Gateway sues federal government as Hudson Tunnel funding freeze threatens construction halt
(UI) - The Gateway Development Commission has filed a breach-of-contract lawsuit against the U.S. federal government in the U.S. Court of Federal Claims, seeking the release of grant and loan funding for the Hudson Tunnel Project. The commission says the continued withholding of funds threatens to halt construction on one of the nation’s largest active underground transportation projects.
According to GDC, federal disbursements required under existing funding agreements have been suspended since Oct. 1, 2025. The commission warned that without additional funding by Feb. 6, 2026, construction would be paused, resulting in the immediate loss of nearly 1,000 jobs. GDC said it has already spent more than $1 billion on construction and related investments and has exhausted remaining funding sources and available credit to keep work moving.
The Hudson Tunnel Project includes construction of a new two-track rail tunnel beneath the Hudson River between New Jersey and New York, along with rehabilitation of the existing North River Tunnel, which entered service in 1910 and has been a long-standing source of operational risk and service disruptions. GDC said prolonged delays could increase the likelihood of failures in the aging tunnel, which carries a significant share of passenger rail traffic in the Northeast Corridor.
Project funding is largely backed by federal agreements finalized in July 2024, including Capital Investment Grants, a Federal-State Partnership Grant, a RAISE Grant and Railroad Rehabilitation and Investment Financing (RRIF) loans. The lawsuit argues that the federal government’s suspension of payments violates those agreements and is not supported by federal law. GDC said it has provided documentation to address compliance questions raised by federal agencies, including requirements tied to the Disadvantaged Business Enterprise program.
RELATED: NUCA urges release of Hudson Tunnel funding amid federal pause
At a Jan. 27 board meeting, GDC said that without renewed federal payments, construction activity will be forced to stop later this week. The commission estimates that a prolonged shutdown could place as many as 11,000 construction jobs at risk and disrupt a wide range of contractors, suppliers and support services tied to the project.
New York Gov. Kathy Hochul said the tunnel is critical to regional mobility and economic stability, noting that roughly 200,000 daily rail passengers rely on Hudson River crossings. The lawsuit seeks release of $205 million in outstanding disbursements, along with damages related to construction delays or potential contract terminations.
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