Court Orders Trump Administration to Release Gateway Tunnel Funds

Construction on the $16 billion project to expand rail service along the Northeast Corridor can now resume after a legal battle.

Published on Feb. 22, 2026

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A federal court has ordered the Trump administration to release nearly $130 million in funding for the Gateway tunnel project, a critical infrastructure initiative to build a new rail tunnel under the Hudson River between New York and New Jersey. The funding had been withheld by the Trump administration, putting the project on hold and threatening thousands of jobs. With the funds now released, construction can resume on the $16 billion project, which aims to expand service along the nation's busiest passenger rail line.

Why it matters

The Gateway tunnel project is a crucial infrastructure initiative to upgrade aging rail infrastructure along the Northeast Corridor, the busiest passenger rail line in the United States. The new tunnel would help prevent major disruptions to rail service that could cost the regional economy billions of dollars annually. The legal battle over the funding highlights the political tensions surrounding major infrastructure projects and the impact that federal policy decisions can have on local economies and jobs.

The details

The Gateway tunnel project would create nine miles of new passenger rail tracks with a two-tube tunnel, and would also fix the existing 116-year-old tunnels that were damaged during Superstorm Sandy in 2012. Around $2 billion had already been spent on the project before the Trump administration abruptly pulled funding last fall during a federal government shutdown. The administration cited issues with New York City's Disadvantaged Business Enterprise program as the reason for withholding the funds.

  • On Oct. 1, federal officials withheld grants to the Gateway project and the Second Avenue Subway construction, citing issues with New York City's Disadvantaged Business Enterprise program.
  • In early February 2026, the Gateway project stopped, affecting about 1,000 workers, due to lack of funding.
  • On Feb. 3, New York and New Jersey attorneys general sued the administration to release funding.
  • On Feb. 13, officials released $30 million in Gateway funds, followed by an additional $77 million on Feb. 17.
  • On Feb. 18, the remaining $127 million in Gateway funds was released via wire, allowing construction to resume next week.

The players

Letitia James

New York Attorney General who announced the release of the Gateway tunnel funding and said the funding freeze was unlawful.

Donald Trump

Former U.S. President who had vowed to terminate the Gateway project during a budget fight with Senate Minority Leader Chuck Schumer.

Chuck Schumer

U.S. Senate Minority Leader from New York who was involved in the budget fight with Trump over the Gateway project.

Kathy Hochul

Democratic Governor of New York who said Trump's halt on the project put thousands of jobs at risk.

Tom Prendergast

CEO of the Gateway Development Commission, the joint corporation between New Jersey and New York overseeing the project.

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What they’re saying

“This funding freeze was unlawful from the start. We took swift action in court, and now every dollar that was illegally withheld has been released.”

— Letitia James, New York Attorney General (usatoday.com)

“Today's progress is significant, but we need certainty that Gateway funding will remain in place for the duration of the project. The federal government has a legal obligation to fully fund Gateway, and New York will accept nothing less.”

— Kathy Hochul, Governor of New York (usatoday.com)

What’s next

The Gateway Development Commission says contractors will be notified this afternoon that work on the Gateway tunnel project will resume next week.

The takeaway

The legal battle over the Gateway tunnel funding highlights the political challenges surrounding major infrastructure projects and the impact that federal policy decisions can have on local economies and jobs. With the funds now released, the project can move forward, but ongoing uncertainty over long-term federal support remains a concern for state and local officials.