Construction on the $16 billion Gateway rail tunnel is set to restart after the Trump administration released federal payments that had frozen work between Manhattan and New Jersey.
A federal judge's February 6 order prompted the administration to disburse a total of about $235 million in installments, clearing the way for contractors to remobilize and bring back affected workers, according to officials and court filings.
Newsweek has reached out to the Department of Transportation for comment.
Work on the project paused after federal reimbursements were withheld, triggering a stoppage that threatened nearly 1,000 jobs.
A federal judge blocked the administration from continuing to hold the money back, and New York says the remaining funds have now been released.
New York Governor Kathy Hochul said the federal government freed up the remaining $98 million due for the project, along with an additional $30 million in reimbursements for work completed in January.
The money came out in pieces over nearly two weeks after a judge's February 6 order. In the sequence New York described, $30 million was released on February 13, followed by another $77 million earlier this week, before the latest tranche.
Officials said construction, paused when funds ran out on February 6, will resume next week, with letters being sent to contractors to restart work.
The Hudson River tunnel is a critical link on the Northeast Corridor, carrying more than 200,000 daily riders through a pair of century‑old tubes that suffered significant damage during 2012's Hurricane Sandy, and the Gateway program is designed to add capacity and rehabilitate the existing tunnel.
The funding interruption, initiated on the eve of the October 1 government shutdown, led to a work stoppage this month, with state officials warning the pause could put jobs at risk.
Funding for the tunnel project comes from the federal government and New York and New Jersey, with Amtrak also committing more than $1 billion.
New York Governor Kathy Hochul said: "Today's progress is significant, but we need certainty that Gateway funding will remain in place for the duration of the project."
"The federal government has a legal obligation to fully fund Gateway, and New York will accept nothing less."
President Donald Trump wrote in a post on Truth Social: "I am opposed to the future boondoggle known as 'Gateway,' in New York/New Jersey, because it will cost many BILLIONS OF DOLLARS more than projected or anticipated."
"Gateway will likewise be financially catastrophic for the region, unless hard work and proper planning is done, NOW, to avoid insurmountable future cost overruns."
New York Attorney General Letitia James said: "These funds should never have been withheld in the first place. I am thrilled that hardworking New Yorkers can now get back on the job and move forward with the most important infrastructure project in the country."
"We will remain vigilant to ensure this funding continues uninterrupted, so that workers and commuters are never again left in limbo by the president's targeted and unlawful whims."
Democratic Senate minority leader, Chuck Schumer, said: "This is a huge win for New York, New Jersey, hundreds of thousands of commuters, thousands of union workers and the economy of the entire region."
Contractors are being told to prepare to resume construction next week, according to the governor's office.
The court fight over the funding freeze is still part of an active legal dispute, even as payments restart and officials push for assurance that future funding continues without another interruption.