The Gateway Development Commission (GDC) filed a lawsuit Feb. 3 against the federal government in the U.S. Court of Federal Claims seeking judgment that would free grant and loan funds for the Hudson Tunnel Project (HTP).
If funding does not become available by Friday, Feb. 6, construction of the HTP will have to pause, resulting in the loss of nearly 1,000 jobs.
The GDC announced at its Jan. 27 board meeting that all available sources and credit have been exhausted, and construction must halt by Friday, if federal disbursements do not resume. After federal funding was paused in October, construction has continued with a line of credit set to lapse on Feb. 6.
The GDC said that besides pausing construction that will result in the immediate loss of nearly 1,000 jobs, an extended pause would put at risk about 11,000 jobs on the current projects, as well as the 95,000 jobs and $19.6 billion in economic activity that construction of the HTP is anticipated to generate overall.
“Our goal has always been to work with our federal partners and get funding flowing again,” GDC CEO Tom Prendergast said. “At the same time, we must hold the federal government to its contractual obligations so that construction is not halted. It’s our responsibility to fight for the nation’s most urgent infrastructure project and the nearly 1,000 workers whose jobs are threatened.”
Federal transportation officials said in October that the pause would remain in place until the completion of a review that determines whether the project’s contracts are aligned with the administration’s rules on women- and minority-owned businesses. At the time, White House Office of Management and Budget Director Russ Vought claimed spending on the project was being used for “unconstitutional” diversity efforts.
The GDC claims it has been cooperating with its federal partners to meet their requirements for restoring funding, responding to each request for information about the project’s federally mandated Disadvantaged Business Enterprise (DBE) program and providing documentation that the project is in compliance with the administration’s latest regulations.
The construction of the $16 billion, 2.4-mile Hudson River Rail Tunnel is part of Phase 1 of the Gateway Program, intended to improve and expand rail service in the Northeast Corridor, the most heavily traveled passenger rail line in the country, hosting more than 2,200 train movements and 800,000 passenger trips daily.
The project involves building a train tunnel connecting New Jersey and New York under the Hudson River. The new tunnel would replace the 116-year-old North River Tunnel that was heavily damaged during Superstorm Sandy in 2012.
The majority of the budget for the project is funded by federal grants. Full funding of the HTP was secured in July 2024. More than $1 billion worth of construction and investment has already been put into building the tunnel.
“The federal government must now honor its commitment,” said Jerry Keenan, president for Alliance for Action, an organization representing thousands of business, labor, government, utility, academic and other New Jersey leaders. “Freezing contractually obligated dollars and forcing the project into court is unacceptable and unnecessary. The funding is in place. The agreement is in place. The work is underway. It’s time to release the money, keep construction moving, and deliver the infrastructure this region and this nation depend on.”
In addition to the $205 million in disbursements GDC claims are due, the complaint seeks damages that will be incurred in the event of a construction pause or termination of existing contracts.
GDC is represented by Milbank LLP, as lead counsel, and Mayer Brown LLP.
