Trump Administration Restores Funding for Manhattan Subway Project After NY Lawsuit

The federal government will resume reimbursing state transit officials for construction costs on the Second Avenue subway line.

Apr. 17, 2026 at 4:18am

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A photorealistic painting of a solitary subway entrance on a Manhattan street corner, with warm sunlight casting long shadows across the scene, conveying a sense of urban nostalgia and the importance of public transit investment.The restoration of federal funding for the Second Avenue subway project signals a hard-fought victory for New York City's transit infrastructure.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 federal government's decision to withhold roughly $60 million in funding. The U.S. Department of Transportation said it has completed its review of the project and will begin reimbursing state transit officials again for construction costs.

Why it matters

The Second Avenue subway project is a major infrastructure initiative that will bring much-needed subway service to underserved neighborhoods in upper Manhattan. The federal funding dispute had threatened to delay or derail the project, which is already years behind schedule and over budget. The resolution of this dispute is a win for New York City commuters who have long awaited the expansion of the subway system.

The details

The federal Department of Transportation had withheld the funding as it reviewed the project, arguing that the use of diversity, equity, and inclusion (DEI) principles had led to soaring costs. However, the state agency argued that it was already in compliance with federal policies and that the funding should have never been withheld. The overall $7.7 billion project is supposed to receive around $3.4 billion in federal funding.

  • In October, the Trump administration also halted billions of dollars in funding for a new rail tunnel between New York and New Jersey.
  • Last year, the USDOT rescinded approval for New York's first-in-the-nation congestion fee and threatened to pull funding from the state if it did not abandon the toll.

The players

Janno Lieber

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

U.S. Department of Transportation

The federal agency that had withheld funding for the Second Avenue subway project, citing concerns over the use of diversity, equity, and inclusion principles.

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What they’re saying

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

— Janno Lieber, MTA CEO

“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 federal government's agreement to resume funding means the Second Avenue subway project can continue construction and move closer to completion, providing much-needed transit service to upper Manhattan neighborhoods.

The takeaway

This dispute highlights the ongoing tensions between the federal government and state/local authorities over the use of diversity, equity, and inclusion principles in infrastructure projects. While the funding has been restored, the underlying disagreement over these policies remains unresolved and could continue to be a source of conflict in future transportation initiatives.