MTA Accuses Feds of Withholding Funds for Second Avenue Subway Expansion

Potential legal battle looms over one of NYC's largest transit projects

Feb. 26, 2026 at 1:50am

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The Metropolitan Transportation Authority (MTA) is accusing the federal government of withholding nearly $60 million in reimbursements for Phase 2 of the Second Avenue subway expansion project. The MTA claims the federal government has illegally frozen these funds, which are critical for the project's progress, and is warning of potential delays and cost overruns if the money is not released soon.

Why it matters

The Second Avenue subway is one of New York City's largest and most important transit infrastructure projects, aimed at relieving congestion on the overcrowded Lexington Avenue line. Any delays or disruptions to the expansion could have significant impacts on commuters and the city's overall transportation network.

The details

According to the MTA, the agency has submitted invoices for reimbursement between October and January, but the federal government has failed to make the required payments within the 30-day window mandated by the 2023 full funding grant agreement. The MTA says it was even locked out of the federal payment system at one point. The agency is warning that the funding freeze could delay a major excavation contract for the 106th and 116th Street stations, with consequences rippling throughout the entire project.

  • The MTA submitted invoices for reimbursement between October 2025 and January 2026.
  • The federal government has failed to make the required payments within the 30-day window mandated by the 2023 full funding grant agreement.
  • The MTA was locked out of the federal payment system at one point.

The players

Metropolitan Transportation Authority (MTA)

The public benefit corporation responsible for public transportation in the New York City metropolitan area, including the Second Avenue subway expansion project.

United States Department of Transportation

The federal agency responsible for overseeing and funding transportation infrastructure projects, including the Second Avenue subway expansion.

Janno Lieber

The Chairman and CEO of the MTA, who has warned of the potential consequences of the federal funding freeze.

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What they’re saying

“Large excavation contract, the non-tunnel boring excavation, so principally on Second Avenue for the 106th and 116th Street stations. That contract is in procurement, and if we're forced to delay it and you have consequences throughout the project 'cause there are dependencies between these different contracts ... that does actually impact our cost and schedules.”

— Janno Lieber, Chairman and CEO, MTA (CBS News New York)

What’s next

The MTA says it plans to seek expedited judicial relief, meaning it would sue the federal government, if the funds are not released by March 6, 2026.

The takeaway

This funding dispute between the MTA and the federal government highlights the critical importance of reliable and timely transportation infrastructure funding, especially for large-scale projects like the Second Avenue subway expansion. Any delays or disruptions to this project could have significant consequences for New York City commuters and the overall transportation network.