By Jack Queen and Luc Cohen

NEW YORK (Reuters) -A U.S. judge on Wednesday declined to order the Trump administration to immediately return to New York City $80.5 million of grants intended to cover part of the city’s cost of housing migrants.

U.S. District Judge Jennifer Rearden said the city failed to show irreparable harm, and could still recover the money if it eventually prevailed in the lawsuit. She ruled after an approximately two-hour hearing in Manhattan federal court.

The White House and New York City’s law department did not immediately respond to requests for comment.

City officials sued after the funds paid on February 4 by the Federal Emergency Management Agency, part of the Department of Homeland Security, went missing from a bank account, having been clawed back by the agency.

Kristi Noem, the homeland security secretary, said on February 12 the money represented "the full payment that FEMA deep state activists unilaterally gave to NYC migrant hotels."

But the city called the clawback a "money grab" that thwarted Congress’ purpose in appropriating the money.

It urged Rearden to order the $80.5 million returned and bar Republican President Donald Trump’s administration from similar further takings.

The dispute stemmed from grants FEMA gave the most populous U.S. city to defray the cost of sheltering migrants in hotels.

These grants were part of a push to reduce overcrowding at facilities near the border, as migration surged during former Democratic President Joe Biden’s administration.

Trump has vowed to crack down on border crossings and step up deportations.

In a February 28 court filing, U.S. Department of Justice lawyers accused the city of letting one hotel housing migrants, the Roosevelt Hotel in Midtown Manhattan, become a "base of operations" for crime.

They said a funding pause was warranted while the administration investigated.

The Justice Department also said that because the $80.5 million reimbursed the city for costs it already incurred, no emergency justified Rearden, a Biden appointee, ordering a return of the money.

In response, the city said on March 3 that proposed legislation aimed at ending the migrant sheltering program created a risk it might never get its funds back.

It also said concerns about crime were "red herrings" because FEMA had determined it was entitled to the payment.

New York City Mayor Eric Adams said last month the Roosevelt would no longer be used as a shelter due to a drop in migrant arrivals.