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Gateway Commission and States Sue Trump Administration Over Hudson Tunnel Funding Freeze

The commission is asking a judge to release over $205 million in withheld reimbursements to avert a work stoppage this week.

FILE - A tunnel is under construction in Manhattan that will connect New York and New Jersey Oct. 2, 2025, in New York. (AP Photo/Ted Shaffrey, File)
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A construction crew works on the Manhattan Tunnel Project, which is part of the Hudson Tunnel Project, in New York City, U.S., October 1, 2025. The U.S. government has paused some funds for major transit projects in New York, including the Hudson Tunnel and the Second Avenue Subway, while the Department of Transportation reviews whether any small-business contractors are engaged in improper diversity initiatives. REUTERS/Kylie Cooper
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Overview

  • The Gateway Development Commission filed a breach-of-contract case in the U.S. Court of Federal Claims seeking immediate release of more than $205 million and enforcement of roughly $15 billion in federal commitments.
  • New York and New Jersey separately sued in federal court in Manhattan, asking for a quick ruling to restart payments so ongoing construction is not forced to shut down as early as Friday.
  • Federal support has been suspended since Oct. 1, 2025, first over a DEI/DBE compliance review and later in statements tying restoration of funds to broader political disputes with Senate Democrats.
  • GDC says reserves and a credit line are nearly exhausted, warning that a halt could cost $15–$20 million per month to secure sites and jeopardize about 1,000 current construction jobs.
  • The White House blames Democrats for the impasse, while Sen. Chuck Schumer, Gov. Kathy Hochul and Gov. Mikie Sherrill back the lawsuits; the commission retained Neal Katyal and Gurbir Grewal for the case.