Trump Administration Restores Funding for Manhattan Subway Project After NY Sues

The reversal comes after a federal lawsuit over the withholding of $60 million in construction funds.

Apr. 16, 2026 at 11:07pm

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A serene, atmospheric painting of an empty subway platform at dusk, with warm light and deep shadows creating a contemplative, cinematic mood that evokes the importance of public infrastructure investments.The restoration of federal funding for the Second Avenue subway project brings renewed hope for improved transit access in Manhattan's underserved neighborhoods.NYC Today

The Trump administration has agreed to resume funding a key Manhattan subway project, the Second Avenue subway line, after New York officials sued over the withholding of $60 million in construction funds. The U.S. Department of Transportation said it has completed its review of the project and will begin reimbursing state transit officials again for costs.

Why it matters

The Second Avenue subway project is a major infrastructure initiative that will bring much-needed transit service to underserved neighborhoods in upper Manhattan. The funding dispute highlighted ongoing tensions between the Trump administration and Democratic leaders in New York over transportation projects and policies like congestion pricing.

The details

The Second Avenue subway project is building new stations northward along Manhattan's Upper East Side, bringing subway service to parts of the Harlem neighborhood. The federal Department of Transportation had withheld roughly $60 million from the $7.7 billion project as it launched a review, arguing the use of diversity, equity, and inclusion (DEI) principles has led to soaring costs on federal projects and is unconstitutional. New York officials argued the state was already in compliance with federal policies and the funding should have never been withheld.

  • In October 2025, the Trump administration halted billions of dollars in funding for a new rail tunnel between New York and New Jersey.
  • In February 2026, a federal judge ordered federal officials to resume payments for the Hudson River tunnel project.
  • In March 2026, a federal judge ruled that the USDOT lacked the authority to unilaterally rescind approval of New York's congestion pricing fee.

The players

Janno Lieber

CEO of the Metropolitan Transportation Authority (MTA), the state agency overseeing the Second Avenue subway project.

U.S. Department of Transportation

The federal agency that initially withheld $60 million in funding for the Second Avenue subway project, citing concerns over the use of DEI principles.

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What they’re saying

“It shouldn't have taken seven months and a lawsuit to get here.”

— Janno Lieber, CEO, Metropolitan Transportation Authority

“This has always been about securing the best deal for the American taxpayer and ensuring their dollars are spent efficiently and fairly.”

— U.S. Department of Transportation

What’s next

The Second Avenue subway project is expected to continue construction now that the federal funding has been restored, with the goal of bringing subway service to more neighborhoods in upper Manhattan.

The takeaway

This dispute highlights the ongoing political tensions between the Trump administration and Democratic leaders in New York over major infrastructure projects and policies. While the funding has been restored, the episode underscores the challenges of securing reliable federal support for critical transit initiatives, especially when they intersect with divisive political issues like diversity and inclusion.