Hudson Tunnel funding secured after court blocks federal freeze

A federal judge in Manhattan ordered the US Department of Transportation (USDOT) on 6 February 2026 to stop withholding federal money from the Hudson Tunnel Project, the USD 16 billion scheme to build a new two-track rail tunnel under the Hudson River and rebuild the century-old North River Tunnel. The temporary restraining order, issued by Judge Jeannette A. Vargas of the Southern District of New York, came on the day the Gateway Development Commission (GDC) had said it would shut its sites.

How the federal freeze unfolded

USDOT suspended disbursements to the project on 30 September 2025. The stated reason was a review of the GDC's compliance with federal non-discrimination rules. By the end of January the commission was warning that its line of credit would run out and that work would stop in early February.

The States of New York and New Jersey sued USDOT on 3 February 2026, and the GDC brought a separate action. The New Jersey Monitor reported that nearly USD 2 billion had already been spent and that close to 1,000 construction jobs were at immediate risk.

From court order to restarted sites

The order did not release money at once. On 9 February Judge Vargas refused the government's request to suspend her ruling but granted a five-day administrative delay. That window closed on 12 February after the Second Circuit Court of Appeals declined to issue a stay, and about USD 200 million in reimbursements already claimed by the GDC began to flow.

By mid-March the GDC confirmed it had received USD 205 million and that crews were back at work after a pause of around three weeks. Chief executive Tom Prendergast warned, in a statement reported by Mass Transit, that the commission would have to stop again if federal payments were interrupted. In March a three-judge Second Circuit panel upheld the restraining order, finding that a suspension would create a serious risk of injury and deterioration on the sites.

What the funding package covers

The project's financing was closed on 8 July 2024, when the Federal Transit Administration signed a Full Funding Grant Agreement and the Build America Bureau closed the commission's Railroad Rehabilitation and Improvement Financing (RRIF) loans. Federal sources account for about 70% of the total.

• Total cost: about USD 16 billion
• FTA Capital Investment Grant: USD 6.88 billion
• Federal-State Partnership for Intercity Passenger Rail: USD 3.8 billion
• RRIF loans (local share): USD 4.06 billion
• Amtrak contribution: USD 1 billion
• Mega and RAISE grants: USD 292 million and USD 25 million
• Target dates: new tunnel in service 2035; North River Tunnel rehabilitation complete 2038

The money pays for two new tubes from North Bergen to Manhattan, followed by the complete rebuild of the existing ones.

Why the North River Tunnel cannot wait

The North River Tunnel opened in 1910 and is the only rail crossing of the Hudson into Penn Station New York for Amtrak's Northeast Corridor and NJ Transit. According to the project's environmental documentation, Superstorm Sandy flooded both tubes with seawater in October 2012, and chlorides left in the concrete liner and bench walls continue to damage the structure.

From an operations point of view, the sequencing is the core of the scheme. The existing tunnel runs at full capacity in the peak, so taking even one tube out of service for reconstruction would sharply cut the number of trains into Manhattan. Only once the new tubes are open can each old tube be closed in turn, stripped and refitted with new track, traction power, drainage and signalling equipment, ending with four tracks under the river.

Amtrak's NextGen Acela fleet depends on this crossing as much as NJ Transit's commuter services do. See also our North America coverage.

Update (October 2026)

On 29 June 2026 Judge Vargas turned the February order into a final judgment. She found that the 30 September 2025 suspension breached the Administrative Procedure Act and federal grant rules, vacated it and barred USDOT from relying on it in future. ENR reported that USDOT said it was considering its legal options; no appeal had been announced at the time.

The first of two Herrenknecht tunnel boring machines, each weighing more than 1,680 US tons (around 1,520 tonnes) with a 28 ft 8 in (8.74 m) cutterhead, was launched at the North Bergen portal at a ceremony on 28 September 2026. It is expected to advance about 30 ft (9 m) a day through the Palisades, a drive of about one mile that should take roughly a year, with the second machine following shortly after. Amtrak is meanwhile running its tender for more than 800 long-distance railcars.

Sources: New Jersey Monitor, 6 February 2026; ENR, 13 February 2026; Mass Transit, 13 March 2026; Trains, 12 March 2026; Tunneling Online (GDC), July 2024; Hudson Tunnel Project FEIS; ENR, June 2026; Railway Age, 6 July 2026; 6sqft, 28 September 2026.