A legal challenge has been launched to restore federal funding for a major infrastructure initiative—the Gateway Program’s new trans-Hudson rail tunnel—after the Trump administration halted disbursements totaling over $200 million. The Gateway Development Commission (GDC), the bi-state agency overseeing construction between New Jersey and New York, filed the lawsuit in the U.S. Court of Federal Claims, seeking enforcement of previously agreed-upon funding commitments authorized by Congress.
According to the 75-page filing, the funding freeze, initiated in early October, threatens to halt construction within days, risking immediate job losses and incurring monthly suspension costs estimated between $15 million and $20 million. The project, which began under the Biden administration in November 2023, operates under a cost-sharing agreement where the federal government covers 70% of the $16 billion total, with the remainder funded by New Jersey, New York, and the Port Authority of New York and New Jersey.
To date, more than $4 billion in federal funds have been committed, with $1 billion already spent on active construction. Despite the freeze, the GDC has managed to maintain progress using credit lines and alternative financing, including the delivery of a tunnel boring machine now on site and ready for assembly.
The lawsuit emphasizes the broader economic implications of the tunnel, which serves a corridor stretching from Boston to Washington, D.C., responsible for approximately 20% of the nation’s gross domestic product. The existing twin-tube tunnel, built 116 years ago and severely damaged during Superstorm Sandy, suffers from frequent failures. Replacing it with four modern tracks will enhance safety, reliability, and service efficiency for Amtrak and New Jersey Transit, which together facilitate around 200,000 daily trips between Newark and Manhattan.
The legal filing also outlines shifting justifications for the funding suspension, including allegations of political retaliation. It claims that after a 43-day government shutdown—triggered by legislative gridlock within the Republican-controlled Congress—Trump administration officials threatened to cancel the project in response to Democratic opposition during negotiations. In October, President Trump reportedly stated his administration was eliminating programs “we didn’t like.”
Support for the lawsuit has come from both New Jersey Governor Mikie Sherrill and New York Governor Kathy Hochul, along with numerous congressional representatives. Later on the same day, the attorneys general of both states filed a separate legal action challenging the freeze as unlawful.
“The Federal Government has left us no choice: we must challenge this illegal action in court, and demand emergency relief that will protect us from these unlawful harms,” said Jennifer Davenport, New Jersey’s acting attorney general.
The case underscores the vulnerability of large-scale infrastructure projects to political shifts and highlights the economic stakes tied to reliable transportation networks in one of the nation’s most vital corridors.
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Lawsuit details economic harm from Trump’s Gateway freeze
Just weeks after President Donald Trump touted economic growth made during his second term, a lawsuit seeking to unfreeze the funding he halted for a new trans-Hudson rail tunnel highlights that project’s importance to the national economy.
The lawsuit, filed in federal court earlier this week by the bistate agency building the new tunnel between New Jersey and New York, seeks to enforce its contractual funding agreements with the federal government.
The Trump administration has been withholding more than $200 million in disbursements authorized by Congress since early October, according to the 75-page suit, putting the project in danger of being halted, at least temporarily, within a matter of days.
“A swift resolution is of the utmost importance,” the Gateway Development Commission’s lawsuit says.
“A forced suspension of work will result in massive job losses for workers on the project and would require GDC to spend approximately $15 million to $20 million a month in suspension costs,” the suit says.
But it’s not just the New Jersey and New York region that stands to take a hit from the looming pause in construction, which threatens nearly 1,000 jobs in the near-term.
Building a new tunnel to replace infrastructure that is 116 years old, and prone to regular breakdowns after being heavily damaged by Superstorm Sandy over a decade ago, is also vital for a regional corridor between Boston and Washington, D.C. And that corridor generates an estimated 20% of the nation’s gross domestic product, according to the lawsuit, which cites an oft-repeated estimate.
“This corridor is an economic engine for the entire country,” the lawsuit says.
