Trump admin sued by New York, New Jersey over freeze in $16B tunnel funding
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New York and New Jersey sued the Trump administration on Tuesday over the withholding of $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” funds allocated to the Gateway project, and two states are seeking emergency assistance to secure the release of funds frozen by the U.S. Department of Transportation (DOT).
With construction already underway, 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 imposing significant new operating costs on states.
The lawsuit, filed in the Southern District of New York, comes after the Trump administration froze funding for the expansion of New York City’s Second Avenue Subway, along with billions of dollars during the government shutdown tied to the project last fall.
TRUMP ADMINISTRATOR, WHO WANTED TO WITHDRAW FUNDS FROM LOCAL GOVERNMENTS, WAS SLAPPED WITH THE JUDGE’S PRELIMINARY CLAIM
Construction continues on the Gateway Tunnel project that will connect New Jersey to Penn Station in New York City on October 17, 2025. (Spencer Platt/Getty Images)
“Donald Trump’s revenge tour of New York threatens to derail one of the most vital infrastructure projects this country has built in generations, jeopardize thousands of union jobs and billions of dollars in economic benefits, and threaten the commute of 200,000 commuters,” New York Governor Kathy Hochul said in a statement. he said.
He said New York “will fight this illegal effort by the Trump Administration to steal the funding the federal government has committed to get the Gateway Tunnel built with everything we have.”
“My message to Donald Trump and Sean Duffy is simple: see you in court.”
Fox News Digital has reached out to the White House and Department of Transportation for comment.
DEMOCRATIC AGS SUES TRUMP TO FREEZE $6.8 BILLION IN K-12 SPENDING
The Trump administration is facing a lawsuit from New York and New Jersey over its freeze on 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 will create new tunnels and rehabilitate the existing Hudson River rail crossing connecting northern New Jersey and New York City.
The overhaul is thought to be necessary because the existing rail tunnels are more than 115 years old and were severely damaged by saltwater flooding during Hurricane Sandy in 2012. The tunnels carry about 70,000 New Jersey passengers a day, and Amtrak has warned that a tunnel failure could reduce rail traffic to New York City by up to 75%.
The project has been under construction for more than a year, but the Trump administration suspended federal funding in September, citing the government shutdown. The two states argue that the move “endangers the economic future of the Northeast region.”
ZOHRAN MAMDANI SAYS HE WILL FIGHT AGAINST TRUMP’S THREAT TO WITHHOLD FEDERAL FUNDING TO NYC
New Jersey Governor Mikie Sherrill said in a statement, “Every time the Trump Administration intervenes, costs rise and workers suffer. The illegal attack on the Gateway Tunnel is another example.” he said. “New Jersey will not back down from this fight. If this project stalls, 1,000 workers will immediately lose their jobs and hundreds of thousands of passengers will lose the chance to finally have the reliable train service that makes their lives easier.”
New York Attorney General Letitia James added in a statement published on
New Jersey’s acting attorney general, Jennifer Davenport, delivered a clear message to the Trump administration.
DUFFY THREATENS TO YANK NEW YORK FEDERAL FUNDS OVER ILLEGALLY ISSUED COMMERCIAL DRIVER LICENSES
Workers at the Gateway Program’s Hudson Tunnel Project construction site in New York City on October 3, 2025. (Anna Moneymaker/Getty Images)
“Our promise to our citizens is clear: Regardless of the source, we will protect them from attacks on their rights and pockets,” 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 illegal action in court and seek immediate relief that will protect us from these unlawful harms.”
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A separate lawsuit regarding tunnel financing was filed against the federal government on Monday by the Gateway Development Commission, which is overseeing the project.
Michael Dorgan of Fox News Digital and The Associated Press contributed to this story.
