Federal funding resumes for Gateway tunnels project

Michael Nagle/Bloomberg

The Trump administration resumed payments this week for the $16 billion Gateway Hudson Tunnels project after a four-month pause even as President Trump warned the government would not cover any cost overruns for one of the nation's largest megaprojects.

The U.S. Department of Transportation released $77 million on Tuesday and $30 million last week after meeting with a federal judge who on Feb. 6 had ordered the funding to continue while litigation over the project continues.

The Gateway Development Commission, a public authority established by New York and New Jersey to manage the rail project, halted work in early February, saying it had run out of funds. In a Feb. 13 statement, the commission said it was grateful for the resumption of funding but did not say when construction would continue.

Sen. Chuck Schumer, D-NY, said he expects work to resume shortly, according to CBS news.

The Trump administration last October froze federal support — which accounts for the bulk of the $16 billion project — saying it would not resume until after it reviewed the GDC's policies around contracts to women- and minority-owned businesses. The commission in response sued the administration in the U.S. Court of Federal Claims and separately, New York Attorney General Letitia James and New Jersey Acting Attorney General Jennifer Davenport sued in the U.S. District Court for the Southern District of New York.

Nearly $2 billion has already been spent, according to the commission. Since October the administration has withheld $205 million in payments owed under U.S. DOT contracts.

"We have received an initial disbursement of $30 million from the federal government and expect to receive the full $205 million in reimbursement funds," the commission said last week, before Tuesday's $77 million came through. "Construction remains paused for now, and we are working with our contractors to plan how to deploy these funds in the most effective way and get workers back on the job to resume some construction as soon as possible."

Trump criticized the project on social media Monday and said the federal government would not cover any cost overruns. "I am opposed to the future boondoggle known as 'Gateway,' in New York/New Jersey, because it will cost many BILLIONS OF DOLLARS more than projected or anticipated," he wrote on Truth Social, comparing the project to California's high-speed train. He warned the project will be "financially catastrophic for the region, unless hard work and proper planning is done, NOW, to avoid insurmountable future cost overruns."

He added that the administration was willing to meet to make sure the overruns don't happen.

The stand off between the White House and New York and New Jersey officials is the latest obstacle for one of the nation's largest megaprojects. After years of fits and starts — including a funding halt under the first Trump administration — the Biden administration by July 2024 had obligated $15 billion of grants and loans to cover the $16 billion project.

The project includes building a new rail tunnel under the Hudson River, repairing another 100-year-old tunnel and adding two sets of tracks linking New Jersey with Manhattan. It also will replace the 117-year-old Portal North drawbridge in New Jersey and a variety of other projects to guarantee the future of that key segment of the Northeast corridor.