By David Shepardson
March 20 (Reuters) - The Chicago Transit Authority sued President Donald Trump's administration on Friday in a bid to undo a White House decision to freeze $3.1 billion in funding for rail projects in the third most-populous U.S. city, calling the suspension an unlawful act of political retaliation.
According to the lawsuit, the U.S. Transportation Department and its Federal Transit Administration already have withheld at least $9.5 million from the city's public transit agency
since October in grants previously approved by the federal government under Democratic former President Joe Biden.
Chicago has the second-largest U.S. public transportation system, with about a million rides taken daily. The transit agency called the frozen grants crucial to modernize and expand the "L," Chicago's system of elevated and underground trains.
The lawsuit, filed in federal court in Chicago, represents the latest legal battle between the Republican president's administration and Democratic-governed cities and states.
The suit, filed in U.S. district court in Chicago, said the federal government is attempting "to hold hostage billions of dollars in federal grants for crucial infrastructure projects in the City of Chicago." The suit among other things called the administration's action "arbitrary and capricious" in violation of a federal law called the Administrative Procedure Act.
It said the administration's purported justification of the freeze - to ensure nondiscrimination in federal transportation funding programs - "is pretextual, and the freeze was instead based on political retaliation."
The Department of Transportation did not immediately respond to a request for comment.
The funding that has been frozen was to go toward modernizing century-old track structure and some stations on two rail lines and extend one of them by 5.5 miles (8.9 km).
The suit said that "absent federal reimbursement, CTA (Chicago Transit Authority) cannot afford to pay its liabilities to its contractors and vendors that continue to accrue" and the agency "has undertaken extraordinary measures to enable work to continue despite the absence of federal funding. That includes issuing new bonds, extending lines of credit and incurring non-recoverable costs."
The Department of Transportation suspended funding for some transit projects in various locales around the United States at the start of a government shutdown last fall after Trump vowed to go after projects in Democratic-led states. The Chicago lawsuit is the latest to challenge these actions.
New York's Metropolitan Transportation Authority also sued the administration this week after the government withheld nearly $60 million from a $7.7 billion subway project.
Last week, a federal appeals court ruled that the administration must keep making payments on the $16 billion New York Hudson Tunnel Project after the Department of Transportation suspended more than $200 million in payments to it.
(Reporting by David Shepardson; Editing by Chris Reese and Will Dunham)
