The start of construction of the Gateway Tunnel Project in 2023.
Susan Watts/Office of the Governor Kathy Hochul
The Trump administration on Friday began sending refunds for the Gateway tunnel project after a federal appeals court on Thursday refused to overturn a decision forcing it to do so.
The Gateway Development Commission, which oversees the project, said it received its first disbursement of the $205 million it is owed from the feds late Friday, for a total of $30 million. However, he said construction still remains paused after it was halted on Feb. 6.
“We have received an initial disbursement of $30 million from the federal government and expect to receive the full $205 million in reimbursement funds,” GDC said in a statement late Friday. “Construction remains paused for now and we are working with our contractors to plan how to use these funds most effectively and get workers back to work to resume some construction as soon as possible.”
Gov. Kathy Hochul, in a statement, said the feds’ move was a step in the right direction.
“Today we made progress,” he said. “$30 million has finally been released, and a court-ordered report will force transparency on the remaining funds. But the job is not done. Full funding must be restored now.”
Trump administration lawyers first revealed they would begin sending the funds during a state of emergency hearing on Feb. 13, requested by the offices of New York and New Jersey attorneys general Letitia James and Jennifer Davenport in their lawsuit seeking to unfreeze the $205 million in Gateway funds.
Trump administration lawyers said during the hearing that some federal refunds will begin arriving at the GDC next Tuesday. The judge in the case, U.S. District Judge Jeannette Vargas, ordered the feds to report the status of their disbursement of the funds by Feb. 17.
Friday’s hearing came after the Second Circuit Court of Appeals declined on Feb. 12 to take up the Trump administration’s appeal to overturn Vargas’ Feb. 6 ruling ordering the funds to be unfrozen for a two-week period. In effect, that means the feds must immediately disburse the money they began withholding in October.
“The court’s order is now in effect and the federal government must immediately release funds for the Hudson Tunnel Project,” James said in a statement Thursday night. “This administration never had the authority to freeze these funds, and no longer has any excuse to delay them. We look forward to full compliance with the court order and prompt delivery of the funds necessary to keep workers on the job and keep this critical project moving forward.”
Instead of accepting the Trump administration’s appeal, the Second Circuit remanded the case to a motions panel, which is not expected to meet until the week of February 23 at the earliest.
Work on the project has been halted since Feb. 6, when the GDC exhausted a line of credit it had used to keep construction moving forward since October. Since then, 1,000 workers spread across five construction sites have been left without work.
James and Davenport’s joint lawsuit argued that a prolonged work stoppage would cause serious harm to both states and that the funding freeze was illegal because it was based on Trump’s desire for political retaliation against Democrats rather than any violation of the law.
GDC filed a separate lawsuit in the Court of Federal Claims, alleging the feds breached the contract by withholding the funds. The judge in the case on Monday scheduled oral arguments for March 12.
Gateway is a $16 billion project to build a new rail tunnel under the Hudson River between New York and New Jersey, intended to replace the crumbling North River Tunnel.
The two-tube passage, which carries hundreds of thousands of travelers between the two states each weekday, is in urgent need of replacement after 116 years of use and severe storm damage caused by Hurricane Sandy in 2012. Therefore, if the new tunnel is not built, the existing tubes will be increasingly in danger of closing, an event that would hamper travel between the Empire and Garden states, as well as throughout the Northeast.
USDOT first froze funding in October, citing the need to review the project’s compliance with new diversity, equity and inclusion (DEI) rules. GDC officials say they have answered questions from the feds about their contracts with women- and minority-owned businesses.