Trump administration sued by New York, New Jersey over $16B tunnel funding freeze
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New York and New Jersey sued the Trump administration on Tuesday for cutting $16 billion in federal funding for a new rail tunnel project under the Hudson River connecting the two states.
The federal government has been accused of “unlawfully withholding” funding committed to the Gateway project and the two states are seeking emergency relief to force the release of funds blocked by the US Department of Transportation (DOT).
As construction has begun, states are seeking a quick decision because the project could be forced to shut down as early as Friday, potentially eliminating thousands of jobs and burdening states with new operating costs.
The lawsuit, filed in New York State, comes after the Trump administration froze billions of dollars during the last government shutdown related to the project, as well as funding for the extension of New York City’s Second Avenue Subway.
TRUMP ADMIN WANTS TO NEGOTIATE FUNDING FOR LOCAL GOVERNMENTS THROUGH JUDGES’ UNGUARANTEE FUNDS.
Construction continues on the Gateway Tunnel project to connect New Jersey with Penn Station on Oct. 17, 2025, New York City. (Spencer Platt/Getty Images)
“Donald Trump’s vindictive trip to New York threatens to destroy one of the most important infrastructure projects this nation has built in generations, puts thousands of union jobs and billions of dollars in economic risk and threatens the travel of 200,000 commuters,” said Gov. Kathy Hochul of New York in a statement.
He said New York “will fight this illegal effort by the Trump Administration to steal federal funding committed to the Gateway Tunnel with everything we have.”
“My message to Donald Trump and Sean Duffy is simple: we’ll see you in court.”
Fox News 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 suspended federal funding for the Hudson River corridor, which has drawn sharp criticism from Gov. Kathy Hochul. (Left: Anna Moneymaker/Getty Images; Right: Victor J. Blue/Bloomberg via Getty Images)
This major project will create new tunnels and rehabilitate the existing railroad crossing the Hudson River connecting northern New Jersey with New York City.
The renovation is considered necessary because the existing railroad tracks are more than 115 years old and suffered extensive damage from saltwater flooding during Hurricane Sandy in 2012. The tunnels carry about 70,000 New Jersey commuters every day, and Amtrak has warned that the failure of one of the tunnels could reduce train traffic in New York City by up to 75%.
The project has been more than a year in the making, but the Trump administration suspended federal funding in September, citing a government shutdown — a move both states argue “jeopardizes 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 another example,” said New Jersey Gov. Mikie Sherrill in a statement. “New Jersey will not back down from this fight. If this project stops, 1,000 workers will lose their jobs immediately and hundreds of thousands of passengers will lose access to the reliable rail service that makes their lives easier.”
New York Attorney General Letitia James added in a statement to X that halting the Gateway project “would cost thousands of good-paying jobs and jeopardize one of the nation’s most used transportation hubs.”
Jennifer Davenport, New Jersey’s acting attorney general, delivered a stern message to the Trump administration.
DUFFY THREATS TO YANK NEW YORK FEDERAL FUNDS OVER ILLEGALLY ISSUED RETAIL LICENSES
Workers at the construction site of 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 their pockets, regardless of where they come from,” he 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,” he added. “The Federal Government has left us no choice: we must challenge this unlawful act in court, and seek urgent relief to protect us from this unlawful harm.”
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A separate lawsuit over the tunnel’s funding was filed Monday against the federal government by the Gateway Development Commission, which is overseeing the project.
Michael Dorgan of Fox News Digital and The Associated Press contributed to this story.
