THE Gateway Development Commission (GDC), which is overseeing the Hudson Tunnel project in New York City, has filed a lawsuit against the United States federal government seeking the release of what it claims are contractually-obligated grant and loan funds for the project.
The US Department of Transportation (USDOT) began withholding federal funding payments for the Hudson Tunnel and Second Avenue Subway projects in October, stating that the requests for payment could not be processed during a review of the projects that it had ordered.
The federal government stated that the review would investigate whether “any unconstitutional practices” are occurring within the projects after USDOT ruled that “race and sex-based presumptions of social and economic disadvantage that violate the US constitution” should be removed from the Disadvantaged Business Enterprise (DBE) programme, which is intended to favour small businesses when awarding contracts for federally-funded projects.
The lawsuit filed by GDC argues that USDOT and GDC are legally bound by the terms of Capital Investment Grants (CIG), Federal-State Partnership (FSP) Grant, and Raise Grant agreements, as well as Railroad Rehabilitation and Investment Financing (RRIF) loans, since full funding for the Hudson Tunnel project was secured in July 2024.
GDC is seeking $US 205m in disbursements that have already been withheld, along with damages that will be incurred as a result of any suspension of the project or cancellation of existing contracts.
The White House has accused Democratic politicians of failing to negotiate with the Trump administration to secure a deal for the future of the project.
Funding exhausted
GDC says it has drawn on available funding and credit to progress the project as planned while the federal disbursements are paused. However, it was confirmed during a board meeting on January 27 that all of this funding would be exhausted by February 6, forcing it to pause construction of the tunnel and resulting in the immediate loss of nearly 1000 jobs.
GDC adds that an extended pause would put approximately 11,000 jobs at risk as well as the 95,000 jobs and $US 19.6bn in economic activity that construction of the tunnel is anticipated to generate overall. It says that delays to the project increase the risk that the 116-year-old North River Tunnel - already a major cause of delays to passenger l services between New Jersey and New York - would shut down.
“For months, GDC has worked cooperatively with its federal partners to meet their requirements for restoring funding,” GDC said in a statement. “GDC responded thoroughly and promptly to each request for information about the project’s federally-mandated Disadvantaged Business Enterprise (DBE) programme and provided documentation that the project is in compliance with the administration’s latest regulations.”
“Our goal has always been to work with our federal partners and get funding flowing again,” says Tom Prendergast, GDC CEO. “At the same time, we must hold the federal government to its contractual obligations so that construction is not halted.”
