To receive DOT funds, states must comply with legal requirements, cooperate with the federal government in enforcing immigration law, and not block Immigration and Customs Enforcement (ICE) officials, the letter states.

Duffy, a former Wisconsin congressman, said his agency has discovered “reported instances where some recipients of Federal financial assistance have declined to cooperate with ICE investigations, have issued driver’s licenses to individuals present in the United States in violation of Federal immigration law, or have otherwise acted in a manner that impedes Federal law enforcement.”

Since Inauguration Day on Jan. 20, Trump has signed a multitude of orders, including ones to invoke emergency powers to address border security and illegal immigration. These include directives limiting birthright citizenship, declaring a national emergency at the border, declaring several drug cartels and transnational gangs as terrorist organizations, and invoking the Alien Enemies Act of 1798.

In March, a federal appeals court said the Trump administration could temporarily ban DEI programs at federal agencies and businesses with government contracts, after a lower court had blocked the ban.

Along with directing federal agencies to eliminate DEI programs, Trump also barred federal contractors, which include many of the largest U.S. companies, from having them. He also told the Department of Justice and other agencies to identify businesses, schools, and nonprofits that are unlawfully discriminating via DEI policies.

The Trump administration has maintained in court papers that the orders do not ban or discourage any speech but are targeted at unlawful discrimination.

DEI refers to organizational frameworks that its proponents say are meant to promote the fair treatment and full participation of all people, including in the workplace. However, critics, such as conservative think tank The Heritage Foundation, have said that DEI is discriminatory, “anti-American,” and akin to the Chinese Communist Party’s “struggle sessions” that were commonplace during the Cultural Revolution in the 1960s and ’70s.

Reuters contributed to this report.