Funding Freeze For Gateway Tunnel Sparks Lawsuit, 1,000 Jobs At Stake

UPDATE: The states of New Jersey and New York have filed a separate lawsuit against the federal government regarding Gateway Tunnel funding. Learn more here.

A federal funding freeze by the Trump administration is about to halt construction on a long-awaited, $16 billion train tunnel between New Jersey and New York – and at least 1,000 jobs are now at risk, advocates say.

On Monday evening, the Gateway Development Commission announced that it has filed a lawsuit against the federal government over the Hudson Tunnel Project. View the full complaint online here.

Otherwise known as the “Gateway Tunnel,” the massive construction project is the centerpiece of a larger effort dubbed the Gateway Program, which aims to take some pressure off one of the most notorious railway chokeholds in the nation: the Northeast Corridor.

The new tunnel is especially crucial to the region, as the existing North River Tunnel serving Penn Station is more than 110-years-old and was severely damaged during Superstorm Sandy in 2012. While the tunnel has been repaired frequently, its age and damaged condition have caused constant headaches for more than 200,000 people who travel through the tunnel on more than 400 trains every weekday.

Construction on the new tunnel started on both sides of the Hudson River in November 2023. It will serve NJ Transit and Amtrak trains. Learn more about the plans here.

FUNDS FROZEN

The Trump administration froze billions of dollars for the project in October 2025.

According to White House budget director Russell Vough, the funding is being put on hold to ensure that it is not flowing based on “unconstitutional DEI principles” – a stance that has been a hallmark of the administration of President Donald Trump.

>> READ MORE: Feds Freeze Gateway Tunnel Funds Over DEI, Gov’t Shutdown

According to the Gateway Development Commission – the bi-state public authority that is overseeing the project – it has used available funding sources and credit to keep the project moving forward while federal funding disbursements are paused.

Those sources have now dried up, the commission said last week.

If additional funding does not become available by Feb. 6, construction of the tunnel will have to pause – resulting in the loss of nearly 1,000 jobs, the commission said.

If the funding freeze continues for an extended period of time, it could risk about 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 tunnel is expected to generate overall.

It also increases the risk that the 116-year-old North River 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, the commission said.

• See Related: Hudson River Tunnel Shutdown Would Severely Hurt Families, Economy

In addition to the $205 million in disbursements due to the commission, the lawsuit seeks damages that will be incurred in the event of a construction pause or termination of existing contracts.

The commission board reported that it has been cooperating with information requests from federal administrators, providing them with data about its federally-mandated Disadvantaged Business Enterprise program – and documentation that the project is in compliance with the administration’s latest regulations.

So far, their efforts have been in vain, the commission said – but they continue to hope that things will change.

“Our goal has always been to work with our federal partners and get funding flowing again,” CEO Tom Prendergast said.

“At the same time, we must hold the federal government to its contractual obligations so that construction is not halted,” Prendergast said.

‘BRAZEN ACT OF POLITICAL RETRIBUTION’

The Gateway Program was greenlighted during the administration of former President Barack Obama. It hit a brick wall when Trump took office for his first term, but picked up steam again when Joe Biden entered the White House.

The $16 billion cost of the project is being split between the federal government and the project’s three local partners: New York, New Jersey, and the Port Authority of New York and New Jersey.

In the past few years, several major infusions of federal dollars for the Gateway Program have been announced.

• See Related: Joe Biden Says Big Bucks Are Coming For Gateway Tunnel In NJ, NY
• See Related: Feds Pledge Nearly $7 Billion For 'Gateway' Train Tunnel Between NJ, NY

According to the Gateway Development Commission, the majority of the budget for the project is funded by federal grants. The U.S. Department of Transportation and the commission have been legally bound to the terms of Capital Investment Grants, Federal-State Partnership Grant, and RAISE Grant agreements, and Railroad Rehabilitation and Investment Financing loans, since July 2024, when full funding for the tunnel was secured.

More than $1 billion worth of construction and investment has already been poured into the effort, the commission said.

The governors of both New Jersey and New York are each backing the commission’s lawsuit and demanding that the Trump administration restart the flow of funds.

“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 Sherrill, who made the Gateway Tunnel a central part of her gubernatorial campaign in the Garden State last year.

• See Related: NJ Gov Candidates Trade Shots Over Gateway Tunnel

Gov. Kathy Hochul said the Gateway Tunnel is “essential” to the future of New York and the economy of the entire region.

“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,” Hochul said.

“I said New York would fight like hell to keep this project moving and today, that is exactly what we are doing,” she added.

• See Related: Trump Is Holding The Gateway Project Hostage

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