New York Sues Trump for Halting Billion-Dollar Rail Project

Lawsuit against Trump over frozen funds

Rail project at risk

Legal and political clash

The attorneys general of New York and New Jersey filed a lawsuit against the government of Donald Trump over the suspension of funding for a key rail project beneath the Hudson River.

State authorities warned that the move could affect the national economy and one of the most heavily used transportation corridors in the country.

The disputed project is known as Gateway Program, which includes a strategic rail tunnel connecting the two states.

Last October, the United States Department of Transportation froze $18 billion linked to the project, according to Fox News.

Lawsuit Against Trump for Freezing Key Funds for Gateway Tunnel

As part of Donald Trump’s revenge tour, his administration is illegally withholding Gateway Tunnel funding, risking thousands of jobs and jeopardizing America’s most critical infrastructure project.

We’ll see them in court. https://t.co/YjseIMDxUJ

— Governor Kathy Hochul (@GovKathyHochul) February 4, 2026

The decision was reportedly based on claims that the plan was subject to diversity, equity, and inclusion policies promoted by Democratic administrations.

The funding freeze also affected other infrastructure plans, according to arguments made by the federal executive branch.

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The state prosecutors filed the lawsuit against Trump Tuesday night in a New York court.

They asked a judge to issue an order preventing the Transportation Department from keeping the funds frozen.

State leaders warned of job losses and rising costs tied to the project’s suspension.

The Rail Project Connecting Two States

New York and New Jersey sued the Trump administration seeking an emergency court order to force the restoration of funding for the massive $16 billion Hudson River tunnel before construction is set to halt on February 6 https://t.co/WP3z5fcIJg

— Reuters (@Reuters) February 4, 2026

New York and New Jersey argue that the withholding of funds lacks legal justification and is politically motivated.

In the lawsuit against the Trump administration, they state that the Gateway tunnel project is essential for regional mobility and the national economy.

They warn that the freeze creates financial uncertainty and jeopardizes previously approved commitments.

Prosecutors are seeking the restoration of approved funds to ensure the continuation of construction.

They also caution that delays significantly increase the project’s final cost.

According to state officials, every month without funding worsens the economic and labor impact.

Governor Kathy Hochul said the improvements to the rail corridor began in 2023 and support the daily transportation needs of approximately 200,000 users.

She warned that thousands of jobs and millions of dollars in economic benefits are at risk.

Legal Action by the Gateway Development Commission

President Trump’s decision to freeze federal funding for the Gateway Tunnel is arbitrary, capricious, and illegal.

I refuse to let it happen.

I won’t let him mess with the jobs, families, and futures of New Jerseyans. pic.twitter.com/0q8Eag1zM0

— Governor Mikie Sherrill (@GovSherrillNJ) February 4, 2026

Separately, the Gateway Development Commission filed a lawsuit Monday in a Washington, D.C. court.

The commission, which oversees construction of the rail infrastructure, argued that the federal government violated its obligations by withholding $205 million for political reasons.

In its filing, the commission warned of immediate consequences for ongoing construction.

It said that without restored funding, it would be unable to pay subcontractors.

This could leave work unfinished and trigger contractual penalties.

The commission estimated that approximately $16 billion allocated to the project is now at risk.

It also warned of mounting additional debt if the freeze continues.

Gateway Program Tunnel Under Pressure With National Impact

New York Attorney General Letitia James described the corridor as one of the busiest in the nation.

She said the existing tunnels are already under operational strain.

Losing the Gateway project, she warned, would be disastrous for commuters and workers.

James emphasized that the negative impact would extend well beyond New York and New Jersey.

Last week, local media quoted a White House spokesperson, Kush Desai, who said that Senator Chuck Schumer and other Democrats were blocking a deal.

According to the spokesperson, they refused to negotiate with the Trump administration over the Gateway project.

Funding for the project was approved by Congress in 2021 under a law signed by former Democratic President Joe Biden.

Now, the future of the Hudson River rail tunnel lies in the hands of the courts, as the Gateway tunnel lawsuit moves forward.