GDC files lawsuit against U.S. government over Hudson Tunnel Project funds
The Gateway Development Commission (GDC) has filed a lawsuit against the federal government in the U.S. Court of Federal Claims seeking judgment that would release contractually-obligated grant and loan funds for the Hudson Tunnel Project (HTP). If additional funding does not become available by Feb. 6, construction of the HTP will pause.
The HTP, set for completion by 2035, aims to provide long-term resiliency and reliability for the regional and national rail network for New Jersey Transit and Amtrak riders by building a new train tunnel that will connect the states of New Jersey and New York under the Hudson River and rehabilitating the North River Tunnel, which has been in service since 1910.
The GDC was created in 2019 by the states of New York and New Jersey as a special purpose entity to build the projects of the Gateway Program, including the HTP. The majority of the budget for the project is funded by federal grants. The U.S. Department of Transportation and GDC have been legally bound to the terms of Capital Investment Grants, Federal-State Partnership Grant and Rebuilding American Infrastructure with Sustainability and Equity discretionary grant agreements, as well as Railroad Rehabilitation and Investment Financing loans since July 2024, when full funding for the HTP was secured. More than $1 billion worth of construction and investment has already been made into building the HTP.
The federal government has suspended the release of its contractually obligated funds since Oct. 1, 2025. GDC says the lawsuit makes clear that the shifting explanations the federal government has provided for the breach are unlawful.
According to the GDC, it has worked cooperatively with its federal partners for months to meet their requirements for restoring funding. GDC notes it has responded thoroughly and promptly to each request for information about the project’s federally mandated disadvantaged business enterprise program and provided documentation that the project is in compliance with the administration’s latest regulations.
"The Gateway Tunnel is essential to the future of New York and the economy of the entire region,” said New York Gov. Kathy Hochul. “Every day, 200,000 commuters who power 20% of the nation's economy depend on a safe, reliable ride under the Hudson River. For months, Donald Trump and his enablers in Washington have illegally withheld committed funding for this project in a brazen act of political retribution intended to hurt New Yorkers, putting thousands of union jobs and billions of dollars in economic benefits at risk. I said New York would fight like hell to keep this project moving, and today, that is exactly what we are doing."
New Jersey Gov. Mike Sherrill notes that “when it comes to fighting for jobs and opportunity in New Jersey, I’m all in.”
GDC says pausing the project increases the risk that the 116-year-old North River Tunnel—already a leading cause of delays that impact riders daily—will shut down, severing the most heavily used passenger rail line in the country and leading to billions of dollars in lost time and productivity.
In addition to the $205 million in disbursements due to GDC, the complaint seeks damages that will be incurred in the event of a construction pause or termination of existing contracts.
“Our goal has always been to work with our federal partners and get funding flowing again,” said GDC CEO Tom Prendergast. “At the same time, we must hold the federal government to its contractual obligations so that construction is not halted. It’s our responsibility to fight for the nation’s most urgent infrastructure project and the nearly 1,000 workers whose jobs are threatened.”
GDC is represented by Milbank LLP as lead counsel and Mayer Brown LLP. The full complaint can be found on GDC’s website.