Russell Vought, the director of the US Office of Management and Budget, cited the “unconstitutional DEI principles” as the reason for the funding freeze in a post on X on Wednesday. “Specifically, the Hudson Tunnel Project and the Second Ave Subway,” he said.  

The move comes as President Donald Trump and Republicans are pitted against congressional Democrats, including New York Senator Chuck Schumer, the minority leader, over funding. 

New York Governor Kathy Hochul was in the midst of holding a press conference with other elected officials in front of the Statue of Liberty to protest the government shutdown when she received news of Vought’s tweet.

“You know as I stand here, the bad news just keeps coming,” Hochul said, adding that the administration is using culture wars as a pretext for its actions. 

“Culture wars, over the tens of thousands of jobs that we’ve created, with these infrastructure projects that were literally talked about for decades, that we finally could get moving, create jobs and opportunity and take care of infrastructure challenges that others were too timid to take on in the past,” she said.

In a subsequent statement, Hochul said she will use “every tool available” to restore the funding. 

The US Department of Transportation said the two major infrastructure projects were under review to determine whether any awarded funding violated a new rule that barred race- and sex-based contracting requirements.

Staff working on the inquiry were furloughed due to the shutdown, causing a delay, the department said in an emailed statement, which blamed Schumer and House Democratic leader Hakeem Jeffries. 

In a social media post, Schumer said the White House’s decision is “counterproductive” because both the Second Avenue Subway and the Hudson River Tunnel projects create thousands of jobs and support the local economy. 

While it’s not clear which provisions the Department of Transportation is targeting, New York — like many cities and states across the US — has programs that support minority and women-owned businesses when awarding contracts. 

In the 2024 fiscal year, $2.8 billion or one-third of eligible state contracts were allocated to minority or women-owned business enterprises, known as MWBEs, according to state data. There are separate requirements under the Disadvantaged Business Enterprise program for contracts funded by the FTA.

Transit Projects

New York is investing significantly in transit-related projects to ease congestion and facilitate necessary upgrades to aging systems, with federal funding providing key support.

The Second Avenue Subway project is a $7.7 billion development run by the Metropolitan Transportation Authority that will connect the 96th Street station to 125th Street and provide subway service to East Harlem residents. 

In 2023, the Federal Transit Administration gave the project a $3.4 billion full funding grant agreement. Other funds will come from MTA debt sales repaid with revenue from a congestion pricing toll that charges motorists to drive on Manhattan’s busiest streets. The Trump administration and the MTA are in a legal challenge over congestion pricing. 

“The federal government wants to immediately ‘review’ our compliance with rules they told us about moments ago,” John J. McCarthy, the MTA’s chief of policy and external relations, said in a statement. “It looks like they’re just inventing excuses to delay one of the most important infrastructure projects in America.”

Wednesday’s actions are “blatant efforts to punish New York,” Lisa Daglian, executive director of the Permanent Citizens Advisory Committee to the MTA, said in a statement. “Tens of thousands of jobs hang in the balance and hundreds of billions in economic activity are at stake should these projects fail to move forward.”

Separately, the Hudson Tunnel project is meant to ease congestion underneath the Hudson River by adding a new tunnel and making upgrades to the current rail tunnel, which is more than 100 years old. The new tunnel is expected to be in service by 2035 and the full rehabilitation of the existing tunnel will be complete by 2038.

The Gateway Development Commission, the bi-state authority created to build the Hudson Tunnel project, said in a statement that it complies with all federal laws and regulations. 

“We remain focused on keeping the project on scope, schedule, and budget,” said Thomas Prendergast, the commission’s chief executive officer. 

Last year, the Federal Railroad Administration provided the commission’s program with $3.8 billion in aid — the last portion of a $12 billion federal contribution granted to the Hudson Tunnel project. 

“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 Department of Transportation said in its statement.