The Trump administration has frozen about $18 billion for two major infrastructure projects in New York City pending a review to ensure that funding is not “flowing based on unconstitutional DEI principles,” a top official said Wednesday.
The funding is earmarked for the Hudson River Tunnel Project known as Gateway, and the Second Avenue Subway project, said Office of Management and Budget Director Russell Vought.
Vought’s announcement came on the first day of the shutdown of the U.S. government after Congress failed to pass stopgap funding bills that would have kept federal agencies and services operating at normal capacity for at least another seven weeks.
The Trump administration has blamed the two top Democrats in Congress — Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries — for that shutdown. Both Democrats are from New York City.
Gateway, which costs more than $16 billion, is set to build another rail tunnel under the Hudson River to add capacity to two single-track tunnels that carry Amtrak and New Jersey Transit trains to Penn Station in Midtown Manhattan from New Jersey, and vice versa.
The Second Avenue Subway is an ongoing subway line project along Manhattan’s East Side.
Vought announced the freeze in posts on the social media site 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.
DEI refers to diversity, equity and inclusion policies, which have become a target for the Trump administration.
Director of the US Office of Management and Budget (OMB) Russell (Russ) Vought speaks to reporters outside the West Wing of the White House on July 17, 2025, in Washington, DC.
Andrew Caballero-Reynolds | Afp | Getty Images
It was not immediately clear what triggered the freeze on that basis.
But the Department of Transportation later said that Secretary Sean Duffy’s “position on the DBE program is clear – subsidizing infrastructure contracts with taxpayer dollars based on discriminatory principles is unconstitutional, counter to civil rights laws, and a waste of taxpayer resources.”
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.”
“The Department is focusing on these projects because they are arguably the largest infrastructure initiatives in the Western Hemisphere, and the American people want to see them completed quickly and efficiently,” the DOT said.
“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.
New York Gov. Kathy Hochul said, “The bad news just keeps coming.”
“They’re trying to make culture wars be the reason why,” Hochul said at a press conference to discuss the federal government shutdown, according to the Associated Press. “That’s what a partnership with Washington looks like as we’re standing here. We’ve done our part. We’re ready to build. It’s underway.”
“And now we realize that they’ve decided to put their own interpretation of proper culture ahead of our needs, the needs of a nation,” the governor said.
The DOT said that its review of the projects will take longer than normal because of the government shutdown.
“Thanks to the Chuck Schumer and Hakeem Jefferies shutdown, however, USDOT’s review of New York’s unconstitutional practices will take more time,” the DOT said.
“Without a budget, the Department has been forced to furlough the civil rights staff responsible for conducting this review.
“This is another unfortunate casualty of radical Democrats’ reckless decision to hold the federal government hostage to give illegal immigrants benefits,” the DOT said.