Construction at The $16 billion Hudson Tunnel project will be suspended at 5pm on February 6 if federal funding is not unlocked for the project. The Gateway Development Commission announced it was halting work at active sites in New York and New Jersey and placing four major procurements for the remaining construction packages on hold until funding is restored.
The announcement came hours before a federal judge in Manhattan was scheduled to hear arguments on whether the Trump administration can continue to withhold funding for the project. New York and New Jersey called for emergency help to keep construction moving along one of the nation’s most critical rail links.
A prolonged shutdown could jeopardize roughly 11,000 current job-linked jobs and threaten the project’s broader projected economic impact: about 95,000 jobs and $19.6 billion in economic activity, it said. GDC officials, who announced on January 27th that it does exhausted its federal funding disbursements
“Today is a setback, but it’s not the end,” GDC CEO Tom Prendergast said in a statement., “To those who have long championed the project, our workforce and the riders who rely on GDC to finally deliver the modern, reliable commute they deserve: know that our work is far from over. GDC will continue to do everything in our power to recover our funding and deliver the nation’s most urgently needed infrastructure project.”
A hearing scheduled for 1 p.m. before Jeannette A. Vargas in the U.S. District Court for the Southern District of New York comes as project backers warn they have exhausted available cash and credit following a federal funding freeze that has since turned into a declaration by President Donald Trump that the project has ended.
The dispute dates back to late 2025, when the US Department of Transportation halted grant and loan disbursements that had already been obligated for the project, citing a compliance review. In January, Trump publicly declared the Hudson Tunnel project “finished,” a stance that New York, New Jersey and the project’s sponsor say cut off the flow of federal cash needed to keep construction already underway.
Despite the funding halt, several early civilian packages directly tied to the short-term tunnel sequence have continued, including approach construction on the New Jersey side, soil stabilization on the Hudson River, and work on the approach to Manhattan. Project presentations and prior ENR reports indicate that some of this work is designed to continue continuously, meaning a shutdown would require crews to secure partially completed excavations, stabilize work areas and demobilize specialized equipment, costs incurred before it can be restarted. Contractors would then face remobilization, resequencing and missed access windows once work resumes, increasing schedule and cost exposure.
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With federal disbursements frozen and no replacement funding in place, the project’s sponsor, the Gateway Development Commission, has warned that it has exhausted available cash and credit, prompting preparations for a possible stay without court intervention.
State officials argue that even a brief outage would have immediate consequences on labor and costs. New Jersey Gov. Mikie Sherrill (D) has warned that “1,000 workers will immediately lose their jobs” if construction is halted. New York Gov. Kathy Hochul (D) has said the funding freeze — and the administration’s subsequent declaration that the project is finished — threatens “thousands of union jobs and billions of dollars in economic benefits” tied to a corridor that carries roughly 200,000 daily rail passengers.
In court filings, New York and New Jersey argue that emergency relief is needed because the continued suspension would cause irreparable harm to an active construction program. Acting New Jersey Attorney General Jennifer Davenport said the freeze “jeopardizes safe and reliable infrastructure and puts thousands of jobs at risk,” while New York Attorney General Letitia James has warned that halting work on the Hudson Pass would be “disastrous for commuters, workers and our regional economy.”
Separately, the Gateway Development Commission has filed a breach-of-contract lawsuit in the U.S. Court of Federal Claims, seeking $205 million in disgorgement and damages related to the work reduction. The commission argues that the funding agreements do not allow for unilateral suspension or termination in the absence of documented noncompliance and that a pause would result in substantial additional costs related to resequencing and restarting. “Our goal has always been to work with our federal partners and get funding flowing again,” GDC CEO Tom Prendergast said in a statement, adding that the agency must meet its contractual obligations with the federal government to avoid a shutdown.
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Federal funding freeze threatens to halt $16 million Hudson Tunnel project
The Hudson Tunnel project would add a new two-tube rail tunnel under the Hudson River and rehabilitate the 116-year-old North River Tunnel, which was damaged during Superstorm Sandy. Together, the tunnels are critical to maintaining capacity on the nation’s busiest passenger rail corridor.
As the case progresses, the project’s trajectory now depends less on engineering milestones than on how the courts rule and how quickly.
