The federal government has restored nearly $60 million in funding for the Second Avenue subway extension in New York City, ending a legal dispute that put the $7 billion project at risk. The Metropolitan Transportation Authority had sued, alleging breach of contract after reimbursements stopped. The Transportation Department had withheld the funds during a review of the authority's criteria for awarding contracts to disadvantaged businesses. The M.T.A. maintained that it had already complied with federal policy changes and there was no justification for the delay.