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The basics:

• Federal funding freeze halted Hudson Tunnel Project, triggering nearly 1K layoffs before court intervention
• Gov. Sherrill called the freeze illegal and politically motivated
• A federal judge ordered reimbursements restored; $205M has been released and work is set to resume
• Broader legal fight over Gateway Program continues

The fight over the $16 billion Hudson Tunnel Project – the central piece of the broader Gateway Program – has evolved into a multi-front battle playing out on construction sites, in the press, on social media and in courtrooms.

What began as a federal funding “pause” in late 2025 has cascaded into suspended construction, nearly 1,000 layoffs, dueling lawsuits, emergency court orders and an ongoing legal fight over the future of what is considered the nation’s most critical infrastructure project.

On the ground, the stakes have been immediate and highly visible.

Crews had been working at five active sites in New Jersey, New York and beneath the Hudson River, advancing the long-awaited project, which will double capacity between New Jersey and New York – adding a new rail tunnel and rehabilitating the current 116-year-old North River Tunnel that was severely damaged by Superstorm Sandy.

Even after the Trump administration froze federal reimbursements tied to the project, construction continued for months. The Gateway Development Commission, which oversees the work, relied on a required line of credit to keep things moving temporarily.

During that stretch, progress did not stop. Two massive tunnel boring machines were completed overseas – with the first delivered to the construction site and the other on the way. The massive and complex machines must be re-assembled onsite after shipment from Germany.

Work continued at the five sites, preparing and setting the stage for tunnel boring to begin this spring. More than $1 billion had already been invested, and workers remained active. But GDC leaders repeatedly warned that financing construction on credit was not sustainable.

Work comes to a halt

By late January, the warning became reality. With its credit line nearly exhausted and federal reimbursements halted, GDC announced it would be forced to stop work by Feb. 6.

That triggered swift legal action, with two federal lawsuits filed ahead of that shutdown date — one by GDC against the Trump administration for breach of contract; and another by New Jersey and New York seeking immediate relief to unfreeze the funds and keep the machines humming.

While funding remained frozen, GDC suspended construction Feb. 6. Roughly 1,000 workers were laid off or reassigned, and momentum on one of the nation’s largest public works projects abruptly stalled.

“For more than two years the hardworking men and women building the Hudson Tunnel Project have not missed a day of work,” said GDC Chief Executive Officer Tom Prendergast Feb. 6. “That changes today, because the federal administration continues to withhold funding for this vital investment in our nation’s rail infrastructure. After spending more than $1 billion, and countless hours of hard work, on this project, we will be left with empty construction sites in New York and New Jersey.

“Today is a setback, but it is not the end.”

Getting back to work

Within hours of construction being suspended, a federal judge issued a temporary restraining order directing the administration to resume payments. The ruling found the states were likely to succeed on the merits and that continued delays would cause immediate harm. The Trump administration quickly sought to block that order at the U.S. Court of Appeals for the Second Circuit, but the appellate court declined to pause the directive.

GDC received the first tranche of $205 million in previously frozen funds on Feb. 13 – with the rest received Feb. 18.

“Gateway Development Commission (GDC) has received the full reimbursement owed to us from the federal government and now has more than $205 million available to fund work on the Hudson Tunnel Project,” the commission said in a Feb. 18 statement. “We are working with our contractors to deploy these funds to resume work as soon as possible. Letters will be sent to contractors today, and construction activities are expected to resume next week.

“We continue to pursue all avenues to secure access to the full amount of federal funding for the Hudson Tunnel Project, including our lawsuit.”

Self-described ‘tunnel-obsessed governor’

At the center of the political and legal fight has been Gov. Mikie Sherrill, who has taken on a lead role in confronting the Trump administration over the freeze.

Sherrill moved quickly after she took office to position herself as the project’s chief defender — work she strongly advocated for during her time in Congress.

The governor has appeared at construction sites and union rallies, done cable news hits, held press conferences, and pushed back against the administration through social media and more – framing the funding suspension as a direct attack on New Jersey workers and commuters. She has vowed that the state would pursue every legal avenue to restore the money.

“I was called, when I was in Congress, the tunnel-obsessed congresswomen,” said Sherrill earlier this month. “I thought that I could move forward on other projects. But I will tell you, I remain the tunnel-obsessed governor. And I will remain so until this tunnel is finished.”

When construction halted Feb. 6, Sherrill sharply criticized President Donald Trump, accusing his administration of jeopardizing jobs and undermining binding federal commitments. She described the freeze as reckless and politically motivated, arguing that Congress had already approved the funds and that signed agreements left little room for unilateral executive action.

“You’re seeing a president who has moved the goalposts again and again and again for 1,000 people that are employed on this project – who are going to have to go home today and tell their families that they don’t have a job on this site,” said Sherrill at a Feb. 6 event in Weehawken. “Because the president of the United States has decided to play politics with their job, has decided to play politics with our economy, has decided that politics are more important to him than the working men and women of this country.

“And I’m telling you – here in New Jersey – we are not going to stand for it. We are drawing the line here.”

Back-and-forth

After U.S. District Judge Jeannette Vargas issued the temporary restraining order, Sherrill and acting Attorney General Jennifer Davenport applauded the decision.

“I am thrilled that the court has granted temporary relief, lifting the freeze of billions of dollars of federal funding for Gateway,” Sherrill said Feb. 6. “President Trump’s arbitrary and politically motivated decision to freeze this funding is plainly illegal, and we will continue to pursue full relief so the nation’s most urgent transportation project can keep moving forward — and workers can keep putting food on the table.”

“As the court correctly recognized, the Trump administration’s attempts to freeze funding for the Gateway Tunnel project are plainly illegal, and they would cause grave harm to New Jersey and New York,” Davenport said in a Feb. 6 statement. “We are grateful that the court agreed to put a halt to this unlawful freeze on this emergency basis.

