The terms of the settlement, which need formal approval from a federal judge, expands the role of a civilian representative who will serve as a check against unwarranted targeted surveillance, according to documents.
An original agreement was rejected last October by US District Judge Charles Haight, according to the New York Civil Liberties Union.
The new agreement gives the representative the power to report to court any time they think the NYPD has potentially violated the Handschu agreement, or Handschu guidelines, which protect against unjust surveillance of political and religious activity.
It also requires that the mayor obtain approval from a federal court before getting rid of the representative's position altogether, whereas the previous settlement abolished the position after five years, according to the New York Civil Liberties Union.
"We appreciate Judge Haight's suggestions for enhancing the settlement," NYCLU legal director Arthur Eisenberg said in a press release. "We believe the terms we have now arrived at make it even more protective of religious and political freedoms."
Raza v. City of New York was originally filed in 2013 by the New York Civil Liberties Union and other groups on behalf of Muslim religious and community leaders who claimed they had been unfairly targeted by increased surveillance tactics in the wake of the September 11 attacks.
NYPD was never found to have engaged in illegal practices, according to Lawrence Byrne, NYPD deputy commissioner of legal matters.
"This is a codification of many things that we had put in place over the past few years as a matter of practice," Byrne said during a press conference. "It will now be codified in the so-called revised Handschu guidelines."
The civilian representative will serve on the Handschu committee, which reviews all criminal and terrorist investigations that may involve politically protected activities. This can include anything from a political protest to a religious service, according to Byrne. The Handschu guidelines are implemented by this committee.
The new settlement, if accepted by the judge, would settle both Raza and another outstanding case, Handschu v. Special Services Division, according to the NYCLU. In 2013, lawyers in the Handschu case filed papers arguing that NYPD surveillance of Muslims violated "a long-standing consent decree in that case," according to the NYCLU.
After the September 11 attacks, the Handschu guidelines
were modified to give police more leeway to investigate potential threats.
The new settlement protects not only against unwarranted surveillance of Muslims, but of all groups, according to Byrne.
"This revised agreement addresses the concerns raised by the Court and strengthens the City's efforts to identify terroristic threats without stereotyping an entire community based on religion," New York City Law Department counsel Zachary W. Carter told CNN in a statement.