Second Avenue Subway extension funding is at the center of a new lawsuit. The Metropolitan Transportation Authority filed it against the federal government. It follows a legal path that recently helped release money for the Hudson Tunnel project.

MTA capital improvements 2025: $15.8B committed
Photo – Office of New York Gov. Kathy Hochul

MTA CEO Janno Lieber disclosed the action during testimony before the New York City Council, according to amNY.com. “Everybody knows the Trump administration has been withholding money for New York infrastructure projects,” Lieber said. “We intend to get every cent of what has been promised, and frankly, based on the agreements, what’s owed to New Yorkers. And we’re not afraid to fight for it in court.”

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Second Avenue Subway extension funding dispute

According to The New York Times, the case was brought in the Court of Federal Claims in Washington. The filing argues that the federal government “agreed to provide but has improperly refused to disburse” more than $58 million from the $3.4 billion the federal government committed to the almost $7 billion project. It also warns that the delayed payments could trigger “a ‘domino effect’ of cascading delays and inflated costs.”

Also, the dispute centers on money already committed to the project. Meanwhile, the lawsuit says the missing funds could slow work. In addition, it says delays could raise costs.

Q Line extension to 125th Street

The extension will carry the Q Line north from its present endpoint at 96th Street and Second Avenue to 125th Street and Lexington Avenue, as previously covered by Railway Supply. There, it is to connect with the 4, 5, and 6 subway lines and with Metro-North commuter rail service.

Initial contracts for the work were awarded in January 2024. Also, utility relocation is already underway. At the same time, civil construction is planned for this year.

In a statement from Governor Kathy Hochul, New York Gov. Kathy Hochul said the state “has been forced to sue the Trump administration to stop [it] from erratically shutting off billions of dollars in previously committed infrastructure funding,” adding that the “unlawful funding pause has put this entire project at risk.”

Hochul also pointed to the continuing dispute over Hudson Tunnel money. She said: “Just like Gateway, Donald Trump has two options: restore the money now, or wait for a judge to force him to.”

Hudson Tunnel project funding precedent

Federal officials announced last September that they were withholding funding for both projects. They said they were reviewing whether the projects complied with new rules tied to contracts for disadvantaged businesses.

Meanwhile, the Gateway Development Commission oversees the Hudson Tunnel project. In February, it filed its own case in the Court of Federal Claims. It argued that the government had breached its obligations by withholding funds that had already been obligated.

Separately, New York and New Jersey also sued. For example, that case led to a ruling that resulted in the tunnel funding being released.

Judge Richard A. Hertling of the Court of Federal Claims later dismissed most of the Gateway case after the money was paid. Still, he did find that the Department of Transportation had breached its contract.

The MTA has maintained that it has demonstrated compliance with the contract rules. In addition, its lawsuit says funding for both projects was withheld “to put political pressure” on Senate Minority Leader Chuck Schumer (D-N.Y.) during the dispute over a federal government shutdown.

A representative for the U.S. Department of Transportation commented on the case in a statement. Also, the agency said it is “considering all legal avenues” in response to the lawsuit.

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