Trump Admin Releases $16 Billion in Withheld Funds for Gateway Tunnel Project

Construction to resume after legal battle over frozen federal funding

Published on Feb. 23, 2026

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The Gateway Development Commission announced that it has received full federal reimbursement for the $16 billion Gateway rail tunnel project under the Hudson River, allowing construction to resume after the Trump administration had previously frozen the funds. The move comes after officials from New York and New Jersey sued the Trump administration over the funding freeze.

Why it matters

The Gateway project aims to replace the aging, 115-year-old rail tunnels that connect New York and New Jersey, which are critical infrastructure for the Northeast corridor. The funding freeze had threatened to delay the project, which is expected to provide relief for 200,000 daily commuters and prevent a potential transit collapse.

The details

The Gateway Development Commission said it now has over $205 million available to mobilize the construction effort, and work is expected to resume next week. The funding pause had coincided with a federal government shutdown in which Senate Minority Leader Chuck Schumer led efforts to block President Trump's funding plan. The Trump administration had justified the hold by citing a new federal rule on contract awards, but New York and New Jersey officials accused the White House of politicizing the funding.

  • The Gateway Development Commission halted work earlier this month after the administration suspended reimbursements in October 2025.
  • A federal judge ordered the administration to hand over the frozen money in February 2026.
  • The federal appeals court is scheduled to consider an appeal of that order by Transportation Secretary Sean Duffy.

The players

Gateway Development Commission

The bi-state agency overseeing the $16 billion Gateway rail tunnel project under the Hudson River.

Kathy Hochul

The Governor of New York, who confirmed that work on the project will restart next week.

Chuck Schumer

The Senate Minority Leader, who led the effort to block President Trump's funding plan during the federal government shutdown.

Donald Trump

The former President, who voiced skepticism about the project's management and warned of potential cost overruns.

Sean Duffy

The Transportation Secretary, who is appealing the federal judge's order to release the frozen funds.

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What they’re saying

“Letters will be sent to contractors today, and construction activities are expected to resume next week.”

— Gateway Development Commission (Gateway Development Commission statement)

“This is a major win for workers and commuters.”

— Kathy Hochul, Governor of New York (Governor's statement)

“Under no circumstances, will the Federal Government be responsible for ANY COST OVERRUNS—NOT ONE DOLLAR!”

— Donald Trump (Trump's Truth Social post)

What’s next

The federal appeals court is currently scheduled to consider an appeal of the federal judge's order by Transportation Secretary Sean Duffy.

The takeaway

The release of the withheld federal funds for the Gateway tunnel project is a significant development, allowing construction to resume on this critical infrastructure project after a legal battle with the Trump administration. However, the project still faces potential challenges, including the ongoing appeal process and concerns raised by the former president about cost overruns.