The back-and-forth has continued throughout the month. Trump administration officials cite concerns related to the project’s Disadvantaged Business Enterprise program as justification for the pause, suggesting a review was necessary to ensure compliance. The president has also expressed concerns about cost overruns (more on that in a moment). Sherrill countered that the agreements had already been vetted and finalized, and that withholding obligated funds violated both federal law and basic contract principles.

Workers ‘can’t wait any longer’

After the district court ordered funding to resume and the appeals court declined to block that order, Sherrill declared the rulings a victory, not just for New Jersey, but for the rule of law.

“The 2nd Circuit’s order today means the $200 million owed to the Gateway Tunnel project needs to be released Immediately,” said Sherrill Feb. 11. “The 1,000 workers currently out of work because of President Trump’s illegal action can’t wait any longer.

“The president must end this reckless fight and keep legally obligated funds flowing to ensure the nation’s most urgent infrastructure project is never stopped again. If they don’t, we’ll continue to see them in court and continue to win.”

Another notable flashpoint throughout this situation was a report from Punchbowl News that in exchange for releasing the funds, Trump wanted Dulles Airport and New York Penn Station named after him. Trump has said the idea was brought to him by Senate Minority Leader Chuck Schumer, D-N.Y., who denied that — and shot down the naming request.

‘Future boondoggle’

On Feb. 16, Trump wrote a lengthy screed on Truth Social about the project. He described it as a potential boondoggle, warning of massive cost overruns. The president also declared that the federal government will not cover a single dollar beyond its existing commitments.

“I am opposed to the future boondoggle known as the ‘Gateway’ in New York/New Jersey, because it will cost billions of dollars more than projected or anticipated, just like Gavin Newscum’s ‘Railroad,’ which is massively over budget, has no end in sight, and could financially destroy whatever is left, after Newscum, of the California economy,” Trump wrote.

“It’s a disaster! Gateway will also be financially catastrophic for the region, unless hard work is done and proper planning is put in place, NOW, to prevent future insurmountable cost overruns. Please let this statement represent the fact that, under no circumstances, will the Federal Government be responsible for ANY COST OVERRUNS, NOT ONE SINGLE DOLLAR! However, the Federal Government is willing to meet to make sure this does not happen,” he continued.

“Also, change the name of the PENN Station (I LOVE Pennsylvania, but it is a direct competitor of New York, and it’s ‘stealing New York’s lunch!’) to TRUMP. The issue of the STATION was brought up by certain politicians and construction union leaders, not by me. JUST MORE FAKE NEWS! NO COST OVERRUNS! Thank you for your attention! President Donald J. Trump.”

Sherrill’s immediate response

Sherrill quickly shot back.

“The only person who can make Gateway a boondoggle is Donald Trump. Until his illegal actions forced the project to shut down, threw 1,000 hard-working men and women off the job, and threatened the commutes of 200,000 people a day, Gateway was on time and on budget,” said Sherrill in a statement.

“Donald Trump’s ridiculous political rhetoric is just another effort to get out of paying what the federal government owes to the most urgent infrastructure project in the country. We won’t let him. We’ll keep taking him to court, and we’ll keep winning, until the Gateway Tunnel’s entire funding is once again secured.”

Beyond Sherrill’s strong support for the project and vow to fight to keep money flowing and work continuing, the issue is a unifying one all around New Jersey and New York. A bipartisan group of lawmakers, labor leaders, business leaders and other key stakeholders have vehemently defended the project’s importance, for several reasons.

For now, funding is flowing again, and construction is expected to restart as soon as this week with GDC working toward full remobilization. The immediate crisis – idle equipment, laid-off workers and frozen reimbursements – appears to be easing.

Legal battle continues

But the broader legal battle is far from resolved. The appeal before the Second Circuit will test the scope of executive authority over previously obligated infrastructure funds. The separate breach-of-contract case could determine whether the federal government violated enforceable agreements. Additional appeals remain possible.

The 2nd Circuit panel of judges is expected to begin reviewing the case this week. The GDC case against the administration is scheduled to ramp up in March.

While court filings and political sparring have commanded attention, the real stakes lie in the project’s tangible impact: the jobs it currently sustains, the tens of thousands more projected as construction ramps up – potentially nearing 100,000 – and the sweeping economic benefits those paychecks create. Beyond construction, the future riders who will use the tunnel promise sustained economic activity and a more dependable commute for hundreds of thousands.

Project regaining momentum

During a Feb. 9 labor rally in North Bergen, Laborers International Union of North America Vice President and Eastern Regional Manager Mike Hellstrom reminded the crowd that infrastructure investment was never a partisan issue and often garnered bipartisan support.

“The jobs of LIUNA members and other construction workers shouldn’t be used as political leverage. Work to modernize America’s transportation system and replace a 116-year-old rail tunnel shouldn’t be canceled to score political points,” said Hellstrom. “Nothing about canceling Gateway says American First Agenda, just the opposite. The Trump administration must get to work and release the Congressionally appropriated funds so our members can get to work building the Gateway Tunnel.”

Project advocates warn that stop-and-start funding could inflate costs, lead to delays and erode confidence in federal infrastructure partnerships nationwide.

For now, the project is regaining momentum. Crews are preparing to return. Money is moving again. On Feb. 24, the GDC will hold a board meeting to give the latest update on the situation.

But the legal fight between Washington – Trenton/New Jersey – Albany/New York very much continues, and the long-term future of the project remains unsettled as that all plays out.

What was expected to be a milestone year for the project — with tunnel boring scheduled to begin, has instead become a high-stakes fight to keep construction on track.

This certainly will not be the last chapter of the story.