By David Shepardson
WASHINGTON (Reuters) -The Biden administration advanced a key $6.88 billion grant to help build a long-delayed new railway tunnel between New York City and New Jersey, which would be the largest ever federal transportation grant for a single project.
The $17.2 billion Hudson (NYSE:HUD) Tunnel Project will repair an existing tunnel and build a new one for passenger railroad Amtrak and state commuter lines between New Jersey and Manhattan.
Any failure of the lines in the current tunnel, which was heavily damaged during 2012's Superstorm Sandy, would hobble commuting in the metropolitan area that produces 10% of the country's economic output.
The White House called the decision "a critical step towards unlocking up to $6.88 billion in funding" from the Federal Transit Administration's (FTA) Capital Investment Grants program.
The announcement officially begins the engineering phase of the project and allows the Gateway Development Commission (GDC) to begin utility relocations, real estate acquisitions, demolition, procurement of equipment and materials, and further design.
If it meets all requirements including securing non-federal matching funds, the White House will consider awarding up to $6.88 billion for the project.
Senate Majority Leader Chuck Schumer of New York said plan sponsors are also applying for an additional $3.8 billion from a Federal Railroad Administration program "which hasn't yet been awarded, to address any potential cost increases."
New Jersey Democratic Senators Cory Booker said the announcement "puts this project on track to receive the substantial federal investments and will enhance "the lives of millions of commuters."
The project has been debated in Washington for over a decade since a New York City-area rail tunnel was damaged when Superstorm Sandy flooded parts of the city. The 112-year-old rail tunnel carries 200,000 passenger trips per day on New Jersey Transit and Amtrak along the Northeast Corridor.
In 2010, then-New Jersey Governor Chris Christie pulled state funding for the tunnel project. The administration of then-U.S. President Donald Trump and Democrats in Congress were at odds over whether the federal government should help fund the tunnel replacement.
Schumer said the Trump administration "made many efforts to derail the project, including slashing its funding and critical programs that would fund its construction."
New Jersey and New York are expected to put up about half the $17.2 billion cost, Schumer said.
The Gateway Program aims to overhaul much of the aging infrastructure in the Northeast Corridor rail line between Newark, New Jersey, and New York City.
Last month, Amtrak applied for $8 billion in government grants to modernize bridges, tunnels and other aging infrastructure along the busy Washington to Boston corridor.
Amtrak said on Thursday acceptance of the tunnel project into the engineering phase "has been years in the making, and we are thrilled to be even closer to the start of major construction on this critical Gateway Program project."