New York and New Jersey Sue Feds to Unblock Gateway Tunnel Funds Before Commuter Upheaval

The fate of North America’s busiest rail tunnel hangs on a legal spat that bodes ill for commuters and the regional economy.

In the liminal hours before a Friday deadline, the rhythm of the New York metropolitan area quivers—not from a subway’s rumble, but from a lawsuit and an administrative edict. If New York and New Jersey’s latest legal offensive fails, work on the $16bn Gateway Tunnel project under the Hudson River will stop, stalling progress on America’s most important rail conduit at the behest of Washington. The states, hardly allies in peacetime squabbles, now stand shoulder to shoulder in federal court, marshalled by their attorneys general Letitia James and Jennifer Davenport, to demand that the federal government restore the funding it froze last October.

The Gateway project, one of the costliest and most complex infrastructure undertakings in the country, aims to replace a 116-year-old tunnel that funnels 200,000 daily riders between Manhattan and New Jersey. The existing tubes, long past their design lifespan, suffered grievous damage from Superstorm Sandy in 2012 and now teeter on the edge of obsolescence. Officials and advocates alike warn that a halt in construction, however brief, could trigger immediate lay-offs, inflate costs, and—perhaps most alarmingly—prolong reliance on tunnels that may fail with catastrophic consequences.

At issue in court is the federal government’s freeze on essential funds, which the US Department of Transportation claims is rooted in concerns about the project’s compliance with newly minted rules on contractor diversity. The states’ lawsuit, filed February 3rd in Manhattan, is candid: they allege political retribution, not procedural scruple. That assertion is bolstered by pointed posts on former President Donald Trump’s Truth Social account, in which he frames the funding delay as payback for Democratic Senate Minority Leader Chuck Schumer. Such declarations, the complaint argues, show the freeze violated the Administrative Procedure Act and should thus be vacated.

This is not the only legal volley in play. The Gateway Development Commission (GDC)—the special-purpose entity overseeing the project—entered the fray just a day earlier in a separate action, contending the government breached a contract inked during the Biden administration. The GDC’s grievance speaks to a deeper malaise: a sense among many regional stakeholders that federal largesse is subject not merely to regulatory scrutiny but to the whims of national politics.

The implications for New Yorkers are neither vague nor remote. When the tunnels creak to a stop, so too does much of the regional economy. Amtrak and New Jersey Transit riders already squeeze onto packed trains in corrugated carriages; a serious disruption, let alone outright closure, would strand thousands daily. The Port Authority and MTA are not designed to swallow such a migration of bodies, nor would the city’s choked roads welcome another blitz of car commuters.

The economic reverberations are daunting. According to an analysis commissioned by the Regional Plan Association, a protracted stoppage in the Gateway project could cost the region around $16 billion, mirroring the entire project’s price tag. Jobs in construction, engineering, and local businesses hang in the balance. Delays spur cost overruns in large infrastructure works—the Second Avenue Subway and East Side Access are cautionary tales writ in steel and concrete—so it is likely that even a brief funding drought would send the already daunting bill skyward.

A political freeze imposed on procedural grounds, especially one with a whiff of vendetta, imperils more than trains and trestles. It chips at New Yorkers’ faith in federal partnership, already tested by pandemic-era confusion and perennial wrangles over transport funding. That the tunnel in question is not merely local but conducts nearly 10% of the country’s GDP from New England to the mid-Atlantic—with knock-on effects as far as Chicago and beyond—underscores the dangers of parochial score-settling.

Uniquely, the Gateway drama highlights a tendency in American governance: the reliance on antiquated, mission-critical infrastructure managed by local, state, and federal actors who seldom sing in unison. Compare this to Europe, where the Channel Tunnel renewal or Germany’s upgrades to its ICE corridors progress under robust, if sometimes ponderous, national leadership. The United States’ patchwork approach—subject as it is to the shifting breezes of election-year politics—bodes badly for continuity and investor confidence.

A dried-up conduit, a cautionary tale

There are, to be sure, modest grounds for the Department of Transportation’s procedural review. Large infrastructure projects should model compliance on workforce diversity and opportunity. But these concerns are typically handled in earnest negotiation, not as abrupt, punitive pauses. The United States is well-known for letting critical infrastructure atrophy until crisis stirs Congress to open the coffers—a cycle as predictable as it is inefficient.

If the courts find in favour of New York and New Jersey, the Gateway’s troubles may be only postponed, not solved. A project beset by years of delay and political trench warfare will scarcely attract the world’s best contractors, let alone the confidence of riders or lenders. It is curious—and faintly absurd—that a tunnel with the potential to transform America’s busiest travel corridor can be endangered by personality politics and administrative log-rolling.

What lessons, then, should New Yorkers and their neighbours draw? That America’s most vital arteries, be they rails, bridges, or airports, cannot depend on the caprice of any administration. Cities compete globally by building and maintaining the infrastructure of commerce and daily life. The spectre of a $16bn tunnel idled by tweets and subpoenas does not advertise robustness.

A more sophisticated republic—politically, fiscally, and administratively—would insulate such capital investments from partisan disturbance. Whether that means retooling grant programmes, embedding multi-year guarantees into law, or shielding project governance from the political storm, the moment seems ripe for reform. We suspect, though, that the Gateway fight will rumble on until the spectre of outright collapse forces all sides back to the table.

In the meantime, New Yorkers and their New Jersey neighbours must commute at the mercy of infrastructure seemingly as rickety as the agreements meant to fix it. The city’s resilience is formidable, but even it quakes when the tunnels do. ■