Federal officials have suspended billions of dollars in funding for two of New York City’s most ambitious transit initiatives — the Hudson Tunnel project and the Second Avenue subway extension — following the launch of an audit campaign examining compliance with Diversity, Equity, and Inclusion (DEI) practices.
According to the Office of Management and Budget (OMB), the decision affects nearly $18 billion in federal allocations earmarked for the projects. The review is part of a broader effort to ensure that federal infrastructure investments meet DEI standards in contracting, hiring, and community impact.
The Hudson Tunnel project, a critical component of the Gateway Program, is designed to modernize rail connections between New Jersey and Manhattan. The Second Avenue subway extension aims to expand transit access on the East Side, a project long anticipated to relieve congestion on the city’s subway network.
City and state leaders expressed concern that the funding pause could delay construction timelines and increase overall project costs. Transportation advocates also warned that the suspension could undermine public confidence in New York’s ability to deliver large-scale infrastructure upgrades.
Federal officials emphasized that the suspension is temporary and contingent upon the outcome of the DEI compliance audit. The findings are expected to determine whether the projects will regain access to the withheld funds or face further adjustments.
