“If the federal government does not continue to disburse the funds for the project, we will have to pause construction again in two to three months,” Starace told commissioners.

The effects of the roughly two-week shutdown are still unfolding.

Starace said Gateway “spent millions to secure and maintain the construction sites,” during the roughly two-week shutdown and is still quantifying those costs with contractors.

Court filings by New York and New Jersey indicate those costs can escalate, with site security, equipment maintenance and field operations reaching millions per week during a shutdown, and full demobilization potentially climbing into the tens of millions depending on duration and accounting of final costs.

He added that hundreds of workers lost pay and production slowed even before the halt as uncertainty grew.

The disruption delayed major construction phases. Two major construction packages—the Hudson River Tunnel and the New Jersey Surface Alignment—were expected to advance in 2026 but have not yet been awarded due to uncertainty over continued federal payments, Starace said.

That uncertainty is now affecting procurement timing, compressing the window to advance major tunneling packages without introducing downstream inefficiencies. Together, those impacts show the funding interruption is no longer just a legal dispute—it is beginning to affect construction sequencing, contract timing and overall project delivery.

Public officials warned that projects of this scale “cannot be stopped and resumed with the flick of a switch,” with each interruption introducing new cost and schedule risk.

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Gateway Hudson Tunnel Work Resumes Even as Funding Uncertainty Mounts

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Work Advances, but Sequencing Risks Remain

Despite the interruption, Gateway officials reported continued progress across critical work fronts.

At the Tonnelle Avenue site in North Bergen, crews have begun assembling the first tunnel boring machine, with components of a second arriving. A second machine from German manufacturer Herrenknecht AG is also arriving as crews prepare for full tunnel boring.

On the Weehawken side, the Hudson County access shaft slurry wall has been finished, allowing excavation to begin. In the Hudson River, ground stabilization using cofferdams, deep soil mixing and grout injection is roughly 70% completed.

On the Manhattan side, crews have placed more than 11,000 cu yd of concrete on the Hudson Yards casing, with wall construction underway and recent pours adding another 2,000 cu yd for the tunnel floor slab.

Those activities align with previously awarded packages advancing toward tunnel boring, including Manhattan-side excavation and Palisades rock tunneling—roughly 5,100 ft of twin tunnels with a 25-ft, 2-in. diameter—led by the Frontier-Kemper Constructors Inc./Tutor Perini Corp. JV and the Schiavone Dragados Lane JV.

The disruption also affected those construction teams, which now must manage workforce continuity, equipment staging and sequencing amid uncertain reimbursement cycles. Other active packages include riverbed stabilization led by Weeks Marine Inc. and early works tied to the Tonnelle Avenue Bridge and utility relocation, delivered by a Naik Consulting Group/Conti Civil LLC team to support tunnel boring machine launch.

Labor and industry representatives said the interruption exposed vulnerabilities for workers and contractors on a project dependent on steady monthly reimbursements. Robert Campos, vice president of Laborers Local 472, said nearly 100 union members were laid off during the shutdown, with broader workforce impacts expected if interruptions continue.

“What does not shut down ongoing projects—and should not shut down projects like Gateway—is political issues,” Campos told the board.

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Federal Funding Freeze Threatens to Halt $16B Hudson Tunnel Project

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Legal Fight Shifts to Long-Term Certainty

The restart follows legal action by Gateway and New York and New Jersey after the Trump administration halted funding tied to a review of contracting practices.

Gateway Chief of Federal Affairs Rob Hickman said a federal court found the government had breached its contracts by withholding roughly $205 million in payments, though those claims were dismissed after the funds were released through separate state litigation. Two remaining claims tied to the construction pause remain pending.

New Jersey Gov. Mikie Sherrill (D) told commissioners that New York and New Jersey will return to court April 16 seeking an injunction to keep payments flowing and a final ruling barring the federal government from withholding funds again.

The project is expected to support roughly 95,000 jobs and generate nearly $20 billion in economic activity, according to testimony.

The new tunnel will supplement and allow rehabilitation of the 115-year-old North River Tunnel, a critical chokepoint on the Northeast Corridor.

While Gateway has returned to full construction, Starace and other officials made clear that the project is now operating on a compressed timeline tied directly to federal reimbursement cycles.

“Funding for the biggest, most urgent infrastructure project in the nation cannot be threatened every time Donald Trump decides to break the law,” Sherrill said, as the states prepare to seek a definitive ruling to ensure uninterrupted payments.