The Gateway Development Commission (GDC) filed a lawsuit against the federal government in the U.S. Court of Federal Claims seeking judgment that would release contractually-obligated grant and loan funds for the Hudson Tunnel Project (HTP).
If additional funding does not become available by Friday, Feb. 6, construction of the HTP will have to pause, resulting in the loss of nearly 1,000 jobs, the GDC said in a press statement on Monday (Feb. 2).
The HTP is an urgent investment in America’s passenger rail network, involving the construction of a new train tunnel under the Hudson River, connecting New Jersey and New York. It also calls for rehabilitating the North River Tunnel, which has been in service since 1910 and causes chronic delays for hundreds of thousands of daily riders.
“I made a commitment to fight for Gateway and New Jersey’s economy, which is why we’re taking action to hold the Trump Administration accountable for breaching its contract. When it comes to fighting for jobs and opportunity in New Jersey, I’m all in,” said New Jersey Gov. Mikie Sherrill.
“As this lawsuit makes clear, President Trump has illegally frozen congressionally appropriated and contractually obligated funding for Gateway,” said Senator Chuck Schumer. “This lawsuit would be unnecessary if President Trump did the right thing for New York and New Jersey and lifted his arbitrary freeze. Gateway is the most important infrastructure project in the country, and tens of thousands of union workers depend on it moving forward,” Sherrill added.
Project Powered Mostly By Federal Grants
The majority of the project’s budget is funded by federal grants, the GDC said. The U.S. Department of Transportation (USDOT) and GDC have been legally bound to the terms of Capital Investment Grants (CIG), Federal-State Partnership (FSP) Grant, and RAISE Grant agreements, and Railroad Rehabilitation and Investment Financing (RRIF) loans, since July 2024, when full funding for the HTP was secured. More than $1 billion in construction and investment has already been made to build the project.
Despite its contractual commitments to fund the project, the federal government has suspended the release of its contractually obligated funds since Oct. 1, 2025. The lawsuit makes clear that the Administration’s shifting explanations for this breach are plainly unlawful.
“The Gateway Tunnel is essential to the future of New York and the economy of the entire region — every day, 200,000 commuters who power 20% of the nation’s economy depend on a safe, reliable ride under the Hudson River,” New York Governor Kathy Hochul said.
“For months, Donald Trump and his enablers in Washington have illegally withheld committed funding for this project in a brazen act of political retribution intended to hurt New Yorkers, putting thousands of union jobs and billions of dollars in economic benefits at risk. I said New York would fight like hell to keep this project moving, and today, that is exactly what we are doing,” Hochul said.
Requirements for Funding Restoration
For months, GDC cooperated with its federal partners to meet the requirements to restore funding. GDC responded thoroughly and promptly to each request for information about the project’s federally-mandated Disadvantaged Business Enterprise (DBE) program and provided documentation that the project is in compliance with the Administration’s latest regulations.
GDC CEO Tom Prendergast said, “Our goal has always been to work with our federal partners and get funding flowing again. At the same time, we must hold the federal government to its contractual obligations so that construction is not halted. It’s our responsibility to fight for the nation’s most urgent infrastructure project and the nearly 1,000 workers whose jobs are threatened.”
GDC has used available funding sources and credit to keep the project on track as planned while federal funding disbursements are paused. However, GDC announced at its Jan. 27 board meeting that all available sources and credit have been exhausted.
Job Losses, Possible Tunnel Shutdown
Pausing construction will result in the immediate loss of nearly 1,000 jobs. An extended pause would put at risk approximately 11,000 jobs on the current projects, as well as the 95,000 jobs and $19.6 billion in economic activity that construction of the HTP is anticipated to generate overall.
It also increases the risk that the 116-year-old North River Tunnel — already a leading cause of delays affecting hundreds of thousands of daily riders — will shut down, severing the most heavily used passenger rail line in the country and resulting in billions of dollars in lost time and productivity.
About the Lawsuit
In addition to the $205 million in disbursements due to GDC, the complaint seeks damages that will be incurred in the event of a construction pause or termination of existing contracts.
GDC is represented by Milbank LLP, as lead counsel, and Mayer Brown LLP. The full complaint is on the GDC website.
About the Gateway Program
The Gateway Program is the most urgent infrastructure program in the country – a comprehensive set of rail investments that will improve commuter and intercity services, add needed resiliency, and create new capacity for the busiest section of the Northeast Corridor (NEC). The NEC is the most heavily used passenger rail line in the country hosting more than 2,200 train movements and 800,000 passenger trips daily.