Federal Funding
Federal Funding Freeze Threatens to Halt $16B Hudson Tunnel Project
Civil work and tunneling preparations are at risk
An aerial view shows circular excavation and support work underway at a Hudson Tunnel project construction site between New Jersey and New York, part of early civil packages now at risk as developer Gateway Commission warns that federal funding could run out by Feb. 6.
Federal funding for the $16-billion Hudson Tunnel Project will be exhausted within days unless payments resume, forcing contractors to begin shutting down work across New York, New Jersey and the Hudson River, the Gateway Development Commission said Jan. 27.
The commission warned that active construction will begin winding down immediately and could halt entirely by Feb. 6, placing one of the nation’s most critical rail megaprojects on pause just as it was preparing to move into full tunnel excavation.
“We have exhausted every available option to keep construction moving,” GDC CEO Thomas Prendergast said in a statement. “Without the federal funding that was promised and contractually committed, we will be forced to pause work on this project, at significant cost to taxpayers and workers.”
Early civil packages across the program had been advancing toward tunneling readiness. Gateway’s project photo gallery shows tunnel boring machine components staged at the Tonnelle Avenue site in North Bergen, N.J., portal and launch box construction underway at the New Jersey tunnel entrance, slurry-wall installation progressing at access shafts on both sides of the river and ground stabilization continuing within the Hudson River itself.
On the Manhattan side, images show an opening cut into the bulkhead at the west end of the Hudson Yards Concrete Casing–Section 3, physically linking new trench work to previously completed casing segments that will feed into bored tunnel sections.
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Those elements now face suspension.
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The project is intended to replace the 116-year-old North River Tunnel, which was heavily damaged during Superstorm Sandy and carries Amtrak and NJ Transit trains beneath the Hudson River. GDC officials have warned that failure of the existing tunnel could sever the Northeast Corridor.
An aerial view shows construction of a bridge and adjacent excavation at the Tonnelle Avenue site in North Bergen, N.J., where work is underway to create access for tunnel boring machine components for the Hudson Tunnel Project.
Photo courtesy of the Gateway Development Commission
About 70% of the project’s $16-billion cost—roughly $12 billion—was to be covered by federal grants, with the remainder financed through loans repaid by New York, New Jersey and the Port Authority of New York and New Jersey. GDC said federal disbursements from both grant and loan programs have been halted since Oct. 1, 2025.
The pause was initially tied to a Federal Transit Administration review of the commission’s disadvantaged business enterprise program before being expanded to cover all federal funding streams supporting the project, according to GDC.
Rep. Josh Gottheimer (D-NJ), whose district includes thousands of daily rail commuters, said the freeze is now threatening work already underway.
“This tunnel is under construction right now, with workers on site and contracts in place,” Gottheimer said in a statement released by his office. “If the Trump administration doesn’t release the funds it already approved, construction will stop, jobs will be lost and costs will skyrocket.”
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GDC said more than $1 billion has already been spent on construction and warned that an extended pause would drive up restart costs while putting thousands of construction jobs at risk.
Carlo A. Scissura, president and CEO of the New York Building Congress, called the potential shutdown “a four-alarm fire,” warning that a pause would idle nearly 1,000 union workers and waste more than $1 billion already invested in a project he said is “fully approved, fully obligated and well underway.”
The White House has disputed responsibility for the impasse. According to The Wall Street Journal, a White House spokesperson said Senate Democrats are blocking a broader agreement needed to move the project forward.
New Jersey officials countered that the funding freeze is an administration action; Reuters reported that state lawmakers warned the shutdown would idle roughly 1,000 workers in the near term.
ENR contacted the offices of House Minority Leader Hakeem Jeffries (D-NY) and Senate Minority Leader Chuck Schumer (D-NY) seeking comment on the funding freeze. Neither office responded.
The commission also said the pause is delaying procurement of four major remaining construction packages, including two planned to begin in 2026, covering the Hudson River Tunnel and the New Jersey surface alignment.
“This is not just about a pause,” Prendergast said. “Every day of delay increases costs, increases risk and brings us closer to a failure of infrastructure that the entire country relies on.”
Bryan Gottlieb is the online editor at Engineering News-Record (ENR).
Gottlieb is a five-time Society of Professional Journalists Excellence in Journalism award winner with more than a decade of experience covering business, construction and community issues, including finance, law and real estate. He has reported for Adweek and the San Diego Daily Transcript and led a community newsroom in Santa Monica, Calif. He served as editor-in-chief of the Detroit Metro Times and as managing editor at Roofing Contractor, where he helped shape national industry coverage. At Engineering News-Record, Gottlieb covers breaking news, large-scale infrastructure and megaprojects, regulatory developments and business trends across the U.S. and global construction sectors.
email: gottliebb@enr.com | office: (248) 786-1591
