The basics:
- Gateway Development Commission files suit alleging federal breach of contract over Hudson Tunnel funding
- Seeks release of $205M in frozen grant and loan disbursements
- Construction halt could threaten nearly 1,000 immediate jobs, up to 11,000 more on ongoing projects
- Project includes new NJ–NY rail tunnel, rehabilitation of the 116-year-old North River Tunnel
The Gateway Development Commission has sued the federal government. The filing alleges a breach of contract for withholding promised funding for the Hudson Tunnel Project.
The lawsuit, filed in the U.S. Court of Federal Claims Feb. 3, seeks the release of contractually obligated grant and loan funds that GDC says have been frozen since Oct. 1, 2025.
As NJBIZ reported last week, GDC told its board it has exhausted available credit and short-term financing. It had utilized those funds to keep work going during the federal funding pause. Without a restoration of federal dollars, the group said, construction must pause by Feb. 6.
GDC says that a halt of construction would result in the immediate loss of nearly 1,000 jobs. Meanwhile, an extended pause would put at risk nearly 11,000 jobs on the current projects, as well as the 95,000 jobs and $19.6 billion in economic activity the total construction is projected to generate.
There are currently five active construction sites in New Jersey, New York and the Hudson River itself. Additionally, the first tunnel boring machine recently arrived from Germany for assembly (and the second to follow). GDC planned to begin tunneling later this year.
The Hudson Tunnel Project is a key piece of the broader Gateway Program. It plans to build a new rail tunnel between New Jersey and New York, as well as rehabilitate the 116-year-old North River Tunnel. The latter carries hundreds of thousands of daily riders and is a chronic source of delays.
All in
GDC said it has already invested more than $1 billion in construction and efforts. It also said federal agencies are legally bound under grant and loan agreements finalized in July 2024, when it secured full funding. The federal government pledged $12 billion for the $16 billion project.
The work is widely regarded as the nation’s most critical infrastructure project.
In its complaint, GDC argues the administration’s shifting explanations for freezing funds – including concerns related to the project’s Disadvantaged Business Enterprise program – are unlawful. As previously reported by NJBIZ, the Trump administration cited concerns over the DBE program as its basis for the funding pause amid further review.
The agency said it has provided documentation showing compliance with federal requirements. The suit seeks the release of roughly $205 million in due disbursements, as well as potential damages tied to any construction shutdown or contract terminations.
“Our goal has always been to work with our federal partners and get funding flowing again,” said GDC Chief Executive Officer Tom Prendergast. “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.”
“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,” said Gov. Mikie Sherrill. “When it comes to fighting for jobs and opportunity in New Jersey, I’m all in.”
Gloves off
New York Gov. Kathy Hochul accused the federal administration of illegally withholding committed funds. She warned the freeze threatens thousands of union jobs and billions in economic benefits.
“I said New York would fight like hell to keep this project moving and today, that is exactly what we are doing,” said Hochul.
Senate Minority Leader Chuck Schumer, D-N.Y., said the lawsuit would not be unnecessary if the White House “did the right thing for New York and New Jersey” and lifted what he called an arbitrary freeze.
“As this lawsuit makes clear, President Trump has illegally frozen congressionally appropriated and contractually obligated funding for Gateway,” said Schumer. “Gateway is the most important infrastructure project in the country, and tens of thousands of union workers depend on it moving forward.”
The White House did not immediately respond to a request for comment.
Milbank LLP (lead counsel) and Mayer Brown LLP represent GDC. The full lawsuit is available here.
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