The Trump administration has temporarily halted $2.1 billion in federal funding for two major Chicago Transit Authority (CTA) projects, citing concerns about “race-based contracting” and the need to ensure compliance with a new Department of Transportation (DOT) rule prohibiting race- or sex-based contracting requirements in federally funded projects.
The projects affected are the long-anticipated Red Line Extension and the Red and Purple Modernization programs, both critical components of Chicago’s public transportation infrastructure plan. The pause marks one of the most significant federal funding reviews to date under the administration’s recent initiative to eliminate what it calls “unconstitutional DEI (Diversity, Equity, and Inclusion) practices” in the use of taxpayer money.
According to statements released by the White House Office of Management and Budget (OMB) and the U.S. Department of Transportation, the funding suspension will remain in effect while the federal government conducts an administrative review. The agencies will assess whether the projects’ contracting processes involved preferences or requirements based on race or gender—standards that may conflict with the administration’s new interpretation of equal protection laws under the Constitution.
The Background
The CTA’s Red Line Extension project aims to extend the existing Red Line from 95th Street to 130th Street, expanding service to several underserved neighborhoods on Chicago’s South Side. The Red and Purple Modernization program focuses on upgrading decades-old tracks and stations to improve reliability and capacity on one of the city’s busiest transit corridors. Together, these two projects represent some of the largest public infrastructure investments in Chicago’s recent history, with combined federal funding commitments exceeding $2 billion.
Under normal circumstances, such projects would move forward with federal reimbursement payments as construction milestones are met. However, the new DOT rule—announced in late September—has introduced a new layer of oversight. The interim final rule bars federal funds from being distributed to programs that include race- or sex-based contracting requirements, which the administration argues violate federal anti-discrimination law and the equal protection clause of the Constitution.
The Federal Review
On October 3, OMB Director Russell Vought confirmed the funding hold in a post on X (formerly Twitter), noting that “$2.1 billion in Chicago infrastructure projects—specifically the Red Line Extension and the Red and Purple Modernization Project—are being reviewed to ensure no federal dollars are flowing through race-based contracting mechanisms.”
The Department of Transportation followed with an official statement explaining that it had issued letters to the Chicago Transit Authority informing them of the administrative review. The department said that while construction can continue with local or state funds, federal reimbursements will be delayed pending the outcome of the review.
“This week, the U.S. Department of Transportation issued an interim final rule (IFR) barring race- and sex-based contracting requirements from federal grants,” the statement read. “To ensure compliance with federal law, USDOT has initiated a review of certain Chicago Transit Authority projects to determine whether any unconstitutional practices are occurring.”
The statement continued: “The American people deserve to know their tax dollars are being used efficiently and legally. Federal funds must not be distributed on the basis of race or gender preferences, but rather on the principles of merit, competition, and fairness.”
Political and Legal Context
The funding freeze in Chicago follows a similar decision earlier in the week to withhold approximately $18 billion in infrastructure funds from New York City projects pending comparable reviews. The moves have intensified debate over the administration’s broader push to eliminate diversity-based policies across federal programs, procurement, and contracting.
The administration has characterized these actions as part of a larger legal and ethical realignment—ensuring federal programs adhere strictly to constitutional standards of equal treatment. “No American should be excluded or favored because of race or gender in the use of taxpayer funds,” Transportation Secretary Sean Duffy said in a press briefing. “Our goal is not to delay progress, but to ensure that progress complies with the law.”
Supporters of the freeze argue that government contracting should prioritize open competition without consideration of race or gender, claiming that “equity-based” initiatives amount to unconstitutional discrimination. They contend that the new rule brings federal policy back in line with Supreme Court precedent following recent rulings limiting affirmative action and race-conscious decision-making in education and employment.
