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New York and New Jersey sued the Trump administration Tuesday for cutting off $16 billion in federal funding for a new rail tunnel project under the Hudson River connecting the two states.
The federal government is accused of “illegally withholding” funding committed to the Gateway project and the two states are seeking emergency relief to force the release of funds frozen by the U.S. Department of Transportation (DOT).
With construction already underway, the states are seeking a quick ruling because the project could be forced to shut down as early as Friday, potentially eliminating thousands of jobs and saddling the states with significant new operating costs.
The lawsuit, filed in the Southern District of New York, comes after the Trump administration froze billions of dollars during the government shutdown last fall tied to the project, as well as funding for the extension of New York City’s Second Avenue Subway.
TRUMP ADMIN SEEKING TO PULL FUNDING FROM LOCAL GOVERNMENTS SLAPPED WITH JUDGE’S PRELIMINARY INJUNCTION
Construction continues on the Gateway Tunnel project to connect New Jersey to Penn Station on Oct. 17, 2025, in New York City. (Spencer Platt/Getty Images)
“Donald Trump’s revenge tour on New York threatens to derail one of the most vital infrastructure projects this nation has built in generations, putting thousands of union jobs and billions of dollars in economic benefits in jeopardy and threatening the commutes of 200,000 riders,” New York Gov. Kathy Hochul said in a statement.
She said New York “will fight this illegal effort by the Trump Administration to steal the funding the federal government committed to get the Gateway Tunnel built with everything we’ve got.”
“My message to Donald Trump and Sean Duffy is simple: we’ll see you in court.”
Digital has reached out to the White House and the Department of Transportation for comment.
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The Trump administration is facing a lawsuit from New York and New Jersey over frozen federal funding for the Hudson River tunnel, drawing sharp criticism from Gov. Kathy Hochul. (Left: Anna Moneymaker/Getty Images; Right: Victor J. Blue/Bloomberg via Getty Images)
The large-scale project would create new tunnels and rehabilitate an existing Hudson River rail crossing connecting northern New Jersey and New York City.
The overhaul is considered necessary because the existing rail tunnels are more than 115 years old and suffered severe damage from saltwater flooding during Hurricane Sandy in 2012. The tunnels carry about 70,000 New Jersey commuters daily, and Amtrak has warned that failure of one tunnel could cut rail traffic into New York City by up to 75%.
The project has been under construction for more than a year, but the Trump administration put a hold on federal funding in September, citing the government shutdown — a move the two states argue is “jeopardizing the economic future of the Northeast region.”
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“Every time the Trump Administration gets involved, costs go up and working people suffer. The illegal attack on the Gateway Tunnel is yet another example,” New Jersey Gov. Mikie Sherrill said in a statement. “New Jersey will not back down from this fight. If this project stops, 1,000 workers will immediately lose their jobs and hundreds of thousands of commuters will lose the chance at finally having reliable train service that makes their lives easier.”
New York Attorney General Letitia James added in a statement posted on X that stopping the Gateway project “would cost thousands of good-paying jobs and put one of the country’s most heavily used transit corridors at risk.”
Jennifer Davenport, New Jersey’s acting attorney general, delivered a blunt message to the Trump administration.
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Workers at a construction site for the Gateway Program’s Hudson Tunnel Project in New York City on Oct. 3, 2025. (Anna Moneymaker/Getty Images)
“Our promise to our residents is clear: we will protect them from attacks on their rights and on their pocketbooks, whatever the source,” she said.
“The President’s decision to freeze funding for the Hudson Tunnel Project jeopardizes safe and reliable infrastructure and puts thousands of jobs at risk,” she added. “The Federal Government has left us no choice: we must challenge this illegal action in court, and demand emergency relief that will protect us from these unlawful harms.”
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A separate lawsuit over tunnel funding was filed Monday against the federal government by the Gateway Development Commission, which oversees the project.
Digital’s Michael Dorgan and The Associated Press contributed to this story.
