CTA Lawsuit Update: Frozen Funding, Court Ruling, and NY Suits

The Chicago Transit Authority’s lawsuit over the federal funding freeze is an active case in the U.S. District Court for the Northern District of Illinois, filed March 20, 2026, that challenges the Trump administration’s decision to pause roughly $3.1 billion in previously committed transit grants. Four days after filing, Judge Thomas M. Durkin granted a temporary restraining order forcing the government to resume payments, and the CTA is now seeking a preliminary injunction that would keep the money flowing for the duration of the litigation. A hearing on that motion, along with the government’s motion to dismiss, is scheduled for July 28, 2026.

What the Frozen Money Pays For

Two CTA projects depend on the disputed federal grants. The Red Line Extension is a $5.7 billion effort to add 5.6 miles of track and four new stations, extending the line from 95th Street south to 130th Street. The federal government committed $1.97 billion under a Full Funding Grant Agreement signed on January 10, 2025.¹

The second project, the Red and Purple Modernization Phase One, is rebuilding 9.6 miles of elevated track and stations on the North Side between Belmont and Howard. Construction began in 2019, and by the time the freeze hit, four new accessible stations had already opened in the summer of 2025.² Together, the two grants add up to about $3.1 billion.

How the Freeze Happened

On October 3, 2025, Office of Management and Budget Director Russell Vought announced a pause on $2.1 billion in Chicago infrastructure funding. The Federal Transit Administration notified the CTA the same day that both projects were being placed under “administrative review.”²

The pause was tied to an interim final rule published that same day, which eliminated race- and sex-based presumptions of disadvantage from the Department of Transportation’s Disadvantaged Business Enterprise program and required all DBE-certified firms to make an individualized showing.³ A DOT spokesperson said the review was meant to keep federal dollars from supporting “discriminatory, illegal, and wasteful contracting practices.”⁴

Only four transit grants nationwide had payments paused. Two belonged to the CTA. The other two were in the New York area.⁵ The Chicago pause came two days after Vought announced a separate $18 billion freeze on New York City infrastructure funding.⁶

Before suing, the CTA spent months trying to resolve the matter through the agency process. It submitted more than 1,000 pages of information on October 21, 2025, and filed a formal compliance certification on December 10. The CTA says it received no further communication from the government after that certification.²

What the CTA Is Arguing

The complaint, case number 1:26-cv-03140, was filed on March 20, 2026, against the U.S. Department of Transportation, the FTA, and the United States, and brought under the Administrative Procedure Act.⁷ The CTA is represented by in-house counsel and the law firm Jenner & Block.⁵ The 51-page filing makes four main claims.

Political retaliation. The CTA alleges the freeze was designed to punish Democrats over the October 2025 government shutdown, citing an October cabinet meeting at which President Trump said, “We’re only cutting Democrat programs, I hate to tell you, but we are cutting Democrat programs.”⁸

Selective enforcement. Hundreds of other transit grantees were allowed to keep drawing funds during the DBE recertification, while only the CTA’s two projects and two in the New York area were frozen.¹

Pretextual justification. The suit argues the DEI rationale is a cover. The CTA’s diversity contracting requirements had been mandated by prior federal regulations, and the agency had already certified compliance with the current standards.⁴

Procedural violations. The DOT’s own regulations for suspending grant disbursements require investigation, notice, a hearing, and an opportunity for voluntary compliance before funds can be withheld. The CTA says none of that happened.

