By Joseph De Avila

The Metropolitan Transportation Authority has sued the Trump administration for withholding about $58.6 million earmarked for an expansion of New York City's subway system.

The U.S. Transportation Department froze the funds for New York City's long-planned Second Avenue Subway extension in political retaliation against local Democrats, the MTA said in its breach of contract lawsuit filed Tuesday in the U.S. Court of Federal Claims.

The dispute started in October, when Russell Vought, director of the White House's Office of Management and Budget, said the Trump administration would freeze the funding, along with money for a $16 billion rail tunnel under the Hudson River connecting New York and New Jersey. Vought said the money would remain on hold while the administration reviewed whether the projects included any diversity, equity and inclusion policies.

The MTA lawsuit also cites comments Trump made indicating the administration was targeting initiatives led by Democrats.

"DOT has never determined the MTA to be in breach of any of its obligations or the law, but rather used funding for the project to punish Democrats in Congress," the lawsuit said.

The Department of Transportation didn't immediately respond to a request for comment.

"Donald Trump's unlawful funding pause has put this entire project at risk," said New York Gov. Kathy Hochul, a Democrat. "His actions alone have jeopardized the commutes of over 100,000 New Yorkers and the jobs of thousands of union workers, but New York will not back down."

Last month, New York and New Jersey sued the Trump administration over withheld funding for the Hudson Tunnel Project, the rail tunnel connecting the two states. A federal judge in February ordered the Trump administration to release the funds.

The first phase of the Second Avenue subway opened in 2017 after more than a century of planning. The MTA and Transportation Department reached an agreement in 2023 in which the federal government would pay for $3.4 billion to help finance the second phase of the expansion, extending the Q line on Manhattan's Upper East Side up to 125th Street.

"If funding does not resume soon, the MTA will be forced to further divert critical funding from other important transportation projects to cover the shortfall and ensure that the Project remains on schedule," the MTA's lawsuit said.

Write to Joseph De Avila at joseph.deavila@wsj.com

(END) Dow Jones Newswires

March 17, 2026 15:51 ET (19:51 GMT)

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