The $540 million would not go directly to the project but would be kept out of the hands of the federal Department of Transportation, according to the sources. | AP Photo Congressional leaders etch deal to make $540M available to Gateway

Congressional leaders have agreed to include $540 million in the federal spending bill that could be used to fund a portion of the massive Gateway tunnel project, according to two people close to the budget negotiations.

The still-tentative deal could offer an end-run around President Donald Trump, who had vowed to veto the spending bill if it included $900 million sought by Senate Minority Leader Chuck Schumer and other New York and New Jersey lawmakers. But the Trump administration says the agreement still gives federal transportation officials the final say over where the new money ends up — and strips any mention of the project from the actual bill.


Gateway, which calls for constructing two new tubes connecting New Jersey to midtown Manhattan and repairs on the existing tunnel that is now falling apart, is considered to be among the most pressing infrastructure projects in the nation. The new funding would cover just a fraction of the total project cost, estimated to run around $13 billion for the tunnel work and $30 billion for the larger program, which encompasses other key upgrades to Amtrak’s Northeast Corridor.

The $540 million would not go directly to the project but could be kept out of the hands of the federal Department of Transportation, according to the sources, neither of whom was authorized to speak publicly.

Under the terms agreed to by congressional leaders — who are said to be closing in on a final, $1.3 trillion spending bill — most of the $540 million would be provided to Amtrak for upgrades on the Northeast Corridor, which runs between Washington and Boston. The remainder would be made available as part of the Department of Transportation’s State of Good Repair program.

Two administration officials, however, say there is no guarantee that money will go to Gateway. DOT, the officials say, will actually have control over the purse strings because existing law allows the department to review Amtrak’s capital spending plans and the state of good repair program includes a competitive grant program. The administration officials, like the people familiar with the Gateway negotiations, spoke on condition of anonymity to discuss the talks before they are finalized.

In recent months, Transportation Secretary Elaine Chao has put up numerous roadblocks to the project, including the rejection of an Obama-era deal in which the federal government was expected to cover half the cost of the project.

The spending bill will also provide nearly $250 million in new discretionary funding for DOT’s Capital Investment Grants program, boosting the total appropriations to more than $2.6 billion, according to one administration official. The Gateway builders, which include Amtrak and agencies in New York and New Jersey, have already applied for some of those grants but are technically not eligible under two recent ratings by DOT.

The current tunnel to New York’s Penn Station is more than a century old, damaged by Hurricane Sandy's flood waters and said to be at risk of failing within the next two decades. Taking just one tunnel out of service would reduce capacity to Penn Station by 75 percent, making it virtually impossible for NJ Transit’s commuter trains to reach New York during peak travel times.

Even more pressing is the work on the Portal Bridge project, a creaky old span that carries Northeast Corridor trains across the Hudson River. The work, estimated to cost $1.6 billion, could begin immediately when funding is made available.