New York and New Jersey sued the U.S. Department of Transportation (USDOT) on Feb. 3 to reinstitute funding for the ongoing Hudson Tunnel Project after federal funds were cut off in the fall of 2025.

The Hudson Tunnel Project involves building a new tunnel and railroad infrastructure for passenger rail trains under the Hudson River, while rehabilitation efforts take place on the existing tunnel. The new tunnel will carry Amtrak and New Jersey Transit Northeast Corridor passenger trains between New Jersey and New York.

The states say they have been using limited operating funds to cover project construction for the past four months and that if they don’t get federal funding restored by Feb. 6, the project will have to shut down.

The Trump administration suspended the funding on Sept. 30, 2025, so it could investigate whether funding to the project is “flowing based on unconstitutional DEI principles,” Russell Vought, the director of the federal Office of Management and Budget, said in a post on X on Oct. 1, 2025.

In executive order 14151, President Donald Trump directed the Office of Management and Budget to terminate discriminatory programs, including diversity, equity, and inclusion (DEI) programs. Programs that promote DEI are “illegal and immoral,” the order said.

USDOT said in an Oct. 3, 2025, statement that “Illinois, like New York, is well known to promote race- and sex-based contracting and other racial preferences as a public policy.”

USDOT is reviewing several projects, including those involving the Hudson Tunnel, New York’s Second Avenue Subway, and the Chicago Transit Authority, “to ensure no additional federal dollars go towards discriminatory, illegal, and wasteful contracting practices.”

New York Attorney General Letitia James said in a statement that the two states are suing because “allowing this project to stop would put one of the country’s most heavily used transit corridors at risk.”

“Our tunnels are already under strain and losing this project could be disastrous for commuters, workers, and our regional economy. We are taking the administration to court to prevent a shutdown that would ripple far beyond New York and New Jersey,” she wrote.

The statement said that when the Trump administration froze the funding on Sept. 30, 2025, it put a hold on millions of dollars in reimbursements that were previously approved by Congress.

The new legal complaint, filed in the U.S. District Court for the Southern District of New York, seeks the restoration of funding and a judicial declaration that the suspension of funding violates the federal Administrative Procedure Act because it is arbitrary and capricious.

The act is a federal statute enacted in 1946 that governs administrative law procedures for federal executive departments and independent agencies. Democratic Sen. Pat McCarran of Nevada said at the time that the law was “a bill of rights for the hundreds of thousands of Americans whose affairs are controlled or regulated in one way or another by agencies of the federal government.”

Under the act, an action by a federal agency can be deemed arbitrary if it appears random or based on whim, and capricious if it is sudden or impulsive.

The complaint states that on Dec. 1, 2025, USDOT told the Gateway Development Commission, which oversees the project, that the commission had violated federal minority contracting rules by presuming contracting companies were qualified if they were female-, black-, Hispanic-, Asian-, or Native American-owned, without ensuring that they actually met legal requirements.

The new lawsuit comes after the Gateway Development Commission filed a separate, similar lawsuit on Feb. 2 in the U.S. Court of Federal Claims against USDOT.

The commission is asking the court to compel the department to release grant and loan funds for the project that it alleges have been unlawfully withheld since September 2025.

Like New York and New Jersey, the commission says the project will have to shut down on Feb. 6 if federal funding is not restored.

The Epoch Times reached out to the U.S. Department of Justice for comment on the lawsuit filed by New York and New Jersey but received no response.

Chase Smith contributed to this report.

This article by Matthew Vadum appeared Feb. 4, 2026, in The Epoch Times.