Federal Government Releases Second $77 Million Payment for Hudson Tunnel Project After Court Order

The federal government has released $77 million more for the Hudson River Tunnel project, the second installment of frozen cash. Federal officials paused $205 million in October 2025 and were ordered by a federal judge to release it.

Gateway Development Commission officials acknowledged the second payment Tuesday. Following President Donald Trump’s social media criticism of the Gateway program, cost overruns were raised.

According to commission spokesman Molly Beckhardt, the agency expects the full $205 million reimbursement. These funds are for commission expenses after government assistance for the Hudson Tunnel Project was paused on October 1, 2025. The payment is crucial to restarting construction.

The budget freeze has caused major problems. The commission paused construction on five Gateway-related projects in New Jersey and Manhattan on February 6 due to funding shortages. Approximately 1,000 construction workers were laid off, putting economic pressure on families and communities that depend on them.

New Jersey Governor Mikie Sherrill sued the federal government to unlock the monies. Her office claims the administration must fulfill budgetary promises. A governor spokesperson said the lawsuit compelled federal officials to meet those commitments. The governor’s office has also threatened legal action if the remaining money are not given soon.

One of the region’s greatest infrastructure projects is the $16 billion Hudson River Tunnel Project. Two new Hudson River rail tunnels and the rehabilitation of aging New Jersey-Manhattan passenger tunnels are part of the idea. This year was supposed to start boring the first new Palisades tunnels in North Bergen, but budget issues halted construction.

Construction has stalled despite the recent payment. Commission officials are consulting with contractors on how to use the new monies and resume work safely. Their immediate goal is to return construction workers to job sites quickly while following federal and state agreements.

Federal agencies owe $98 million for previously approved reimbursements. U.S. District Court Judge Jeannette A. Vargas will receive a payback and financing status report. The court wants reports on the balance and payments.

President Trump called the Gateway project costly and warned that it could incur billions in unfunded costs. Governor Sherrill maintained that the project was on time and within budget before payments were withheld. Under a 2024 deal, New York and New Jersey will fund cost overruns beyond federal pledges.

The commission’s board will discuss project progress and finances on February 24. Since the tunnel project is vital to the Northeast rail network, stakeholders in both states are constantly monitoring it.

Significant developments in the funding controversy occurred with the second payment. One of the nation’s most critical transportation infrastructure projects remains uncertain until full reimbursement is finalized and construction resumes.