The agency overseeing construction of a $16 billion rail tunnel under the Hudson River sued the federal government on Monday for cutting off the project’s funding and leaving it without enough money to keep building beyond this week.
The agency, the Gateway Development Commission, filed suit in federal court in Washington against the United States for withholding $205 million in payments for work on the tunnel, which would connect New York and New Jersey. The project is critical to avoid a disruption in rail travel around New York City that would have drastic effects on the national economy, its supporters say.
The suit contends that the federal Department of Transportation has breached several grant and loan agreements by suspending funding for the tunnel project. In its filing, the commission raises the concern that the suspension is political, citing statements by “senior executive branch officials” that linked the funding cuts to the project’s status as a “Democratic program.”
The commission, which is controlled by Amtrak and the governors of New York and New Jersey, warned last week that it would have to shut down work sites on both sides of the Hudson and in the river by Feb. 6 because the Trump administration suspended its funding four months ago. About 1,000 workers would have to be laid off, the commission said.
The federal government had pledged to contribute nearly three-fourths of the estimated cost of the tunnel, which 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.
On Oct. 1, the Transportation Department announced that it would halt payments to Gateway’s Hudson Tunnel Project and to a project to extend the Second Avenue Subway in Manhattan while the department reviewed 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.”
In December, the department’s office of civil rights cited some aspects of Gateway’s contracting that it determined were violations of that rule. The department would not say last week whether the commission had satisfied its demand for changes, and instead referred questions to the White House.
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” and 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.
The commission’s chief executive, Thomas Prendergast, said that he had notified the project’s contractors that, without a reprieve from the president, their work would have to stop on Feb. 6 and the jobs would be lost.
Mr. Prendergast said that more than $1 billion had already been spent on the Gateway project. The commission’s suit raises the estimated spending total to nearly $2 billion.
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.
Patrick McGeehan is a Times reporter who covers the economy of New York City and its airports and other transportation hubs.
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