Transportation Dept. to freeze $18B in New York projects over DEI rules
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The West Side Highway and Hudson River from the West Side Railyards in New York on July 8, 2024. Photo: Yuki Iwamura/Bloomberg via Getty Images
The Trump administration is freezing nearly $18 billion in federal funding, affecting two major New York infrastructure projects, for what budget director Russ Vought deemed "unconstitutional DEI principles" Wednesday.
Why it matters: The Transportation Department, which is conducting a review of federal grants for DEI practices, also halted a $300 million payment that, with the larger freeze, could delay the Hudson River Tunnel and Second Avenue Subway projects.
- Lapses in funding could push back construction timelines and threaten jobs tied to the contracts.
- Tunnel construction would support more than 20,000 direct and indirect jobs, while also generating $4.5 billion in economic output, per an analysis the Gateway Development Project released in April.
What they're saying: "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 in a statement released Monday.
- The funding freeze is unrelated to the government shutdown, but DOT blamed Democrats for delaying the review.
- "Without a budget, the Department has been forced to furlough the civil rights staff responsible for conducting this review," the agency said.
At Wednesday's White House press conference, a correspondent asked Vice President Vance if freezing federal funds for NYC's infrastructure projects was a punishment for Senate minority leader Chuck Schumer, following the government shutdown.
- In response, Vance said, "'I'm sure Russ is heartbroken about the fact that he is unable to give certain things to certain constituencies."
Zoom out: The review stems from DOT's new interim final rule on Disadvantaged Business Enterprises, which per the agency, "removes race and sex-based presumptions of social and economic disadvantage."
- Applicants must now individually prove disadvantage through a personal narrative, describing specific economic struggles or institutional barriers to receive additional assistance.
- The final rule applies nationwide, meaning other state or local infrastructure projects relying on federal funding could face similar scrutiny if the DOT suspects plans are supporting DEI.
NYC Mayor Eric Adams' office called the administration's actions "unnecessary" in a statement to Axios and said both projects offer "good paying union jobs" and enhance transportation for the working class — "that is ultimately who will pay."
- "We are reviewing our options in response," spokesperson William Fowler said.
What we're watching: President Trump continues to threaten cuts to federal funding for New York City projects and officials.
- Trump has also warned that if Democratic New York Mayoral nominee Zohran Mamdani won the race, he would not provide federal funds to uphold Mamdani's campaign pledges.
Editor's note: This story has been updated with a statement from a White House press conference.
