Trump Administration Freezes $2.1 Billion in Chicago Transit Funding Over DEI Concerns

The Trump administration has paused billions in federal infrastructure funding to the city of Chicago, citing concerns over race- and gender-based contracting requirements that the administration views as potentially unconstitutional. The move comes on the heels of a similar funding freeze in New York, and signals a broader crackdown on diversity, equity, and inclusion (DEI) initiatives tied to federal grants.

On Friday, the U.S. Department of Transportation (USDOT) confirmed that two major projects — the CTA Red Line Extension and the Red and Purple Modernization Program — are now under administrative review, pending an investigation into whether the projects utilize what the administration considers discriminatory contracting practices.

Federal Oversight on DEI-Based Contracting

According to a statement from the USDOT, the reviews aim to ensure compliance with new federal guidelines that prohibit the use of race- or sex-based preferences in federally funded contracts. This follows the issuance of an Interim Final Rule (IFR) earlier in the week that formally bans such requirements in federal grants.

Russell Vought, Director of the Office of Management and Budget (OMB), announced the funding pause on social media, stating that $2.1 billion earmarked for Chicago transit infrastructure would be withheld until the reviews are completed.

“This week, USDOT issued an interim final rule barring race- and sex-based contracting requirements from federal grants,” the department said in its statement. “To continue implementation of this rule, USDOT today sent letters to the Chicago Transit Authority (CTA) to inform them that two projects… are also under administrative review.”

Political and Legal Context

The move has reignited the national debate over DEI policies and their role in public contracting. The Trump administration has taken an aggressive stance against what it describes as “discriminatory and unconstitutional” public policies, particularly those that prioritize race or gender in procurement processes.

“Illinois, like New York, is well known to promote race- and sex-based contracting and other racial preferences as a public policy,” the Department of Transportation said in its release. “These reviews are intended to ensure no additional federal dollars go towards discriminatory, illegal, and wasteful contracting practices.”

Officials insist the goal is to make sure tax dollars are spent fairly and efficiently.

“The American people don’t care what race or gender construction workers, pipefitters, or electricians are,” the statement continued. “They just want these massive projects finally built quickly and efficiently.”

Tensions with Local Leadership

The decision comes amid ongoing tension between the Trump administration and Democratic mayors in major cities. Chicago Mayor Brandon Johnson, who has advocated for progressive reforms since taking office, has been a vocal supporter of DEI initiatives in city programs, including transportation and infrastructure development.

Though Mayor Johnson has not yet publicly responded to the funding pause, city officials are expected to challenge the federal action, possibly through legal channels.

Critics of the administration’s decision argue that these programs were designed to promote economic inclusion and correct long-standing disparities in contracting opportunities for minority- and women-owned businesses.

However, supporters of the administration’s move argue that government-funded projects should be awarded based strictly on merit, cost, and efficiency — not on social criteria.

Broader Implications

This is the second major funding pause issued in less than a month. Just days earlier, the Trump administration froze roughly $18 billion in infrastructure funding for New York, citing similar concerns about equity-based contracting tied to state-level DEI mandates.

These actions reflect a growing effort from the administration to redefine federal compliance standards, particularly around civil rights and procurement policies. Federal agencies, including the OMB and USDOT, have been tasked with reviewing all current and future grant disbursements to ensure alignment with the new rules.

USDOT Secretary Sean Duffy stated that while the department is committed to reviewing the projects quickly, staffing shortages due to the ongoing government shutdown — which remains unresolved — may delay the process.

“Secretary Duffy and USDOT are committed to conducting these reviews as fast as possible so reimbursements can move forward,” the department stated. “Unfortunately, Chuck Schumer and Hakeem Jeffries’ decision to shut down the government has negatively affected the Department’s staffing resources for carrying out this important analysis.”

What’s Next for Chicago?

For Chicago, the pause represents a significant hurdle. The CTA Red Line Extension and modernization efforts are cornerstone projects for the city, aimed at improving transit access for underserved neighborhoods and modernizing aging infrastructure.

City officials are likely to appeal the decision or modify existing policies to comply with federal regulations in order to secure the funding.

In the meantime, the situation remains fluid. As the administration continues its broader review of DEI policies in federal grants, other cities and states could soon face similar scrutiny.

With billions in federal funding now tied to these legal and political interpretations, the battle over equity in public infrastructure may just be getting started.