The Gateway Development Commission sued the federal government late Monday, after months of the Trump administration’s refusal to distribute money approved by Congress for the construction of the Hudson River Tunnel.
The suit, filed in the U.S. Court of Federal Claims, comes just days before work on the $16 billion tunnel project is expected to come to a halt for lack of funds, and alleges the federal government is in breach of contract by holding up billions in already-promised dollars.
“Despite its contractual commitments to fund the project, the federal government has suspended the release of its contractually obligated funds since October 1, 2025,” the GDC said in a statement Monday night. “The lawsuit makes clear that the shifting explanations the Administration has provided for this breach are plainly unlawful.”
The tunnel project, which seeks to build two new rail tubes under Jersey City and the Hudson River — linking train tracks in the New Jersey Meadowlands to Penn Station — is the single largest piece of a massive Gateway project meant to double rail capacity between the Empire and Garden states.
Work on the tunnel is expected to generate over 70,000 jobs and ultimately increase potential capacity at Penn Station, the nation’s busiest train station.
Work has been ongoing since the October freeze, with a massive tunnel-boring machine nearly ready to start digging through rock under Jersey City. But Gateway officials said last week work will halt indefinitely on Friday if the feds don’t end their funding freeze — a stoppage that will endanger the project and axe about 1,000 jobs.
“President Trump has illegally frozen congressionally appropriated and contractually obligated funding for Gateway,” said Sen. Chuck Schumer, New York’s senior senator and the body’s minority leader. “This lawsuit would be unnecessary if President Trump did the right thing for New York and New Jersey and lifted his arbitrary freeze.”
Gov. Hochul called the funding pause a “brazen act of political retribution” on Trump’s part, “intended to hurt New Yorkers.”
Hochul’s cross-Hudson counterpart, N.J. Gov. Mikie Sherrill, said she’d “made a commitment to fight for Gateway and New Jersey’s economy,” and was “all in” to fight for the state’s economic opportunity.
Over the past five months, the Trump administration has linked the funding freeze to a grab-bag of grievances, offering three unrelated justifications.
The freeze was first announced just hours into the federal government shutdown on Oct. 1, supposedly over “unconstitutional DEI principles” in the selection of contractors.
At that time, Office of Management and Budget Director Russel Vought and U.S. Department of Transportation Secretary Sean Duffy claimed the project, along with the MTA’s long-awaited Second Avenue subway extension, no longer complied with contracting rules the government had changed just hours before the shutdown.
Duffy told reporters the feds were “not trying to shut down these projects — to the contrary, we’re trying to make sure these projects move forward, move forward fast.”
But within weeks, the president took to gloating that he’d “terminated” the project for good —not because of contracting rules, but because it was a favorite of Schumer’s. The New York Democrat has been a longtime advocate for the tunnel’s construction, and was the president’s foil in the ongoing shutdown.
“Billions and billions of dollars that Schumer has worked 20 years to get — it’s terminated,” the president said in October. “Tell him, ‘It’s terminated’.”
Officials at GDC have insisted the bi-state body has worked to remain in compliance with federal requirements, even as the Trump administration has changed its rules.
“For months, GDC has worked cooperatively with its federal partners to meet their requirements for restoring funding,” the commission said in its statement Monday. “GDC responded thoroughly and promptly to each request for information about the project’s federally mandated Disadvantaged Business Enterprise program and provided documentation that the project is in compliance with the administration’s latest regulations.”
When the Daily News last week asked the USDOT if similar claims by GDC CEO Tom Prendergast were true — and, if so, why the funding hadn’t been restored — a spokesperson directed the inquiry to the White House.
White House spokesman Kush Desai then offered a third explanation as to why Congress’ money wasn’t getting to the tunnel — lack of Democratic fealty to the Trump administration’s historically unpopular immigration efforts.
“It’s Chuck Schumer and Democrats who are standing in the way of a deal for the Gateway Tunnel Project by refusing to negotiate with the Trump administration,” Desai claimed. “There is nothing stopping Democrats from prioritizing the interests of Americans over illegal aliens and getting this project back on track.”
