New York transit officials sue Trump administration over subway project funding

The lawsuit accuses the federal government of breach of contract for withholding $60 million in funding for a Manhattan subway extension project.

Mar. 17, 2026 at 11:45pm

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The transit agency in charge of New York City's subway system, the Metropolitan Transportation Authority (MTA), has sued the Trump administration, accusing it of breach of contract for withholding almost $60 million in federal funding that was supposed to help build new stations in Manhattan. The lawsuit, filed in the Court of Federal Claims in Washington, states that since the government last year announced it was suspending funding for a project to extend the Second Avenue subway line, the U.S. Department of Transportation has withheld over $58.6 million, with more expected soon.

Why it matters

This legal battle is the latest in a series of disputes between the federal government and officials in New York and New Jersey over funding for transportation infrastructure projects in the region. The Second Avenue subway extension project is a critical infrastructure investment for New York City, and the loss of federal funding puts the entire $7.7 billion project at risk.

The details

The Second Avenue subway extension project is supposed to cost $7.7 billion, with the federal government paying around $3.4 billion of that. Without the federal funds, the MTA has had to divert money from elsewhere, but if the suspension continues, the work will eventually come to 'a screeching halt', according to the lawsuit. The Republican Trump administration announced in October a hold on $18 billion in funding for the subway extension as well as a new tunnel beneath the Hudson River, citing a government shutdown and concerns that the funding was being unconstitutionally spent based on diversity, equity and inclusion principles.

  • In October 2025, the Trump administration announced a hold on $18 billion in funding for the subway extension and a new Hudson River tunnel project.
  • In February 2026, a federal judge ordered the Trump administration to restore funding to the Hudson River tunnel project.

The players

Metropolitan Transportation Authority (MTA)

The transit agency in charge of New York City's subway system that filed the lawsuit against the Trump administration.

U.S. Department of Transportation

The federal agency that the MTA is accusing of breach of contract for withholding $60 million in funding for the subway extension project.

Kathy Hochul

The Democratic governor of New York who argued the funding suspension puts the entire subway extension project 'at risk'.

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What they’re saying

“Once again, New York has been forced to sue the Trump Administration to stop them from erratically shutting off billions of dollars in previously committed infrastructure funding.”

— Kathy Hochul, Governor of New York (Press release)

“We are committed to ensuring hardworking taxpayer dollars are being spent responsibly. We are considering all legal avenues.”

— U.S. Department of Transportation (Statement)

What’s next

A federal judge will consider the MTA's lawsuit and determine whether the Trump administration's suspension of funding for the subway extension project was lawful.

The takeaway

This legal battle highlights the ongoing tensions between the federal government and state/local officials over infrastructure funding, with the Second Avenue subway extension project caught in the middle. The outcome could set an important precedent for how such disputes over federal transportation funding are resolved in the future.