New York and New Jersey file suit over Gateway tunnel funding

Evan Simko-Bednarski and Molly Crane-Newman, New York Daily News on Feb 3, 2026

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New York and New Jersey sued the Trump administration late Tuesday, demanding the full restoration of billions of dollars in federal funding for construction of the Gateway Project’s Hudson River Tunnel.

The $16 billion tunnel project, which would double the number of rail lines between New Jersey and New York Penn Station and generate an estimated 90,000 jobs, is set to run out of money on Friday, following a months-long refusal by the Trump administration to distribute funds dedicated by Congress.

The Manhattan Federal Court suit says President Trump’s Department of Transportation is leveraging the critical completion of one of the most heavily used passenger rail lines in the U.S. “in a brazen act of political retribution.” Federal money is earmarked to cover more than two-thirds of the tunnel’s cost.

The 116-year-old North River Tunnel, in dire need of an overhaul since Hurricane Sandy, “supports approximately twenty percent of the nation’s overall economic output and lies at the economic center of the bustling northeast region,” the suit reads.

“The poor condition of the tunnel has required emergency maintenance that disrupts service for hundreds of thousands of rail passengers throughout the region. The damage is so severe that it can only be addressed through a comprehensive reconstruction.”

The centerpiece of the broader Gateway project to modernize and expand rail lines between the Jersey Meadowlands and midtown Manhattan, the tunnel’s construction is expected to boost the regional economy by $19.6 billion in addition to creating tens of thousands of jobs, Tuesday’s suit details.

Work has been ongoing since the feds first froze funds in October, with a massive tunnel-boring machine standing by, ready to start digging through bedrock under Jersey City.

Gateway officials said last week the work would halt indefinitely on Friday if the feds don’t let the congressional dollars flow — a stoppage that will endanger the project and ax about 1,000 jobs.

In a statement, New York Attorney General Letitia James said shutting down the project would have ramifications “that would ripple far beyond New York and New Jersey.”

“Our tunnels are already under strain, and losing this project could be disastrous for commuters, workers, and our regional economy,” the AG said.

The eleventh-hour suit comes a day after the Gateway Development Commission — the bi-state body tasked with overseeing the tunnel’s construction — filed its own suit in the Court of Federal Claims, accusing the Trump administration of breach of contract for withholding the funds.

Tuesday’s lawsuit asks the court to declare the funding interference illegal and to force the federal government to meet its funding obligations in time to prevent work from stopping.

It accuses the Trump administration of suspending the funds because of the president’s desire to punish his political rivals, in violation of the Administrative Procedure Act “many times over.”

“Why did the Federal Government suddenly suspend the Project if not for regulatory noncompliance or some other statutorily permitted reason? It has done so because President Trump is engaged in political retribution,” the suit details.

Trump was explicit about his reasons for sabotaging the monumental project by October, deriding it as a favorite of New York Democrat and Senate Minority Leader Chuck Schumer.

“What we’re doing is we’re cutting Democrat programs that we didn’t want,” the president said in October. “We’re cutting a $20 billion project that Schumer fought for 15 years to get, and I’m cutting the project. The project is gonna be dead. It is pretty much dead right now.”

The freeze was first announced in the early hours of last year’s federal government shutdown, over “unconstitutional DEI principles” in the selection of contractors.

Trump’s Office of Management and Budget director, Russel Vought, who has radically reshaped federal spending, and U.S. Department of Transportation Secretary Sean Duffy claimed the project, along with the MTA’s long-awaited Second Avenue subway extension, was no longer in compliance with contracting rules the government had just changed.

The CEO of the Gateway Development Commission, Tom Prendergast, last week said it was in compliance with new contracting rules demanded by federal transportation officials and had promptly addressed any concerns. A USDOT spokesperson last week directed the Daily News to the White House when asked why the funds were still being withheld.

White House spokesman Kush Desai offered a new reason for the ransom, citing a lack of Democratic fealty to the Trump administration’s historically unpopular immigration efforts.

“It’s Chuck Schumer and Democrats who are standing in the way of a deal for the Gateway Tunnel Project by refusing to negotiate with the Trump administration,” Desai claimed.

“There is nothing stopping Democrats from prioritizing the interests of Americans over illegal aliens and getting this project back on track.”

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