Federal Funding Restored for Gateway and Second Avenue Subway Projects

The Trump administration has agreed to release federal funding for two major New York infrastructure projects that had been suspended for months, allowing work to resume on the Gateway rail tunnel and Second Avenue Subway Phase 2. Federal funding for the $16 billion Gateway rail tunnel between New York City and New Jersey, which had been suspended for more than four months, began to flow again on Friday after lawyers for the Trump administration told a federal judge that it would comply with her orders. Separately, the administration will release $58 million in funds for New York's Second Avenue Subway Phase 2 project, ending a seven-month delay.

The suspension of Gateway funding had left the government owing about $205 million to the tunnel's planners, the Gateway Development Commission, and forced a halt to work on the project last week, as well as the layoff of about 1,000 union workers. The federal government had pledged more than $11 billion toward the tunnel project, which has been billed as the most urgent major infrastructure project in the United States. But at the end of September, administration officials said they would stop the flow of that funding while they reviewed the project's contracts for compliance with revised federal regulations.

After the work came to a halt at the end of last week, the states of New York and New Jersey sued the U.S. Department of Transportation, arguing that they had been harmed by the layoffs and disruption. Judge Jeannette Vargas of the Southern District of New York ordered an end to the suspension by 5 p.m. on Feb. 12. In a hearing before Judge Vargas on Friday afternoon, lawyers for the government said that about $30 million of the overdue payments was on its way to the commission and the rest should be paid by early next week.

Just before 5 p.m., Senator Chuck Schumer said that the commission had received the first chunk of the money. "The first $30 million of federal funding for Gateway has arrived and we eagerly await the remaining money to be sent as quickly as possible so construction can resume," Schumer said. The commission said in a statement that it had received an initial disbursement of $30 million and expected to receive the full $205 million.

In recent weeks, the Trump administration shifted its explanation for the prolonged suspension of funds. In discussions with Senator Schumer of New York, President Trump suggested that he would release the funds in exchange for support of the renaming of two transportation hubs — Washington Dulles International Airport in Virginia and Pennsylvania Station in Manhattan — after him, people familiar with those talks said. Schumer said he rejected that idea.

For the Second Avenue Subway project, the funds had been withheld since Oct. 1 pending a DOT review of whether MTA's hiring practices were in compliance with the department's new rules related to disadvantaged businesses. "It shouldn't have taken seven months and a lawsuit to get here, but with the federal government's concession today on the courthouse steps, the MTA can now confidently forge ahead with Second Avenue Subway Phase 2," the MTA Chair and CEO said in a press release. "The billion-dollar contract approved at our March Board meeting is being awarded and contractors are mobilizing right away."

Second Avenue Subway Phase 2 will extend the Q line about 1.76 miles north from 96th Street to 125th Street in East Harlem. The tunnel contract, valued at $1.972 billion, was awarded to Connect Plus Partners, a joint venture between Halmar International and FCC Construction, in August 2025. The total project cost is estimated at $7.7 billion with a projected completion date of 2032.