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Judge Dismisses Some Gateway Tunnel Funding Disputes, Two Issues Remain
Federal judge rules U.S. DOT has paid $205 million owed to Gateway Development Commission, but other contract breach claims still to be addressed.
Mar. 12, 2026 at 8:19pm
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A U.S. federal claims court judge dismissed six breach of contract counts brought by the Gateway Development Commission against the U.S. Department of Transportation over funding for the $16 billion rail tunnel project under the Hudson River. However, two other counts related to alleged improper suspension of funding and "duty of good faith" will be addressed later this month.
Why it matters
The Gateway tunnel project is critical infrastructure for the Northeast U.S. corridor, but has faced ongoing funding disputes and delays. This ruling provides some resolution, but leaves open key issues that could impact the project's future progress and timeline.
The details
The judge ruled the first six counts were "moot" because the U.S. DOT has since paid the $205 million that had been frozen by the Trump administration in 2025. The two remaining counts involve allegations that funding was improperly suspended and claims related to the "duty of good faith" between the parties.
- On Sept. 30, 2025, the Trump administration stopped providing payments to Gateway while it reviewed the agency's minority and women owned business program.
- For the next four months, the agency relied on cash on hand and tapped a line of credit to pay for construction.
- By Feb. 6, 2026, the agency ran out of money and was forced to halt construction, then secure the project sites, lay off nearly 1,000 workers and store heavy machinery.
The players
Gateway Development Commission
The bistate agency created to receive federal funds for the $16 billion Gateway rail tunnel project under the Hudson River.
U.S. Department of Transportation
The federal agency that oversees transportation infrastructure funding and was sued by Gateway over the tunnel project.
Richard Hartling
The U.S. federal claims court judge who partially ruled on the Gateway funding dispute.
Mikie Sherrill
The Governor of New Jersey, who issued a statement about the case.
Donald Trump
The former U.S. President who halted Gateway tunnel funding, citing concerns about the project's minority and women-owned business program.
What they’re saying
“Today the court found that GDC preliminarily established that the federal government was in breach of multiple contracts in connection with the Hudson Tunnel Project. The judge also made it clear that the court would provide expedited review of similar claims if they arise in the future.”
— Molly Beckhardt, Gateway Development Commission spokeswoman
“We will continue to fight, and continue to win, if Donald Trump tries to illegally stop funding again.”
— Mikie Sherrill, New Jersey Governor
What’s next
The two remaining counts involving alleged improper funding suspension and "duty of good faith" will be addressed in more detail at proceedings later in March.
The takeaway
The Gateway tunnel project remains mired in legal disputes over federal funding, underscoring the political challenges and uncertainty that have plagued this critical infrastructure project. While some progress has been made, the future of the $16 billion endeavor still hangs in the balance.
