NJ, NY sue Trump to force release of $205M Gateway Tunnel funds

💲1,000 jobs and nearly $1B in investments hang in the balance

💲$205M frozen as shutdown politics collide with NJ’s biggest transit project

💲States escalate court fight as Trump administration halts Gateway funding

New Jersey and New York are escalating their legal battle with the Trump administration over frozen federal money for the Gateway Tunnel project, warning that construction could grind to a halt within days.

The Gateway Development Commission on Monday filed a breach-of-contract lawsuit aimed at unlocking federal money frozen for the project, seeking the immediate release of $205 million that Congress already approved but the federal government has refused to pay.

Now, a second lawsuit has been filed in federal court in Manhattan by New York Attorney General Letitia James and New Jersey Acting Attorney General Jennifer Davenport, arguing the funding freeze threatens to shut down work as early as Friday.

What is the Gateway Tunnel project?

The Gateway Tunnel is the largest and most critical transit project in the region, involving construction of a new rail tunnel under the Hudson River and repairs to the aging North River Tunnel used by roughly 200,000 daily commuters.

The GDC is the public authority formed by New Jersey and New York to oversee the construction and rehabilitation of the tunnel, which first opened more than a century ago and was heavily damaged during Superstorm Sandy.

A spending package approved by the House on Tuesday afternoon includes $700 million for Gateway but it does not resolve the immediate cash freeze that project leaders say is putting construction at risk.

Work on the Gateway project began in 2023 and is funded under the federal infrastructure law signed in 2021. A shutdown of construction, even temporarily, could drive up costs and delay a project long billed as essential to the region’s economy and transportation network.

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Lawsuit claims president lacks authority to halt funding

The GDC argues the funding freeze is illegal and politically motivated, saying the president does not have the authority to block money Congress specifically designated for the project.

President Donald Trump terminated the funding at the start of the October government shutdown, and federal agencies later suspended payments, effectively stalling progress.

The administration has said the funding pause was tied to the shutdown and concerns raised by the White House budget director about spending connected to diversity, equity and inclusion requirements. The U.S. Department of Transportation said it was reviewing whether any “unconstitutional practices” were involved.

The GDC said at its Jan. 27 board meeting that all available sources of funding and credit have been exhausted. The lawsuit seeks to release funds that have already been approved so work can continue uninterrupted.

Gov. Sherrill: This is about law, not politics

“This lawsuit simply says this money has legally been designated by Congress for this project and should be put towards this project, and that the President does not have the legal right to hold it up,” Gov. Mikey Sherrill told CBS New York on Tuesday morning.

“He has pointed to no reason why this money should not continue to flow as Congress directed for this project,” Sherrill said before New Jersye filed its lawsuit.

Gateway Tunnel project seen as critical to economy

U.S. Sen. Andy Kim, D-N.J., called the Gateway Tunnel one of the most important infrastructure projects in the country, warning the consequences of delay would be felt far beyond New Jersey.

“Our national economy would struggle tremendously if we don't follow through on this,” Kim said. “We’re talking about 1,000 jobs right out of the gate when it comes to construction, and thousands more in support.”

Democrats from New Jersey and New York have urged Trump to release the funds, arguing the delay has nothing to do with compliance and everything to do with politics.

In a Jan. 28 letter to federal officials, the bi-state delegation said the Department of Transportation had already completed its review tied to disadvantaged business requirements in December.

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