The agency overseeing the $16bn New York-New Jersey Gateway Tunnel has sued the U.S. government over funding freeze. The project being undertaken as a rail tunnel under the Hudson River is lamenting as it funds were cut leaving it without money to keep building. The Gateway Development Commission, the agency behind the project, noted they would be taking to the courts earlier this week.

They filed suit in federal court in Washington against the United States for withholding $205 million in work payments. Once complete, the rail tunnel is expected to link the cities of New York and New Jersey. Furthermore, it is critical to avoid a disruption in rail travel around New York City that would have drastic effects on the national economy.

The suit contends that the federal Department of Transportation has breached several grant and loan agreements by suspending funding for the tunnel project. The commission in its filing raises concern that the suspension is politically motivated as it cites statements by senior executive branch officials. Another major rail project in the U.S. that also seems to be advancing despite setbacks is the California high-speed rail project. 

Outlook on the New York-New Jersey Gateway Tunnel

The commission and the governors of New York and New Jersey noted warned last week about the shutdown of the New York-New Jersey Gateway Tunnel. These entities said that they would have to “shut down work sites on both sides of the Hudson and in the river by Feb. 6.” The main reason was because the Trump administration suspended its funding four months ago. Furthermore, the commission, controlled by Amtrak, noted that about 1,000 workers would have to be laid off. Despite the warnings last week, the Trump Administration has made no evident effort to provide insight on the matter.

The federal government had pledged to contribute nearly three-fourths of the estimated cost of the tunnel. It was considered fully funded by the end of Joseph R. Biden Jr.’s presidency. New York and New Jersey had agreed to split the balance of the total cost. However when Trump administration’s took office, other matters seemed to be of more precedence. On Oct. 1, the Transportation Department announced that it would halt payments to Gateway’s Hudson Tunnel Project. On the other hand, the allotted funds would be diverted to a project to extend the Second Avenue Subway in Manhattan.

The department also noted the halt would allow for review on the contracts of the tunnel and subway projects for compliance with a new rule that forbids mandates based on race and sex. Sean Duffy, the transportation secretary, called New York State’s contracting processes “discriminatory” and “unconstitutional.”

The Take on the White House Regarding the Tunnel Project

The questioning on the decisions on the New York-New Jersey Gateway Tunnel has been a back and forth between government departments. In December, the department’s office of civil rights cited some aspects of Gateway’s contracting that it determined were violations of the rule noted earlier. However, the department would not say last week whether the commission had satisfied its demand for changes.

Instead, it referred questions to the White House. On the other hand, the White House indicated that it had a different reason for continuing to withhold the funding. Last week, a White House spokesman, Kush Desai, said in a statement: “It’s Chuck Schumer and Democrats who are standing in the way of a deal for the Gateway tunnel project by refusing to negotiate with the Trump administration.”

Mr. Schumer, the Democratic minority leader in the Senate, called Gateway the “largest public-works project in America.” He also said that President Trump could restore the flow of money to it with a phone call. “All he has to do is tell the secretary of transportation to lift his hold,” Mr. Schumer said at a meeting of the commission’s board in Lower Manhattan on Tuesday. Components of the first of two massive tunnel-boring machines have arrived in New Jersey, where digging of the tunnels was scheduled to begin this spring.

Project Factsheet New York-New Jersey Gateway tunnel.

• Project Hudson River Rail Tunnel (Gateway Program).
• Project Value: $16 billion
• Developer: Gateway Development Commission.
• Status: New rail tunnel between New York and New Jersey.

Funding Dispute

• Criminal prosecution: Federal lawsuit.
• Amount withheld: $205 million
• Charge: U.S Department of transport violated grant and loan contracts.
• Reason given by Gateway: Politically based suspension of funding.

Project Impact

• Workers at risk: 1,000 layoffs
• Shutdown warning Construction sites would close by February 6.
• Economic significance: Of Northeast railroad and national economy.

Federal Position

• Funding freeze declared: October 1.
• Reallocated funds: Second Avenue Subway extension (Manhattan)
• DOT justification: Contracting practices also under new federal regulations.
• White House position: Says talks were derailed by Democratic leadership.

Current Status

• Federal share: Nearly 75% of total cost previously committed
• State funding: It was a deal between New York and New Jersey to divide up balance.
• Construction update: Delivery of tunnel-boring machine parts in New Jersey.
• Next step at risk: Excavation scheduled for spring