en.Wedoany.com Reported - On April 16, the U.S. Department of Transportation (USDOT) filed documents with the U.S. Court of Federal Claims, announcing the completion of its review of the Second Avenue Subway Phase 2 project and the resumption of funding. According to an official MTA statement, approximately $58 million in previously withheld federal grants will soon be disbursed, allowing the MTA to resubmit reimbursement requests. This funding is part of the $3.4 billion in federal commitments within the total $7.7 billion project and had been suspended since September 30, 2025.
As reported by Engineering News-Record, the USDOT stated in a letter to MTA Chairman and CEO Janno Lieber that the review uncovered "troubling information" regarding the MTA's consideration of race and gender factors in contract awards, deeming the practice inconsistent with a 2025 executive order. The MTA subsequently demonstrated that it had ceased using contractor diversity tracking in bid evaluations for federally funded projects and agreed to complete a re-evaluation of Disadvantaged Business Enterprise certifications by August 2026. Based on this, the USDOT determined the MTA had met compliance requirements.
The MTA filed a lawsuit in the U.S. Court of Federal Claims on March 17, alleging the federal government violated the Full Funding Grant Agreement by withholding due payments. In a statement, Janno Lieber said, "It should not have taken seven months and a lawsuit to get here, but with the federal government backing down on the courthouse steps today, the MTA can move forward confidently on the Second Avenue Subway Phase 2." He also confirmed that the $1 billion contract approved at the March board meeting is being awarded, and contractors have been immediately mobilized to the site.
New York Governor Kathy Hochul posted on social media that the federal government "backed down, the freeze is over," and called for immediate release of the funds. USDOT representative Danna Almeida stated that the agency's actions ensure taxpayer "hard-earned money does not fund unconstitutional DEI initiatives." This restoration decision came hours before a scheduled oral argument in court. U.S. Court of Federal Claims Judge Philip S. Hadji has requested both parties submit a joint report by April 22 detailing the MTA's access status to the federal reimbursement system ECHO-Web, the status of payments made, and each party's position on dismissing the breach of contract claims.
The Second Avenue Subway Phase 2 project will extend 1.76 miles north from 96th Street to East Harlem, constructing three new stations at 106th Street, 116th Street, and 125th Street. The 125th Street station will provide transfers to the 4, 5, and 6 lines and Metro-North Railroad. Previously, the MTA awarded a $1.97 billion tunnel contract to the Connect Plus Partners joint venture, covering twin tunnel boring from 116th to 125th Street and excavation for the 125th Street station. The funding freeze had pressured the construction schedule; with funding restored, major civil construction work is set to accelerate this year.
This funding restoration decision follows a recent legal defeat for the USDOT in a dispute over withheld funds for the Hudson River Tunnel project. According to an announcement from the New Jersey Attorney General's office, the case was jointly filed by New York and New Jersey, with a federal judge ruling the government's withholding of funds constituted a breach of contract. The $1.5 billion in federal grants for the Gateway Tunnel project were restored following that court ruling.
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