The Gateway Tunnel Project, a $16 billion effort to build a new train tunnel under the Hudson River, recently hit a bureaucratic speed bump. Federal officials have paused funding while they review the project’s compliance with federal government rules. It’s been in the headlines, but the details aren’t always clear. This article dives into what the Federal Railroad Administration (FRA) review process is, and what it means for Gateway’s timeline.
Why Does the FRA Review Project Contracts?
When the FRA awards grants for big rail projects, it doesn’t just write a check and walk away. With billions of taxpayer dollars on the line, the agency is required to monitor how the money is spent from start to finish. Here’s how that oversight works.
The ground rules
When a project sponsor such as the Gateway Development Commission (GDC) accepts a federal grant, it signs an agreement promising to follow federal law. That includes environmental regulations, labor standards, Buy America rules that require the use of U.S. steel and manufactured products, and small-business contracting rules such as the Disadvantaged Business Enterprise (DBE) program for minority- and women-owned firms.
Competitive bidding
The FRA requires contracts to be awarded through open and fair competition. That means no favoritism, clear rules for bids and efforts to keep costs reasonable. The FRA may ask to see procurement documents or reports to confirm the process was aboveboards.
Reimbursement reviews
Federal transportation grants work on a reimbursement model. A project sponsor pays the contractors first, then requests repayment from the feds. Before approving reimbursement, the FRA checks whether the work performed and the costs billed meet federal rules. If something doesn’t, the FRA can withhold payment. That is the agency’s main enforcement power.
In short, contract reviews are how the FRA ensures projects stay on track, follow the law, and use public money responsibly.
Gateway in the Spotlight
Construction on the Gateway project’s Tonnelle Avenue Bridge & Utility Relocation Project in North Bergen, NJ (November 2025). This early work is part of preparing the New Jersey side for the tunnel boring machines.
Gateway is one of the largest infrastructure projects in the United States. It will build a new two-track tunnel between New Jersey and New York, repair the existing 115-year-old tunnel damaged during Hurricane Sandy, and add rail capacity for Amtrak and NJ Transit. Because of its size and cost, Gateway is under especially close watch.
Why was funding paused?
In May 2025, the U.S. DOT filed a motion in federal court stating that the “race and sex-based presumptions” in the DBE program may no longer be constitutional. The court has not ruled yet, which created uncertainty for all federally funded transportation projects that rely on DBE rules written before the motion.
In fall 2025, the DOT paused reimbursements for Gateway while it reviewed whether the project’s contract language is consistent with the changing DBE rules. The GDC announced quickly after that it would pause enforcement of DBE participation goals in its active contracts. Contractors are still required to comply with nondiscrimination laws, but they no longer need to meet DBE percentage targets.
Even though the GDC is cooperating with federal reviewers, federal payments remain frozen until the review is complete. For a megaproject that depends heavily on federal disbursements to keep work moving, that creates scheduling pressure.
Then came the shutdown
The federal government shutdown in October 2025 added another layer of delay. The contract review is handled by civil rights staff at USDOT. But when the government shut down, those staff were furloughed and the review stalled. Even after a short-term budget deal allowed work to resume later that month, the delay underscored how vulnerable big infrastructure projects can be to federal disruptions.
What Happens Now?
Construction continues. The GDC has funding from New Jersey, New York and the Port Authority that can support near-term work. Crews are currently active at five sites on both sides of the Hudson River. But upcoming phases of the project, like tunneling, are far more expensive. If the reimbursement pause continues for too long, it could delay awards for the next round of contracts.
GDC CEO Tom Prendergast has said the team remains committed to keeping the project on scope, on schedule and on budget despite the funding pause.
The bottom line
The FRA contract review process may seem like paperwork, but it has real-world consequences. Reviews exist to protect taxpayers, ensure fairness, and keep projects accountable. But when rules change mid-stream, or when outside factors such as government shutdowns interrupt the process, major projects can slow down.
Gateway is still being built. The tunnel is still coming. But the next time a train line is delayed because of aging infrastructure, remember that even new tunnels depend on contracts, compliance, and federal approvals that are every bit as important as concrete and steel.
References
Federal Railroad Administration. (2020). Monitoring and Technical Assistance Program – Procedure 01: Administrative Conditions and Requirements. Washington, DC: FRA Office of Passenger and Freight Programs railroads.dot.govrailroads.dot.gov.
Gateway Development Commission. (2025, October 3). Disadvantaged Business Enterprise (DBE) Program – Important Notice gatewayprogram.orggatewayprogram.org.
Fazelpoor, M. (2025, October 27). Gateway Project faces new uncertainty amid government shutdown. NJBIZ njbiz.comnjbiz.com.
Kiefer, E. (2025, October 1). Trump Admin freezes Gateway Tunnel funds over DEI, government shutdown. Patch Media patch.compatch.com.
U.S. Department of Transportation. (2025, October 1). Statement on review of New York’s discriminatory, unconstitutional contracting processes [Press release] transportation.govtransportation.gov.
