Trump Administration to Release Frozen Funds for $16 Billion Gateway Tunnel Project
NEW YORK — The Trump administration has agreed to release federal funds it had previously frozen for the $16 billion rail tunnel project between New York City and New Jersey, effectively ending a high-stakes standoff that threatened to derail one of the nation’s most critical infrastructure endeavors.
Government lawyers informed U.S. District Judge Jeannette Vargas on Friday that the Department of Transportation would begin disbursing the withheld reimbursements early next week. The concession comes just a day after the U.S. Court of Appeals for the Second Circuit declined to block a lower court ruling that ordered the immediate release of the money.
The dispute centers on the Gateway Program, a massive initiative designed to build two new rail tunnels under the Hudson River and rehabilitate the existing century-old tubes, which were severely damaged during Hurricane Sandy in 2012. The project is widely considered a linchpin for the Northeast Corridor, a transit artery that supports 20 percent of the national GDP.
Federal funding for the project had been abruptly halted in October 2025. At the time, the administration cited concerns regarding compliance with Disadvantaged Business Enterprise protocols. However, state officials and proponents of the project argued the freeze was politically motivated. Recent reports had surfaced suggesting the funding was being used as leverage in negotiations unrelated to the tunnel’s construction.
The freeze led to a work stoppage earlier this month, putting approximately 1,000 construction jobs at risk and costing the states millions in securement costs for dormant work sites. In response, New York and New Jersey, led by Attorneys General Letitia James and Jennifer Davenport, sued the federal government, arguing the withholding of funds was arbitrary and unlawful.
Judge Vargas ruled in favor of the states on February 6, issuing an order for the funds to be released. While the administration initially appealed, seeking a stay, the appellate court’s refusal to intervene forced the government’s hand. During an emergency status hearing on Friday, federal attorneys confirmed that the first tranche of reimbursements, estimated at over $200 million, would be processed by Tuesday.
“The court’s order is now in effect, and the federal government must immediately release funding for the Hudson Tunnel Project,” New York Attorney General Letitia James said in a statement. “This administration never had the authority to freeze this funding, and it no longer has any excuse to delay.”
New York Governor Kathy Hochul also welcomed the development, noting that the expiration of the legal stay means the project can get “back on track.”
The Gateway Development Commission, the bi-state entity overseeing the project, expressed relief at the news. Commission officials stated they are coordinating with contractors to resume full operations as quickly as possible. The restart of funding ensures that essential work on the Hudson Yards concrete casing and other early-stage elements of the tunnel can proceed without further interruption.
While the immediate cash flow crisis appears resolved, the broader litigation regarding the administration’s authority to withhold future payments remains active. Oral arguments on the underlying merits of the case are scheduled for later this month. For now, however, the checks are set to clear, and work under the Hudson River will continue.
* amny.com
* theguardian.com
* railpassengers.org
* evrimagaci.org
* amny.com
* amny.com
* amny.com
* ourtownny.com
* whyy.org
