MTA accuses federal government of withholding Second Avenue subway funding

A potential legal battle could derail one of New York City's largest transit expansions.

The MTA is accusing the federal government of withholding nearly $60 million for Phase 2 of the Second Avenue subway, which would extend the Q line into East Harlem.

In a sharply worded letter, the MTA accuses the federal government of illegally freezing $58,652,146.02 in "past due reimbursements" tied to Phase 2.

The agency says invoices submitted between October and January were never paid, and officials claim at one point they were locked out of the federal payment system all together.

Under a 2023 full funding grant agreement, the feds committed billions toward the expansion. Federal rules require payments within 30 days.

The MTA says that's not happening, and now, they're warning of a domino effect.

"Large excavation contract, the non-tunnel boring excavation, so principally on Second Avenue for the 106th and 116th Street stations," MTA Chairman and CEO Janno Lieber said. "That contract is in procurement, and if we're forced to delay it and you have consequences throughout the project 'cause there are dependencies between these different contracts ... that does actually impact our cost and schedules."

The MTA argues in the letter the suspension may be politically motivated.  

The agency said if the funds aren't released by March 6, it plans to seek expedited judicial relief, meaning it would sue the federal government to keep the project alive.

CBS News New York reached out to the United States Department of Transportation, but we have not yet heard back. Federal transportation officials have previously said payments were paused pending review.

For now, the transit agency says the clock is ticking, and this pause has already stretched more than 21 weeks.