Chicago transit funding lawsuit over paused CTA rail funding

The Chicago transit funding lawsuit reached federal court on Friday. The Chicago Transit Authority wants $2 billion in federal construction funding restored. That funding was tied to commuter rail expansion, as previously covered by Railway Supply.

Chicago transit funding lawsuit and CTA claims

Filed in U.S. District Court in Chicago, the case says the administration acted arbitrarily. It says the city’s transit construction funding was stopped. It says this happened while the administration tried to restrict race- and gender-based contracting. The administration believes that contracting is unconstitutional. Also, the lawsuit names the U.S. Department of Transportation as a defendant. It also names the Federal Transportation Authority.

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The Transportation Department said it is trying to block the process. It called the process “discriminatory” and “illegal.” Separately, the Chicago filing came just days after New York City officials sued. That suit sought similar federal transit funding worth $60 million, as AP News reported.

Red Line extension and North Side rail project

One of the projects hit hardest is the 5.3-mile (8.5 kilometer) Red Line extension. It is on the elevated L system. For example, the work would add four stations. It would extend service to 100,000 additional residents in disadvantaged and largely Black neighborhoods. In addition, federal dollars had also been supporting a North Side rail project. It replaced century-old rails and added four new accessible stations, as CTA notes.

“We are fully committed to the success of these projects, and we will take every step necessary to ensure that they move forward,” CTA Acting President Nora Leerhsen said in a statement. “The Red Line extension is a historic investment into the far South Side of Chicago that will transform public transit and create new economic opportunity for the communities it will serve.”

Contracting rule changes and the Oct. 3, 2025 funding pause

According to the lawsuit, the Trump administration adopted a new rule in September. It removed race- and gender-based contracting preferences. Meanwhile, the rule was applied retroactively only to grants for Chicago and New York. Also, the CTA says the funding pause began on Oct. 3, 2025. It says it submitted the requested documentation a few weeks later.

The department asked for additional records in December. Still, the lawsuit says there has been no further communication since the CTA responded. It describes the government’s actions as “unlawful many times over.”

At the same time, the complaint says the agency is being penalized. It had followed the rules that were in effect at the time. It adds that the government did not “explain why grants to the hundreds of other projects nationwide” saw no interruption in funding. Those projects were operating under the same rules.

In addition, the Transportation Department commented in an email. It said it would continue to fight “discriminatory, illegal, and wasteful contracting practices.”

“The American people don’t care what race or gender construction workers, pipefitters, or electricians are,” the department said. “They just want these important projects built quickly and efficiently.”

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