While federal funding for the Hudson Tunnel Project, which aimed to increase train service between New Jersey and New York, was initially halted in October 2025, a recent lawsuit ruled in favor of the project. Without the funding, the construction would have been paused, with thousands of jobs lost and the construction timeline at risk.
The Hudson Tunnel Project would build railroad infrastructure under the Hudson River. It will create four tracks between New Jersey and New York and restore the North River Tunnel, which is more than a hundred years old and a frequent source of delays for daily passengers. When the project is finished, it will expand train service in the Northeast Corridor, the most heavily used passenger rail line in the United States. According to the Gateway Program’s website, the project’s completion would generate $19.6 billion in economic activity and support over 95,000 direct, indirect, and induced jobs. In 2019, New York and New Jersey established the Gateway Development Commission (GDC) to facilitate the project and serve as the primary loan borrower. While the Port Authority of New York and New Jersey, NJ Transit, and New York State financed the project, 70% of the budget is funded by roughly $12 billion of federal grants.
On October 1, 2025, the Department of Transportation (DOT) announced that the project’s reimbursements will be withheld until an administrative review is conducted to resolve the government shutdown in October 2025. Despite this, construction hadn’t come to a full halt. Since the funding freeze, they finished the Tonnelle Avenue bridge, mixed over a hundred columns in the Hudson Riverbed, and procured two tunnel boring machines.
However, on January 27, the GDC announced that all available funding and credit have been exhausted, and if federal funding doesn’t resume, construction must pause, which would result in an immediate loss of nearly 1,000 jobs. On February 3, the GDC filed a lawsuit against the DOT and stated that the “DOT has breached its disbursement obligations under those agreements to the tune of over $205 million by repeatedly failing to timely reimburse GDC for project costs without identifying any contractual basis for withholding funds.” GDC noted that pausing construction puts thousands of jobs at risk and increases the chance that the North River Tunnel will shut down. Another lawsuit was filed by the lawyers of New York and New Jersey, sharing similar concerns. According to a court filing, the lawyers stated that “whatever its shifting stated reasons, federal officials publicly confirmed that DOT had suspended funding to punish New York officials for opposing presidential demands.”
U.S. District Judge Jeannette Vargas ruled that withholding the federal funds would harm the public interest and ordered that the project’s payments be released. While the federal government appealed the order, the effort expired on February 19. The first installation of $30 million was repaid on February 13. On February 18, the GDC reported that the $205 million withheld had been repaid, contractors were contacted, and construction would resume shortly after.
