After Court Order, Federal Funds Flow Back to Gateway Project as New Jersey Governor Says Delay Raised Costs
After a court decision, the Trump administration unfroze $205 million for the Gateway rail tunnel project. The payment restarts construction, but New Jersey Gov. Mikie Sherrill says the interim hold has cost millions and interrupted hundreds of workers.
The Gateway Development Commission stated Wednesday that federal transportation agencies have refunded the full $205 million withheld since October 1, 2025. This month, U.S. District Court Judge Jeannette A. Vargas reinstated the monies.
Gateway officials said they are working with contractors to promptly use the monies. Construction businesses are receiving letters, and work should begin next week. Construction can resume without board approval, according to the commission.
Since February 6, five major Gateway projects in New Jersey and Manhattan had been halted due to funding issues. Approximately 1,000 construction workers were laid off during the stoppage. Industry groups said the stoppage left workers and contractors who had invested in the project apprehensive.
The $205 million payment was made, but court papers suggest the project may require more. Gateway is owed $235.7 million from three federal loans and three federal transit and railroad grants, according to a repayment status report presented to Judge Vargas. As legal actions continue, officials are reviewing those statistics.
For job and economic security, Governor Sherrill said the state took legal action. After an appearance in Flemington, she said monies needed to be released but criticized the administration’s payment suspension. She said the financing freeze halted work and may have raised costs.
The $16 billion Hudson River Tunnel Project is a major regional transportation project. Two new rail tunnels beneath the Hudson River and rehabilitation of New Jersey-New York tunnels are part of the concept. Federal sources will provide $12 billion of the project’s cost, while New York and New Jersey will share the balance through low-interest federal loans.
Construction began before the financing freeze. The first tunnel boring machine is on site for the first Palisades tunnels in North Bergen, which will begin this year.
Former President Donald Trump slammed the Gateway project on social media one day before the second payment, calling it a pricey undertaking that could exceed. He suggested that the federal government would not fund rising costs.
However, 2024 federal-state agreements require New York and New Jersey to absorb cost overruns, not the federal government.
Contractor groups hailed the funding and said they will return to work immediately. The Utility and Transportation Contractors Association CEO, Dave Rible, said construction workers should never have faced employment uncertainty over a federally approved infrastructure project. His association would continue working to finish the Gateway initiative, he said.
The temporary stop emphasizes the financial and legal challenges of large-scale infrastructure projects that require coordinated federal and state funding. The cash released resolve the immediate issue, but the federal court legal challenge and financial review continue.
Officials said the priority is getting workers back to work and finishing the multibillion-dollar transportation project on time. To avoid delays and expenditures, state authorities say stability and continuous funding are essential.
Sources:
Gateway Development Commission
U.S. District Court
Federal Transit Administration
Federal Railroad Administration
Office of the Governor of New Jersey
