Construction on the $16 billion Hudson Tunnel Project is set to resume next week after the Trump administration released $127 million in previously frozen federal funding, New York Gov. Kathy Hochul announced Wednesday.
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The long-delayed infrastructure effort — formally known as the Hudson Tunnel Project — will build a new commuter rail tunnel between Manhattan and New Jersey while rehabilitating the existing century-old tunnel beneath the Hudson River.
The funding had been withheld by the U.S. Department of Transportation, prompting New York and New Jersey to file suit after $205 million was frozen beginning Oct. 1. Construction was halted on Feb. 6, leaving roughly 1,000 workers temporarily sidelined.
Earlier this month, U.S. District Judge Jeannette Vargas ordered the federal government to release funds for the project, clearing the way for work to restart.
Hochul framed the development as a major breakthrough for the region’s transportation network and labor force.
“A major win for workers and commuters,” Hochul said on social media. “We’ll keep fighting to ensure the federal government meets its commitments.”
Senate Minority Leader Chuck Schumer, D-N.Y., also praised the funding release.
" a huge win for New York, New Jersey, hundreds of thousands of commuters, thousands of union workers, and the economy of the entire region."
"We have secured all of December’s funding and even part of January’s ahead of schedule. Workers will be back on the job very soon andGatewayis back on track,” he said in a news release.
The Department of Transportation did not immediately comment on whether additional project funds could face future delays.
The dispute over funding took on political overtones in recent weeks. NBC News previously reported that the Trump administration had asked Schumer for Washington’s Dulles International Airport and New York’s Penn Station to be renamed after Donald Trump in exchange for releasing the funds.
Trump later said on social media that the idea of renaming Penn Station had been raised by other politicians and union leaders, not him.
Reiterating his opposition to the tunnel project’s cost structure, Trump warned about potential overruns.
“Gateway will likewise be financially catastrophic for the region, unless hard work and proper planning is done, NOW, to avoid insurmountable future cost overruns,” Trump said.
Hochul said she spoke directly with Trump on Monday after his post and told him the project was not experiencing cost issues.
The existing Hudson River rail tunnel, heavily damaged during Hurricane Sandy in 2012, remains one of the most critical chokepoints in the U.S. passenger rail system. More than 200,000 travelers and 425 trains use the corridor daily, making it the busiest passenger rail line in the nation.
Engineers have warned for years that the aging infrastructure requires frequent emergency repairs, disrupting service and creating long-term reliability risks for Amtrak and NJ Transit commuters.
The Hudson Tunnel Project is a central component of the broader Gateway Program, a multibillion-dollar effort to modernize rail connections between New York and New Jersey. Federal support totaling approximately $15 billion was allocated under former President Joe Biden’s administration. Nearly $2 billion has already been spent on early works, design, and preliminary construction.
Beyond commuter reliability, the tunnel carries major economic implications. The Northeast Corridor generates an estimated 20% of U.S. GDP, and transportation experts warn that a prolonged tunnel shutdown due to structural failure could cause severe economic ripple effects.
Industry groups and labor unions argue the project supports thousands of high-paying union construction jobs while strengthening long-term regional competitiveness.
With funding restored — at least for now — contractors are preparing to remobilize crews and restart heavy construction activities, including tunnel boring preparations and staging work along the Manhattan and New Jersey waterfronts.
While political debate over spending levels may continue, state officials say the immediate priority is getting workers back on site and advancing a project widely considered essential to the nation’s most heavily traveled rail corridor.
Originally reported by Reuters in NBC News.
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