Critics, however, have accused the administration of overreach and politicization, warning that the sudden suspension of funds threatens essential urban projects and jobs. Chicago Mayor Brandon Johnson and Illinois officials have expressed concern that the decision could cause significant delays and financial strain on local contractors, many of whom have already been awarded subcontracts under the projects.
In a brief response, the CTA said it “continues to comply with all federal requirements and remains committed to transparency as it works with USDOT to resolve the matter quickly.” The agency emphasized that the Red Line Extension “is vital for mobility, equity, and economic growth for Chicago’s South Side residents.”
Administrative and Budgetary Challenges
The DOT’s statement also referenced the ongoing federal government funding impasse, noting that the current partial shutdown has slowed administrative operations, including the staffing of compliance reviews. “Unfortunately, congressional gridlock has impacted the Department’s ability to expedite these analyses,” the agency said, attributing staffing constraints to the continuing budget standoff in Congress.
OMB officials, however, said the reviews would proceed as quickly as possible. Once completed, DOT will determine whether the projects can resume receiving reimbursements or whether corrective actions must be taken to remove potentially unlawful contracting conditions.
Broader Implications
The Chicago decision is expected to have ripple effects beyond Illinois. State and municipal governments across the country may now face scrutiny regarding how diversity and inclusion standards are applied to federally funded contracts. Legal analysts say the administration’s new approach could alter decades of established procurement practices, particularly those encouraging minority- and women-owned business participation in public works.
Some experts predict a wave of administrative challenges and lawsuits testing the scope of the new rule. Civil rights organizations have already indicated they may contest the legality of halting funds over contracting programs that, they argue, comply with existing federal statutes designed to promote opportunity and counter historic exclusion.
In the meantime, local governments and contractors are left in limbo. Large-scale infrastructure projects rely on predictable federal disbursements to manage cash flow and construction schedules. Extended delays could increase costs, disrupt employment, and postpone long-promised upgrades to critical public systems.
Outlook
As of now, the funding freeze remains temporary. The Department of Transportation has not issued a final decision, and the review process is ongoing. A senior administration official said the review is expected to conclude “within weeks,” after which the government will determine whether federal funding can resume or whether compliance adjustments are necessary.
While the administration’s actions have drawn strong political reactions, the issue ultimately hinges on legal interpretation and administrative oversight. The core question—whether local equity-based contracting requirements violate constitutional or federal law—may take months, or even court rulings, to resolve definitively.
For Chicago, the stakes are high. The Red Line Extension, in particular, is seen as a transformative project for communities long underserved by public transit. Any prolonged delay could slow both construction progress and the broader economic development plans tied to the project.
The pause also underscores the administration’s growing willingness to use federal funding as leverage in enforcing its policy goals, particularly in areas where it views existing practices as inconsistent with constitutional principles.
As the review unfolds, all eyes will be on whether the federal government restores the funds or sets a precedent for a new national approach to public contracting—one that could reshape the balance between promoting diversity and adhering to a strict interpretation of equal protection under the law.
Emily Johnson is a critically acclaimed essayist and novelist known for her thought-provoking works centered on feminism, women’s rights, and modern relationships. Born and raised in Portland, Oregon, Emily grew up with a deep love of books, often spending her afternoons at her local library. She went on to study literature and gender studies at UCLA, where she became deeply involved in activism and began publishing essays in campus journals. Her debut essay collection, Voices Unbound, struck a chord with readers nationwide for its fearless exploration of gender dynamics, identity, and the challenges faced by women in contemporary society. Emily later transitioned into fiction, writing novels that balance compelling storytelling with social commentary. Her protagonists are often strong, multidimensional women navigating love, ambition, and the struggles of everyday life, making her a favorite among readers who crave authentic, relatable narratives. Critics praise her ability to merge personal intimacy with universal themes. Off the page, Emily is an advocate for women in publishing, leading workshops that encourage young female writers to embrace their voices. She lives in Seattle with her partner and two rescue cats, where she continues to write, teach, and inspire a new generation of storytellers.
