The Gateway Development Commission sued the Trump administration Tuesday for withholding funding from a $16 billion tunnel project between New York and New Jersey.
The Department of Transportation’s “breach has jeopardized the project, threatened the livelihoods of the countless workers employed in its construction, endangered passengers who must rely on decaying, century-old rail infrastructure, and undermined the United States’ reputation as a reliable contracting party,” the commission said in court documents.
The administration told the Gateway Development Commission in September 2025 that it would withhold nearly $18 billion for the Hudson Tunnel Project and another infrastructure project in New York, the Second Avenue Subway, over allegations that contractors involved in the projects used race- and sex-based measures in hiring and staffing.
The tunnel project’s developer said last week that it will have to cease construction after Feb. 6 without the federal funds.
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Halting work on the project would threaten hundreds of construction jobs and leave “massive holes in the ground” at construction sites, the commission said. The commission expects to spend an extra $15 million to $20 million per month to wind down work on the project if the funds are not reinstated, court filings said.
The Gateway Development Commission expected about $15 billion total from the Department of Transportation for the project, the filings said. The federal government has withheld more than $200 million from the commission since its September decision.
The Transportation Department said in its announcement last year that it would conduct a “quick administrative review” of the contracting process for the tunnel project to ensure it complied with a Trump administration rule barring the use of some diversity, equity and inclusion principles in contracting for transportation projects.
The Transportation Department has not provided updates on this review. It did not immediately respond to a request for comment Tuesday.
The tunnel developer said in court filings that it attempted to “work collaboratively” with the Trump administration and demonstrated “full compliance” with federal rules, but that the administration did not reinstate funding.
The commission also alleged in court documents that the administration has been inconsistent in justifying why it is withholding funding for the tunnel.
In private correspondence, the federal government said the funding cuts were because the development commission did not comply with requirements for the Transportation Department’s Disadvantaged Business Enterprise program, the lawsuit alleges. The program offers companies owned by individuals from marginalized groups an opportunity to secure federal government contracts, and the department under Trump altered the program requirements to prohibit considering race and sex in selecting contractors.
The Trump administration publicly tied its decision to withhold funds to the October government shutdown, which the president and his allies blamed on congressional Democrats, the commission said in the filings.
Lawmakers from both parties, including moderate Republicans in New York and New Jersey, criticized the Trump administration’s moves to strip funds from the Gateway tunnel. Several Republican lawmakers, including Rep. Mike Lawler, said they have lobbied the White House to reverse the funding cuts.
Democratic Sen. Kirsten Gillibrand, who is the top Democrat on the Senate Appropriations Committee’s transportation subcommittee, said in a statement Tuesday that in withholding the funds, the administration went back on its word.
Gillibrand “secured clear commitments from Transportation Secretary Duffy that he would not cancel grants for major transit capital investment projects, including Gateway,” the statement said.
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