The broader rail system served by the tunnel traverses several major metropolitan areas, carrying 800,000 daily passenger trips across a 457-mile line, according to the suit. Between just the major stations in Newark, New Jersey and New York City, Amtrak and New Jersey Transit trains account for some 200,000 daily trips, the suit says.
“When the (tunnel project) is finished, there will be four modern tracks between New Jersey and New York where there are currently only two,” the suit says. “This will increase safety and operational flexibility for Amtrak and NJ Transit to support reliable, on-time service.”
After losing a bid for reelection in 2020 to Democrat Joe Biden, Trump, a Republican, prevailed in 2024, besting then-Vice President Kamala Harris.
In touting accomplishments made during the first year of Trump’s second term, the White House highlighted rising wages, private-sector job growth and an expansion of the nation’s real GDP, which is an estimate of the overall value of the goods and services produced by labor and property located in the U.S.
“President Trump has delivered truly transformative results with the most accomplished first year of any presidential term in modern history,” the White House said last month.
The lawsuit filed on Monday by the Gateway Development Commission devotes several pages to the shifting explanations for why the tunnel funding has been frozen.
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Among those reasons for the freeze is “retribution” against Democrats after last year’s record-long government shutdown, which occurred after Trump was unable to get appropriations legislation through both houses of the Republican-controlled Congress in time to keep the government open.
Amid an ensuing 43 days of gridlock, Trump administration officials “publicly threatened to halt and terminate federal funding for the (tunnel project) in retribution for positions taken by Democratic leaders during shutdown negotiations,” according to the lawsuit.
And Trump himself said in mid-October that his administration was “getting rid of programs that we didn’t like,” the suit says.
The White House did not immediately respond to a request for comment on the lawsuit submitted via email on Tuesday.
Construction of a new tunnel began in November 2023, when Biden was in office, under a finance plan where the federal government pledged to cover 70% of the project’s overall, $16 billion cost. The balance of that cost is being funded by New Jersey, New York and the Port Authority of New York and New Jersey, according to agreements cited in the suit.
Since October, the GDC has been able to utilize a line of credit and other available funding sources to keep construction on schedule, agency officials said during a public meeting last week.
In New Jersey, that effort has included the procurement of a tunnel boring machine that is currently, “on site” and “ready for assembly,” the officials said last week.
To date, more than $4 billion in federal funding has been obligated for the tunnel project, with $1 billion already spent on the ongoing construction, the officials said.
To be sure, the broader economic stakes of the tunnel project have been well-publicized, even before the funding stalemate emerged as a key regional concern over the fall.
Last year, the New York-based Regional Plan Association released a study that detailed the tunnel project’s long-term economic benefits, which totaled an estimated $445 billion through 2060.
A new tunnel will also deliver more than economic benefits, and to more than just the people who commute into and out of Manhattan on a daily basis, according to the agency’s research.
“The expected users and beneficiaries of the expanded service include the millions of residents, workers, and visitors throughout the region who rely on the rail network for safe, convenient travel daily, as well as those who may never directly ride the trains, but who benefit from reduced congestion, cleaner air, and stronger economic growth resulting from other people using transit,” according to the RPA’s 2025 report.
This week’s filing of the lawsuit by the bistate agency drew statements of support from both New Jersey Gov. Mikie Sherrill and New York Gov. Kathy Hochul, as well as many congressional representatives from both states.
“When it comes to fighting for jobs and opportunity in New Jersey, I’m all in,” Sherrill said.
The lawsuit itself was filed in the Washington, D.C.-based U.S. Court of Federal Claims, which has nationwide jurisdiction over a variety of monetary claims against the federal government, including contract disputes.
Later on Tuesday, the attorneys general of both New Jersey and New York announced the filing of a separate lawsuit against the Trump administration that also contests the funding freeze and alleges it is unlawful.
“The Federal Government has left us no choice: we must challenge this illegal action in court, and demand emergency relief that will protect us from these unlawful harms,” said Jennifer Davenport, New Jersey’s acting attorney general.
— Benjamin J. Hulac contributed reporting for this story.