Contractors on the nation’s largest infrastructure project remain in a holding pattern after a federal judge ordered funding to resume—only for an immediate appeal to stall the decision once again.
Work on the $16 billion Hudson Tunnel Project will stay largely frozen until at least Thursday as courts determine whether the U.S. Department of Transportation must immediately restore federal payments. The uncertainty is costing taxpayers dearly, with officials estimating $15 million to $20 million a month just to keep partially built sites safe.
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A federal judge in New York on Feb. 6 directed the DOT to resume funding for the project, but the Trump administration appealed the ruling two days later. On Monday, the court gave the government until Thursday to comply while the appeal proceeds, according to the Center Square.
The funding freeze has already triggered major disruption on the ground. Nearly 1,000 workers have been laid off, the Gateway Development Commission said, while others must remain on site to manage hazardous conditions created by unfinished construction.
In a lawsuit seeking to restore payments, the GDC warned that massive excavations and partially completed structures cannot simply be abandoned. The agency said monthly suspension expenses would be needed to demobilize crews, secure sites, remove and store heavy equipment, and stabilize work zones.
The conflict traces back to last fall when the administration challenged the Department of Transportation’s Disadvantaged Business Enterprise program, which sets participation goals for women, minorities and veterans. Gateway, as a federally funded project, had complied with those requirements.
For several months construction continued as planned, with the GDC relying on cash reserves and a line of credit. But by late January those resources were exhausted, forcing a full stop.
The commission halted construction entirely on Feb. 6 and has paused four major procurements. Days earlier, it filed suit alleging breach of contract, while New York and New Jersey launched their own legal challenge.
After the initial court order, the GDC expressed cautious optimism.
“We are hopeful this means funding disbursements will resume soon, and we can start site operations and get our workers back on the job.”
Federal grants represent **about $12 billion—roughly 70%—**of the tunnel’s budget. Los Angeles-based contractor Tutor Perini declined to comment.
The GDC placed responsibility squarely on the DOT.
“On September 30, 2025, DOT threw the future of this massive public works project into serious doubt by suspending the release of funds it was contractually obligated to pay to GDC under a set of binding grant and loan agreements,” the GDC wrote in its lawsuit. “Since that date, DOT has withheld a total of $205,275,358 in payments owed to GDC under the HTP Grant and Loan Agreements.”
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Before the freeze, 2026 was expected to be a landmark year. Officials planned to award two major contracts, launch tunnel boring in New Jersey, and generate tens of thousands of jobs.
“In the days and weeks ahead, GDC is going to continue doing everything we can to get funding restored so the many hardworking men and women employed by the Hudson Tunnel Project can get back to work, and we can go back to celebrating milestones on the way to delivering this urgently needed new tunnel,” said Balpreet Grewal-Virk, New Jersey commissioner and co-chair at the Gateway Development Commission.
Transportation analysts warn that prolonged delays could inflate the project budget well beyond current estimates and push completion dates further into the 2030s. The tunnel, intended to replace a century-old link under the Hudson River, is considered critical to the Northeast rail corridor that carries hundreds of thousands of passengers daily.
For now, contractors, commuters and regional leaders are waiting on the next court ruling to determine whether the funding tap will finally reopen.
Originally reported by Sebastian Obando, Reporter in Construction Dive.
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