Gateway Tunnel: Trump admin begins disbursing federal funds to rail project

The Trump administration on Friday began sending reimbursements for the Gateway Tunnel project following a federal appeals court declining on Thursday to overrule a decision compelling it to do so.

The Gateway Development Commission, which is overseeing the projec, said it recieved its first disbursement of the $205 million its owed from the feds on Friday evening — totalling $30 million. However, it said construction still remains paused afte it ground to a halt on Feb. 6.

“We have received an initial disbursement of $30 million from the federal government and expect to receive the full $205 million in reimbursement funds,” GDC said in a Friday evening statement. “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.”

Gov. Kathy Hochul, in a statement, said the feds’ move was a step in the right direction.

“Today we made progress,” she said. “$30 million has finally been released, and a court-ordered report will force transparency on the remaining funds. But the job isn’t done. Full funding must be restored now.”

Trump administration attorneys first revealed it would begin sending the funds during an emergency status hearing on Feb. 13, requested by New York and New Jersey Attorneys General Letitia James’ and Jennifer Davenport’s offices, in their suit seeking to unfreeze the $205 million in Gateway funding.

Lawyers for the Trump administration said during the hearing that some federal reimbursements will begin flowing to the GDC next Tuesday. The judge in the case, U.S. District Judge Jeannette Vargas, ordered the feds to report on the status of their disbursement of the funds on Feb. 17.

Friday’s hearing came after the Second Circuit Court of Appeals declined on Feb. 12 to grant the Trump administration’s appeal to override Vargas’ Feb. 6 ruling ordering the funds unfrozen for a two-week period. In effect, that means the feds must disburse the money they began withholding in October right away.

“The court’s order is now in effect, and the federal government must immediately release funding for the Hudson Tunnel Project,” James said in a Thursday night statement. “This administration never had the authority to freeze this funding, and it no longer has any excuse to delay. We expect full compliance with the court’s order and the prompt delivery of the funds needed to keep workers on the job and this critical project moving forward.”

Union construction workers affected by the work stoppage attend a Gateway Tunnel Project Rally in North Bergen, New Jersey, United States, on Feb. 9, 2026. The Trump administration files papers to fight a court order that would restore federal funding to the $16 billion Hudson River Tunnel as a deadline looms to resume payments.Photo by Kyle Mazza/NurPhoto

Instead of granting the Trump administration’s appeal, the Second Circuit referred the case to a motions panel, which is not expected to meet until the week of Feb. 23 at the earliest.

Work on the project has been halted since Feb. 6, when the GDC exhausted a line of credit it had used to keep construction moving forward since October. Since then, 1,000 workers spread across five construction sites have been out of a job.

James’ and Davenport’s joint suit argued both that a prolonged work stoppage would cause serious harm to both states and that the funding freeze was illegal because it was based on Trump’s desire for political retaliation against Democrats rather than any violation of the law.

The GDC filed a separate suit in the Federal Court of Claims, alleging that the feds are in breach of contract by withholding the funds. The judge in the case on Monday scheduled oral arguments for March 12.

Gateway is a $16 billion project to build a new rail tunnel beneath the Hudson River between New York and New Jersey, intended to replace the crumbling North River Tunnel.

The two-tube passage, which carries hundreds of thousands of commuters between the two states each weekday, is in dire need of replacement after 116 years of use and severe storm damage from 2012’s Hurricane Sandy. Therefore, if the new tunnel is not built, the existing tubes will increasingly be in danger of shutting down — an event that would snarl travel between the Empire and Garden states as well as up and down the northeast.

The USDOT first froze the funds in October citing a need to review the project’s compliance with new rules regarding diversity, equity, and inclusion (DEI). GDC officials say they have answered the feds’ questions around its contracting with minority- and women-owned businesses.