Hudson Tunnel funding lawsuit: Gateway warns of Friday work stop

The Hudson Tunnel funding lawsuit filed by the Gateway Development Commission (GDC) is intended to compel the federal government to release grant and loan money tied to the Hudson Tunnel project, as reported by Progressive Railroading.

The case is before the U.S. Court of Federal Claims, where GDC is seeking a judgment that would unlock funds it says are contractually obligated under existing agreements.

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GDC says the situation is time-sensitive. In its press release, the commission warned that if additional funding does not become available by Friday, construction of the rail tunnel between New York and New Jersey will be suspended.

Estimated at $16 billion, the Hudson Tunnel project is a key component of the Gateway Program to improve rail transportation in the Northeast Corridor. The work includes building a new two-track rail tunnel beneath the Hudson River and rehabilitating the century-old North River tunnels that currently connect New Jersey and New York City. Those existing tunnels are crucial for Amtrak and New Jersey Transit trains that carry passengers between New York City and New Jersey daily.

Hudson Tunnel funding lawsuit targets contract-linked grants and loans

In outlining the case, GDC said federal support covers most of the project’s budget. It pointed to Capital Investment Grants, a Federal-State Partnership Grant, and a RAISE Grant agreement, as well as Railroad Rehabilitation and Investment Financing loans. The commission added that the U.S. Department of Transportation and GDC have been legally bound by those agreements since July 2024, when full funding for the tunnel was secured.

GDC also said more than $1 billion worth of construction and investment has already gone into building the tunnel.

Funds withheld since Oct. 1, 2025, GDC says

Even with those agreements in place, GDC alleges the Trump administration has suspended the release of the federal government’s contractually obligated funds since Oct. 1, 2025. The lawsuit says the administration’s shifting explanations for holding back the money are unlawful. The commission is controlled by Amtrak and the governors of New York and New Jersey.

Governors highlight commuter and economic stakes

In the same press release, New York Gov. Kathy Hochul called the Hudson Tunnel essential to New York’s future and to the economy of the broader region. She said about 200,000 commuters a day depend on trains that operate under the Hudson River to and from New York City and New Jersey.

Hochul accused Donald Trump and his allies in Washington of illegally withholding committed funding as political retribution intended to hurt New Yorkers, saying the delay puts thousands of union jobs and billions of dollars in economic benefits at risk. New Jersey Gov.

Mikie Sherrill said she had made a commitment to fight for Gateway and New Jersey’s economy and described the lawsuit as an effort to hold the Trump administration accountable for breaching its contract.

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