Construction on the $16 billion Hudson Tunnel project is scheduled to resume on Monday, Feb. 23, after the full release of previously withheld federal reimbursements cleared up the funding disruption that had forced contractors to curtail activity earlier this month.
The Gateway Development Commission said Feb. 18 that it had received full reimbursement from the federal government and now has more than $205 million available to fund work on the project. Letters were being sent to contractors and “construction activities are expected to resume next week,” the commission said.
RELATED
Judge orders feds to release funds for Hudson River Gateway tunnel hours after officials announce project’s suspension
The payments were released after a federal court order ordered the US Department of Transportation to resume disbursements under the project’s grant agreements.
New York Attorney General Letitia James said the release followed litigation that forced federal compliance. “The Gateway Program is essential to the economic health of our region,” he said in a statement. “We will continue to ensure that this funding remains uninterrupted.”
New Jersey officials echoed that framework, describing the reimbursement restoration as necessary to protect workers and maintain momentum on a project designed to replace aging passenger rail infrastructure.
The reboot comes amid continued public criticism of President Donald Trump. In a Feb. 16 post on his Truth Social account, Trump wrote that he opposed the “future boondoggle known as ‘Gateway'” and warned that “under no circumstances will the federal government be responsible for ANY COST EXCESS, NOT ONE DOLLAR!” The release followed its earlier statement that the project was “terminated” after federal reimbursements were initially suspended.
Looking for quick answers on construction and engineering topics?
Try Ask ENR, our new intelligent AI search tool.
Ask ENR →
Although the administration complied with the court order to release previously withheld funds, Trump’s continued opposition adds political pressure to a project whose funding has depended on layered federal participation over several years.
Gateway officials are expected to provide additional updates at the commission’s board meeting scheduled for Feb. 24, where members are likely to discuss construction sequencing and funding status after the reimbursement is released.
RELATED
The deadline to resume funding for the Gateway program has passed
How the refund process works
Gateway’s federal participation flows through a reimbursement model tied to documented eligible expenditures. Under its grant agreements, the commission submits periodic draw requests that reflect costs already incurred. Federal program staff review these submissions before payment is released.
There is no publicly released “next tranche” date. Reimbursements typically move on a recurring cycle, often monthly, that is tied to federal billing and processing timelines. Payments are now expected to return to this normal cadence.
For contractors operating multi-year heavy civil packages, a consistent monthly cash flow underpins workforce deployment, subcontractor coordination, bonding capacity, and procurement sequencing. Even brief disruptions can cause cascading delays in project schedules.
The project’s financing framework was confirmed last June when S&P Global Ratings affirmed an A- rating with a stable outlook on the commission’s RRIF loan for the Hudson Tunnel project. S&P provided this update on the published research, but offered no additional comment on the recent funding freeze.
In the report, S&P cited “limited political and administrative risks” related to the structured payment stream backing the loan and wrote that New Jersey’s commitment to the project “increases the likelihood that potential roadblocks will be faced and resolved quickly.” The federal reimbursement freeze, and subsequent court-ordered release, represents the first significant evidence of this risk framework since the rating was upheld.
Moody’s Investor Service has said that uncertainty in federal transit funding flows can increase liquidity and operational risk at US transit agencies, highlighting how volatility in federal funding can translate into financial exposure for long-running capital programs.
Restarting a megaproject under political pressure
The Hudson Tunnel project had entered the first heavy civil phases when repayments stopped. Contractors demobilized parts of their workforce, halted purchases, and slowed field activity in response.
More than 200 union workers demonstrate at the Gateway Development Commission’s North Bergen construction site after federal funding was halted, demanding the restoration of project funds. About 1,000 workers were laid off after the suspension of reimbursements.
Image courtesy of the Gateway Development Commission
Four major procurement packages had been put on hold during the funding freeze, according to previous ENR reports. Gateway has not publicly detailed whether these requests will resume on their original timelines or require extensions.
The restart also intersects with wider corridor capacity work, including the ongoing replacement of the Portal North Bridge, which underlines the tight sequencing of capital programs on the Northeast Corridor.
While repayments have resumed and debt service on the RRIF loan is not dependent on construction progress or project revenue, as S&P noted in its 2025 analysis, the underlying legal challenge to the federal moratorium remains active in federal court.
