Officials noted that further updates will follow as the dispute unfolds.

New York’s Metropolitan Transportation Authority filed a 46-page lawsuit in the U.S. Court of Federal Claims alleging the federal government withheld roughly $58 million in funds for the Second Avenue Subway extension as part of a broader pause on infrastructure funding.

Governor Kathy Hochul warned that the funding suspension jeopardizes the entire project and blasted the administration for eroding previously committed infrastructure funding.

A federal judge had earlier ordered restoration of funding for the Hudson River tunnel project in February, underscoring ongoing legal tensions over funding allocations for regional transportation projects.

The Department of Transportation said the hold stems from a review of the MTA’s contracting with minority- and women-owned businesses to assess compliance with diversity, equity, and inclusion rules, a claim the MTA says it has addressed.

MTA Chair Janno Lieber urged avoiding delays or “funding gamesmanship” that could derail progress and undermine public confidence in the agency.

The White House and DOT cited ongoing reviews and responsible use of taxpayer dollars, while the Justice Department did not comment.

The MTA contends it complied with Disadvantaged Business Enterprise requirements and argues it was not given proper notice of issues, deeming the halt unwarranted and politically motivated.

MTA officials say the freeze is politically motivated to pressure Senate Minority Leader Chuck Schumer over the October 2025 government shutdown and that DOT delays are driving up costs and risking the project’s timeline.

The funding pause, announced by White House budget director Russell Vought, was tied to a review of the MTA’s contracting practices and has remained in place for months.

The suit cites prior threats of legal action and cites a court ruling favorable to the city in a related congestion pricing dispute, signaling a favorable judicial track record for the MTA.

New York lawmakers, including Senate Minority Leader Chuck Schumer, supported the suit, arguing the projects are essential lifelines for the state’s economy and workers.