Federal funding for the $16 billion Hudson River rail tunnel—one of the most critical transportation projects in the United States—has become the focus of a high-stakes legal fight, just days before construction is set to stop.
The Gateway Development Commission (GDC), the bi-state authority overseeing the project, filed a lawsuit late Monday seeking to compel the Trump administration to release approved funds that it says are being unlawfully withheld. Without the money, the commission warned, construction will halt on Friday, jeopardizing jobs, contracts, and the future of the tunnel itself.
The Hudson River tunnel is the main rail link between New York and New Jersey, used daily by roughly 200,000 passengers and underpinning a regional economy that generates about 10% of U.S. economic output. The project includes building a new tunnel under the Hudson and rehabilitating an existing one that dates back to 1910 and was badly damaged by Hurricane Sandy in 2012.
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In its filing at the U.S. Court of Federal Claims, GDC said the U.S. Department of Transportation (USDOT) breached contractual obligations by refusing to release more than $205 million in federal funds approved under the previous administration. According to the lawsuit, there is “no legal basis” for the funding freeze.
Absent immediate funding, the commission said it would be unable to pay contractors, leaving “unfinished work sites with massive holes in the ground,” threatening hundreds of construction jobs and triggering costly delays and penalties that could undermine the project’s viability.
President Donald Trump announced in October that he had terminated federal support for the tunnel, and USDOT has since declined to release funds. The White House said last week that Democrats were blocking progress by refusing to negotiate, arguing that “there is nothing stopping Democrats from prioritizing the interests of Americans … and getting this project back on track.”
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Senate Majority Leader Chuck Schumer of New York said the legal action “would be unnecessary if President Trump did the right thing for New York and New Jersey and lifted his arbitrary freeze.”
New York Governor Kathy Hochul and New Jersey Governor Mikie Sherrill, both Democrats, praised the lawsuit and urged the administration to reverse course, warning of severe consequences for commuters and the regional economy if construction stops.
Nearly $2 billion has already been spent on the Hudson tunnel initiative, which has secured roughly $15 billion in federal commitments. The project serves Amtrak as well as multiple state-run commuter rail lines linking New Jersey to Manhattan.
GDC said it has repeatedly informed USDOT that the project is in full compliance with federal law and grant requirements.
Transportation analysts note that the Trump administration has previously moved to halt or scale back major transit and infrastructure projects in Democratic-led states. In New York, the administration is also seeking to end Manhattan’s congestion pricing program, which was launched last year to reduce traffic and raise billions for mass transit upgrades.
If the court does not intervene quickly, construction is expected to stop at the end of the week, raising the risk of cascading delays and higher costs. Any prolonged disruption could strain rail service along the Northeast Corridor, the busiest passenger rail route in the country.
