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October 1, 2025|Regulatory

Reports: Feds to Pause $18B in NYC Infrastructure Project Funding

Written by Marybeth Luczak, Executive Editor
A new station at 106th Street (rendering above, courtesy of the New York MTA) is part of the Phase 2 extension of the Second Avenue Subway in New York City.
A new station at 106th Street (rendering above, courtesy of the New York MTA) is part of the Phase 2 extension of the Second Avenue Subway in New York City.
The POTUS 47 administration will “withhold” approximately $18 billion in funding previously awarded for at least two rail-related infrastructure projects in the New York City area, according to reports in The New York Times and CNBC on Oct. 1.

U.S. Transportation Secretary Sean Duffy in a statement “specifically mentioned the expansion of the Second Avenue subway line and the construction of new train tunnels under the Hudson River, a $16 billion project,” according to The Times. “He said that funds for those two projects would not be distributed while the Transportation Department reviewed what it described as New York State’s ‘discriminatory, unconstitutional contracting processes.’”

“The review was in response to [POTUS 47’s] executive orders earlier this year targeting diversity, equity and inclusion programs, Mr. Duffy said,” according to The Times. “‘The department is focusing on these projects because they are arguably the largest infrastructure initiatives in the Western Hemisphere,’ he said in a statement.”

The Times noted that “[i]t was not immediately clear whether the $18 billion involved just those two projects or others as well.”

CNBC reported that Office of Management and Budget Director Russell Vought announced the federal funding freeze in posts on social media platform X. “‘Roughly $18 billion in New York City infrastructure projects have been put on hold to ensure funding is not flowing based on unconstitutional DEI principles,’ Vought wrote,” CNBC reported. “The funding is earmarked for the Hudson River Tunnel Project and the Second Avenue Subway project, said … Vought.”

According to CNBC, “The DOT in a statement, said it had issued ‘an interim final rule (IFR) barring race- and sex-based contracting requirements from federal grants,’ and that it had sent ‘letters to New York to inform them that their two mega projects – the 2nd Avenue Subway and Hudson Tunnel – are under administrative review to determine whether any unconstitutional practices are occurring.’”

(Gateway Development Commission illustration)

The statement noted: “Until USDOT’s quick administrative review is complete, project reimbursements cannot be processed, including a $300 million disbursement for the 2nd Avenue Subway. The remaining federal funding for these projects totals nearly $18 billion,’” according to the CNBC report.

The media outlet reported that while the government shutdown, which began at 12:01 a.m. ET on Oct. 1, did not lead to the funding freeze, “the DOT said that its review of the projects will take longer than normal because of the shutdown.”

The Gateway Development Commission has oversight of the Gateway Program Hudson Tunnel Project, which is building nine miles of passenger rail track between New York and New Jersey, including a new, two-tube tunnel under the Hudson River, and will rehabilitate the existing North River Tunnel. 

In an Oct. 1 statement, Gateway Development Commission CEO Thomas Prendergast said: “GDC has received notification from FTA [USDOT’s Federal Transit Administration] regarding a pause in disbursements for the Hudson Tunnel Project. GDC complies with all federal laws and regulations, and will continue to do so throughout the project. We look forward to continuing our productive relationship with the Administration, FTA, FRA [Federal Railroad Administration], and the U.S. Department of Transportation. In the meantime, we remain focused on keeping the project on scope, schedule, and budget.” (The GDC Board of Commissioners on Sept. 30 authorized expanding the use of the delivery partner model for project construction.)

According to The New York Times report, New York Gov. Kathy Hochul “described the [funding freeze] announcement as the [POTUS 47] administration’s latest salvo in its war on the state and its values. Earlier this week, Ms. Hochul said that the administration had cut an additional $100 million in counterterrorism funding in New York, following an earlier reduction of $87 million.”

“‘They’ve decided to put their own interpretation of proper culture ahead of our needs, the needs of a nation,’ Ms. Hochul, a Democrat, said at a news conference to discuss another topic involving Washington, the federal government shutdown,’” according to The Times. “‘You can’t make this up, folks. Just keeps getting worse and worse.’”

The FRA in July announced that it would pull back approximately $4 billion in funding for the California High-Speed Rail Authority (CHSRA) high-speed rail project. The FRA’s decision followed the release of its Compliance Review Report, which found the CHSRA project to be “in default” of the terms of two federal grants. CHSRA is now suing the POTUS 47 Administration.

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