Trump administration officials announced Wednesday that they are suspending funding for two multibillion-dollar infrastructure developments in New York due to concerns the funds could be tied to “unconstitutional” diversity, equity, and inclusion initiatives.
White House Office of Management and Budget Director Russ Vought revealed that $18 billion in funding has been put “on hold” for the Hudson Tunnel Project and Manhattan’s Second Avenue Subway development. The projects are under “administrative review to determine whether any unconstitutional practices are occurring,” according to the Trump administration, which accused Democrats of stalling the review by blocking a congressional budget measure this week designed to keep the government funded.
“Without a budget, the Department has been forced to furlough the civil rights staff responsible for conducting this review,” a Transportation Department statement posted to X reads.
“Until USDOT’s quick administrative review is complete, project reimbursements cannot be processed.”
The Transportation Department is targeting the subway and Hudson Tunnel developments over DEI concerns because “they are arguably the largest infrastructure initiatives in the Western Hemisphere, and the American people want to see them completed quickly and efficiently,” the statement adds.
Democrats were swift to attack, accusing Trump of weaponizing the government shutdown to hurt the country. Both projects lie in the state represented by two of the most powerful Democrats in Congress, Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Hakeem Jeffries (D-NY).
“I think this is probably what they meant when Donald Trump said, ‘We’re going to extract maximum pain,’” Rep. Pete Aguilar (D-CA) said to reporters at a press conference Wednesday morning.
Both projects rely heavily on federal funding. New York has tied some of that funding to another government program that set goals for a certain number of contracts related to federally funded infrastructure projects to be awarded to businesses owned by minorities, women, and “economically and socially disadvantaged” people.
The Transportation Department’s Disadvantaged Business Enterprise program has come under scrutiny under the Trump administration due to concerns that it could contain DEI mandates that are out of line with federal antidiscrimination laws. Transportation Secretary Sean Duffy announced this week that the department released guidance to “ensure” the DBE program does not operate under race- and sex-based presumptions of social and economic disadvantage that violate the Constitution.
The Biden administration awarded the Hudson Tunnel project nearly $7 billion in federal funding in 2023. New York authorities, through the Gateway Development Commission, have requested that 20% of the contracts related to the project be given to minority, female, or “economically disadvantaged” people who are part of the DBE program. The DBE program is part of a Transportation Department initiative seeking to award federal transit funds to certain groups that have been challenged by the Trump administration.
“This commitment ensures that businesses owned by socially and economically disadvantaged individuals have ample opportunities to contribute to the project, promoting equitable economic growth and community empowerment,” according to the GDC.
In 2023, the Biden administration also led the Federal Transit Administration in committing $3.4 billion to extending the Second Avenue Subway, which constituted the largest award in the history of the FTA’s Capital Investment Grant program. Then-Transportation Secretary Pete Buttigieg’s funding plan left New York’s Metropolitan Transportation Authority responsible for the remaining $4.3 billion and other costs.
The second phase of the Second Avenue Subway promises to add just over 1.5 miles of track, three new stations in Upper Manhattan, and has specific participation goals for DBE businesses, carrying a 5% DBE sub-contracting requirement.
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Gov. Kathy Hochul’s (D-NY) office awarded the tunneling contract for the project last month to Connect Plus Partners. In addition to following the 5% DBE goal, Connect Plus is also following a 20% hiring goal from the surrounding zip codes and “economically disadvantaged areas,” according to the MTA.
The subway project’s designs have provoked censure from some industry experts, while critics have pointed to the overall subway development’s long history of stalled progress and missed deadlines. The project sparked controversy under then-Gov. Andrew Cuomo’s (D-NY) tenure in 2017, when officials opened the first phase of the Second Avenue line to the public before completing final safety testing. At the time, the subway line was also one of the most expensive in the world at $2.5 billion per mile, according to the New York Times.
