The Trump administration has released $127 million in previously frozen federal funding for the long-awaited Gateway rail tunnel project linking Manhattan and New Jersey, marking a major development in one of the nation’s most critical infrastructure efforts.
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New York Gov. Kathy Hochul confirmed Wednesday that the administration freed up the remaining $98 million owed for the Gateway project, along with $30 million in reimbursements for work completed in January. The funding was released after a federal judge issued a Feb. 6 order blocking the administration from withholding the money.
The funds had been distributed in stages over nearly two weeks. In compliance with the court ruling, the administration released $30 million on Feb. 13, followed by $77 million earlier this week, before issuing the final installment.
The temporary funding suspension — initiated just ahead of the Oct. 1 government shutdown deadline — triggered a full work stoppage, threatening nearly 1,000 construction jobs and halting progress on the project that began construction in 2023.
Contractors have now been instructed to prepare for construction to resume next week.
“Today’s progress is significant, but we need certainty that Gateway funding will remain in place for the duration of the project,” Hochul said. “The federal government has a legal obligation to fully fund Gateway, and New York will accept nothing less.”
Just days earlier, President Donald Trump criticized the project, calling it a “future boondoggle” in a Truth Social post and claiming it could cost “many BILLIONS OF DOLLARS more than projected or anticipated.” He also asserted that the federal government would not be responsible for any cost overruns tied to the $16 billion initiative.
In the same post, Trump rejected reports that he had offered to release funding in exchange for renaming Penn Station after himself. The station is named after the historic Pennsylvania Railroad, which originally built and operated it.
New York Attorney General Letitia James, who sued the administration alongside New Jersey acting Attorney General Jennifer Davenport, welcomed the funding release.
“These funds should never have been withheld in the first place,” James said. “I am thrilled that hardworking New Yorkers can now get back on the job and move forward with the most important infrastructure project in the country. We will remain vigilant to ensure this funding continues uninterrupted, so that workers and commuters are never again left in limbo by the president’s targeted and unlawful whims.”
The Gateway program represents one of the largest infrastructure undertakings in the United States, aimed at modernizing rail connections between New York and New Jersey. At the center of the program is the construction of a new two-track rail tunnel under the Hudson River and the rehabilitation of the aging North River Tunnel.
The existing North River Tunnel carries approximately 200,000 passengers daily and is 116 years old. Officials have long warned that the tunnel was already in urgent need of repairs before sustaining significant damage during Superstorm Sandy in 2012. Saltwater flooding during the storm accelerated deterioration of critical infrastructure components.
The Gateway project will both rehabilitate the existing tunnel and construct a new parallel tunnel, ultimately doubling capacity and providing redundancy that transportation experts say is essential to avoiding catastrophic service disruptions along the Northeast Corridor.
The $16 billion project is funded jointly by the federal government and the states of New York and New Jersey. Amtrak has committed more than $1 billion toward the effort, underscoring its importance to the national rail network.
The funding release is expected to stabilize employment for nearly 1,000 workers who faced layoffs during the work stoppage. Industry leaders have warned that prolonged funding uncertainty could have driven up costs, disrupted contractor schedules, and delayed critical infrastructure upgrades.
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Transportation analysts note that the Gateway tunnel is not only vital for regional commuters but also for interstate commerce along the Northeast Corridor — the busiest passenger rail corridor in the country. Any long-term disruption to the aging North River Tunnel could severely impact economic activity across the region.
While the immediate funding dispute has been resolved following the court order, political tensions remain over long-term federal commitments and potential cost overruns. State officials continue to seek assurances that funding will remain uninterrupted through the project’s completion.
For now, construction is set to resume, restoring momentum to a project widely viewed as essential to the future of rail transportation between New York and New Jersey.
Originally reported by Kevin Breuninger in CNBC.
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