Federal Funds Restored For Subway Expansion

NEW YORK, NY— The federal government agreed to release nearly $60 million in funding for New York City’s Second Avenue subway extension, restarting payments after a legal dispute that put the $7 billion project at risk.

A government lawyer confirmed the decision in a letter filed in Federal Claims Court in Washington, signaling an end to a standoff with the Metropolitan Transportation Authority.

The agency had sued, alleging breach of contract after reimbursements stopped.

Transportation Department officials had withheld the funds during a review of the authority’s criteria for awarding contracts to disadvantaged businesses.

Sean Clayton, an acting deputy director, said the agency now accepts New York’s revisions.

The M.T.A. maintained in court filings that it had already complied with federal policy changes and argued there was no justification for the delay.

At a hearing, the authority’s lawyer, Roberta Kaplan, challenged the government’s reasoning.

“The M.T.A. had to comply, as it did, with the laws and regulations when President Biden was president, and agreed to do the same when President Trump was president,” Kaplan said.

Accusing the agency of violating the law under a new interpretation, she added, “truly takes us back to kind of a Henry the Eighth world.”

Gov. Kathy Hochul declared the outcome a victory after the payments resumed, pointing to the state’s legal action to challenge the funding freeze.

The dispute marked another obstacle for a project first envisioned nearly a century ago.

The planned extension would carry the Q line from 96th Street to 125th Street and Lexington Avenue, expanding service into East Harlem.

Crews began tunneling in 1972 before a fiscal crisis halted work. The first phase, launched in 2007, opened a decade later after delays and rising costs.

Progress slowed again in June 2024 when the state postponed Manhattan’s congestion pricing program, a key funding source.

Work on the extension has resumed, with completion projected for 2032.

The agency recently advanced a $1.1 billion contract tied to excavation at a planned station on 106th Street.

State leaders have also pledged to fund design work for extending the line west to 125th Street and Broadway, adding new connections across multiple subway and bus routes.