WASHINGTON — Federal investigators discovered an accounting error worth about $116 million and a delay in the purchase of key construction materials in a key piece of the massive Gateway tunnel-and-bridge public works project.
But otherwise, an audit last week by the inspector general for Amtrak gave a generally clean bill for the multi-billion Hudson Tunnel project, even as President Donald Trump threatened to end its federal funding.
The audit described “notable progress” in the Hudson Tunnel Project, a $16 billion effort to build a new passenger rail tunnel beneath the Hudson River and repair a separate tunnel, despite Trump’s claim he “terminated” it.
The tunnel project is the largest federally funded mass transit project in U.S. history. Trump’s proclamation is one of many attempts he has made this year to circumvent Congress and block federal funding already obligated.
“We found that Amtrak has made notable progress meeting its near-term obligations for the Hudson Tunnel Project, but the company could reduce its risks and help improve overall project performance by clarifying its role with external partners, engaging all relevant internal stakeholders, and strengthening its document management system,” the inspector general said in a statement.
The tunnel project is the central piece of the broader Gateway Program puzzle, a gargantuan public transit project decades in the making. The Hudson Tunnel Project specifically is a two-tube effort with two halves: a new tunnel, estimated to be done in 2035, and rehabilitation for an existing tunnel, expected by 2038.
The first of two mammoth boring machines – giant drills to dig the tunnels – is set to arrive in January. Drilling will commence in the Palisades, below which the machines — 28 feet wide, 500 feet long and 1,700 tons apiece — will gnaw through sub-surface rock and earth.
In their review, auditors found an “excess payment” Amtrak had made to the Gateway Development Commission, a public entity New Jersey and New York created to finance the overall project.
After the discovery of the excess payment, the corporation had repaid Amtrak $115.5 million, as of July 2025, the inspector general said.
Investigators also found Amtrak as of May had not procured “construction materials to be used in equipping the new” tunnel, though some items for large projects can take years to obtain.
How plans to redevelop New York Penn Station could also trigger repercussions for Gateway’s future, the inspector general found.
To complete the audit, the fifth the Amtrak watchdog has completed on the Gateway project, staff reviewed more than 650 documents, interviewed dozens of people, and visited construction sites in both states, officials said.
The inspector general found “Amtrak has made notable progress fulfilling several key obligations in support of the project, including acquiring necessary real estate parcels and staffing its project team.”
Gateway could generate $450 billion in long-term economic benefits in the tri-state region of New Jersey, New York and Connecticut, according to the Regional Plan Association, a research group.
The boring machines are expected to churn through about 27 feet a day, according to the Gateway Development Commission. “They are massive, highly complex machines that have been custom-built for the Hudson Tunnel Project. Producing them is an impressive feat in-and-of itself,” said Thomas Prendergast, CEO of the commission.
