No federal funding has been dedicated for the project. However, completion of these two steps is “a prerequisite for [the agencies] to direct future federal funding to advance this project through pre-construction activities such as engineering, final design development, and property acquisition, as well as construction,” according to a US Transportation Dept. statement.

New York state and New Jersey are set to split project costs with the federal government, but NY Gov. Andrew Cuomo on May 27 again publicly questioned whether the tunnel could be upgraded more cost-effectlvely using an approach that would allow ongoing train service, similar to what he pushed in the revamped repair of a storm damaged Brooklyn-to-Manhattan subway tunnel, which was completed last year.

“I’m not going to pay unless it is a smart, efficient, effective process, period,” he said at a May 27 press conference. Project officials have previously said that approach was not feasible based on the Hudson tunnel's scope of work.

A Federal Transit Administration spokesperson says the agency is working with the Port Authority of New York and New Jersey and other project partners "to advance the Hudson River Tunnel project through the Capital Investment Grants Program." As project sponsor, Port Authority "must complete several grants program requirements before the project is eligible for funding, including identifying all funding sources and obtaining funding commitments; applying for and being approved for any USDOT loans assumed; and developing a firm and final project cost, scope, and schedule."

The spokesperson adds that the Gateway Development Commission, a non-profit agency formed to deliver the program, expressed its intent to become the project sponsor through a board action on May 12.  The Federal Transit Administration "will provide technical support" to Port Authority and the Commission as those agencies complete the role transfer, she says.

The project involves construction of a new Northeast Corridor rail tunnel under the river connecting to Penn Station rail hub in New York City and also rehabilitation of the existing North River Tunnel, which is more than 110 years old and was inundated with seawater during Superstorm Sandy in 2012.

The decision represents completion of the federal environmental review process required under the National Environmental Policy Act.

The Hudson Tunnel Project is one part of the Gateway Program, developed to overhaul aging New York City regional rail infrastructure.

According to Amtrak, about 450 trains use the Hudson Tunnel daily, including those operated by New Jersey Transit. Before the COVID-19 pandemic in 2020, more than 200,000 daily passenger trips took place.

Amtrak asked Congress earlier this year for $16 billion for Gateway, including $6.7 billion over five years for the tunnel project. The project would mean four more modern tunnels between New Jersey and Penn Station.

A Feb. 16 decision by the Biden Administration reversed a Trump-era red light on transit funding for the tunnel construction and upgrade plan.

The Gateway program to boost train capacity between New Jersey and New York was stalled when the Federal Transit Administration three years ago  declined to consider federal loans as part of states’ portions of the funding.

The ruling effectively blocked the project on the grounds that it lacked sufficient local funding to meet federal grant standards.

The Gateway program, which includes $1.8 billion to rehabilitate the existing North River Tunnel and $9.8 billion for a new tunnel, increased in cost 2.4% last year due to the delay, according to the Gateway non-profit.

The previous administration did agree last year to $766.5 million in federal funding for the estimated $1.8-billion project to replace the Portal Bridge. an aging northern New Jersey swing bridge on the rail line.

The US Army Corps of Engineers is expected to issue a permit for the tunnel project in the fall.