New York, New Jersey Join Gateway Development In Filing Suit Against Feds for Withholding Funding

NEW YORK—The states of New York and New Jersey filed suit on Feb. 3 against the Trump Administration for pausing needed federal funding for the $16-billion Gateway Tunnel project. The two states joined the Gateway Development Commission in seeking legal action to compel the federal government to resume funding for the project already under construction.

A day earlier, the Gateway Development Commission filed a breach of contract lawsuit against the Trump Administration for the ongoing funding pause. If additional funding does not become available by Friday, Feb. 6, 2026, construction of Gateway’s Hudson Tunnel Project will have to pause, resulting in the loss of nearly 1,000 jobs. 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.

The lawsuit brought by the states of New York and New Jersey was filed in federal court in the Southern District of New York. It seeks emergency relief to stop the U.S. Department of Transportation from continuing to implement its indefinite funding freeze—funds needed to ensure that active construction on the project can continue and that workers do not lose their jobs.

“Donald Trump's revenge tour on New York threatens to derail one of the most vital infrastructure projects this nation has built in generations, putting thousands of union jobs and billions of dollars in economic benefits in jeopardy and threatening the commutes of 200,000 riders,” Gov. Hochul said. “New York will fight this illegal effort by the Trump Administration to steal the funding the federal government committed to get the Gateway Tunnel built with everything we've got. My message to Donald Trump and Sean Duffy (USDOT Secretary) is simple: we'll see you in court.”

New Jersey Governor Mikie Sherrill said, “Every time the Trump Administration gets involved, costs go up and working people suffer. The illegal attack on the Gateway Tunnel is yet another example. New Jersey will not back down from this fight. If this project stops, 1,000 workers will immediately lose their jobs and hundreds of thousands of commuters will lose the chance at finally having reliable train service that makes their lives easier.”

New York Attorney General Letitia James said, “Allowing this project to stop would put one of the country’s most heavily used transit corridors at risk. Our tunnels are already under strain and losing this project could be disastrous for commuters, workers, and our regional economy. We are taking the administration to court to prevent a shutdown that would ripple far beyond New York and New Jersey.”

The states are bringing this lawsuit, separate from the lawsuit the Gateway Development Commission filed this week, because they are suffering their own independent harms, the states noted in a press announcement of the litigation. Ending federal funding would do more than just kill thousands of jobs and imperil the future commutes of hard-working New Yorkers and New Jerseyans. It would also mean New Jersey and New York lose the benefits of the millions in funding and land they provided to the Gateway Project. It would mean New Jersey and New York would need to incur significant new operating costs. And because the Gateway Project is well underway with a number of active construction sites, it also means New Jersey and New York would have to incur millions to secure those sites and to prevent serious public safety and public health hazards.

The states are seeking emergency relief—including a preliminary injunction—to block DOT from continuing to implement this indefinite funding freeze.

On Feb. 2, the Gateway Development Commission 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.

The majority of the budget for the project is funded by federal grants. The U.S. Department of. Transportation 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 worth of construction and investment has already been made into building the HTP.

Despite its contractual commitments to fund the project, the federal government suspended the release of its contractually obligated funds since Oct. 1, 2025. The lawsuit charges that the shifting explanations the Administration has provided for this breach are plainly unlawful.

GDC has utilized available funding sources and credit to keep the project moving forward as planned while federal funding disbursements are paused. However, GDC announced at its Jan. 27, 2026, Board Meeting that all available sources and credit have been exhausted and construction must pause by Feb. 6, 2026, if federal disbursements do not resume.

For months, GDC stated that it has worked cooperatively with its federal partners to meet their requirements for restoring 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.”

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 that impact hundreds of thousands of daily riders—will shut down, severing the most heavily used passenger rail line in the country and leading to billions of dollars in lost time and productivity.