The Gateway rail tunnel project, linking New York and New Jersey, has begun receiving federal reimbursements after a months-long funding freeze, with an initial $30 million installment now available to the project. Officials anticipate the remaining approximately $205 million will follow by next Wednesday, though construction remains paused.
The funds are part of reimbursements owed to the Gateway Development Corporation under existing federal agreements for work already completed on the Hudson Tunnel Project, a key component of the broader Gateway Program. A project spokesperson confirmed receipt of the $30 million and stated that construction is currently halted while officials collaborate with contractors to determine the most effective way to deploy the funds and resume work.
The release of funds follows a legal battle initiated by New York and New Jersey after the U.S. Department of Transportation (DOT) suspended payments on September 30, 2025. The states challenged the suspension in court, arguing it was unlawful.
According to a federal filing, the DOT cited a review of regulations governing contracting with disadvantaged business enterprises as the reason for the suspension. This review is connected to broader discussions surrounding diversity, equity, and inclusion (DEI) in federal contracting practices.
On February 6, U.S. District Judge Jeannette A. Vargas issued a temporary restraining order blocking the DOT’s suspension of funds. The judge subsequently allowed a brief administrative delay while the government sought emergency appellate relief. She also directed the Trump administration to provide a status report by Tuesday at 3 p.m. Detailing efforts to transfer the money.
The ruling upholding the release of funds was welcomed by New York Governor Mikie Sherrill, who emphasized that Congress had already approved the funding and it rightfully belonged to the American people. Senate Minority Leader Chuck Schumer criticized the initial freeze, asserting that the funds were both appropriated by Congress and committed through existing contracts.
New York Attorney General Letitia James and New Jersey officials sought an emergency hearing, warning that a work stoppage would lead to significant cost increases and schedule delays. The Gateway Redevelopment Commission stated the ruling was a “positive step” and expressed its intention to get workers back on the job as soon as possible.
The DOT has stated We see complying with the court order. However, the funding freeze related to DEI concerns extends beyond the Gateway project. In October 2025, Reuters reported that the administration was withholding approximately $18 billion linked to major transportation projects in New York City, including the Second Avenue subway extension and the Hudson Tunnel Project, due to similar concerns about DEI-related contracting and compliance.
The Chicago Transit Authority (CTA) also experienced a pause of around $2.1 billion in federal funding for Chicago transit projects, including the Red Line extension, in October 2025, with administration officials citing concerns about race-based contracting and DEI issues.
The initial $30 million represents a first step, with the full $205 million expected to be released next week. The Gateway project remains paused as officials work to redeploy the funds and resume construction.