The complaint warned the court that without immediate relief the agency would have to halt work on both projects by March 27, 2026.⁹

What the Judge Ordered

On March 24, 2026, Judge Thomas M. Durkin granted the temporary restraining order, finding the CTA was likely to succeed on the merits and that the DOT’s actions appeared “arbitrary and capricious” under the APA.¹⁰

Durkin first rejected the government’s jurisdictional argument that the case belonged in the U.S. Court of Federal Claims under the Tucker Act. He held that the CTA’s claims were properly brought under Title VI of the Civil Rights Act, which authorizes judicial review of agency actions that terminate financial assistance. At the TRO stage, that was the government’s only argument. It did not defend the freeze on the merits.¹¹

On the substance, the judge found the DOT had failed to justify applying its new interim final rule retroactively to grants already in place, noting that the rule and the review letters to the CTA had gone out within less than a week of each other. He also pointed to the selective nature of the freeze. If the DOT had applied its review to the “hundreds of other transit projects” it funds, Durkin wrote, “this would be a different case.”⁵ And he found the DOT had skipped its own procedural steps for suspending funds.¹⁰

On irreparable harm, the court accepted the CTA’s evidence that continued suspension of over $2 billion would force demobilization of both projects, with delays and safety risks that money could not later repair.

The order declared the interim final rule’s retroactive application to the CTA’s existing grants unlawful and unconstitutional, barred the DOT and FTA from refusing to disburse the funds, and gave the government until 10 a.m. on March 27, 2026, to comply or obtain a stay.¹⁰

Where the Case Stands

The TRO did not end the fight. On April 9, 2026, the court extended the TRO to remain in force until it rules on the CTA’s motion for a preliminary injunction and the government’s motion to dismiss.¹² The CTA filed its preliminary injunction motion on April 17, asking the court to convert the TRO into a longer-term order for the duration of the litigation.¹¹ The government filed its opposition and its motion to dismiss on June 5.

The CTA’s reply on the preliminary injunction is due June 29, and the government’s reply on the motion to dismiss is due July 13. Judge Durkin is scheduled to hear both motions on July 28, 2026.¹²

With the TRO holding and money flowing, the CTA broke ground on the Red Line Extension on April 24, 2026, near Michigan Avenue and 116th Street. Foundation work by lead contractor Walsh-VINCI Transit Community Partners is underway, station construction is expected to start in 2027 or 2028, and the extension is targeted to open in 2030.¹³ No reports through spring 2026 indicate the funding dispute has interrupted construction since the court’s order.

Related Suits in New York

The CTA is not the only agency that sued. New York’s Metropolitan Transportation Authority brought two challenges over the same administration-wide freeze. In February 2026, a federal judge ordered payments resumed for the Hudson Tunnel Project, finding the DOT had acted in a “ready, fire, aim” manner.¹⁴ A separate MTA breach-of-contract suit over nearly $60 million in Second Avenue Subway payments was resolved in April 2026 when the government agreed to release the funds.¹⁵ Of the three cases, only the CTA’s is still being actively litigated.

1
Block Club Chicago. Feds Froze $3.1B for CTA Because of Political Retaliation, Suit Says
2
Chicago Transit Authority. Chicago Transit Authority Sues Federal Government Over Paused Red Line Extension and Red and Purple Modernization Project Funding
3
Federal Register. Disadvantaged Business Enterprise Program and Disadvantaged Business Enterprise in Airport Concessions Program Implementation Modifications
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The Hill. Chicago Transit Sues Trump Infrastructure Funding
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Bloomberg Law. Trump Administration Ordered to Resume Chicago Transit Funding
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NBC News. White House Freezes $18 Billion New York City Infrastructure Funding
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CourtListener. Chicago Transit Authority v. United States Department of Transportation
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Politico. Chicago Transit Authority Funding Lawsuit
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Chicago Transit Authority. Court Grants CTA Temporary Restraining Order
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Justia. Chicago Transit Authority v. United States Department of Transportation, Memorandum Opinion and Order
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University of Michigan Civil Rights Litigation Clearinghouse. CTA Memorandum in Support of Preliminary Injunction
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CourtListener. Chicago Transit Authority v. United States Department of Transportation – Docket
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Chicago Transit Authority. CTA Celebrates Start of the Historic Red Line Extension Project
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New York Post. Trump Admin Restores Funding to 2nd Avenue Subway Project After MTA Sues
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New York Times. 2nd Avenue Subway MTA Trump