Judge dismisses most of Gateway suit but knocks Trump administration for breach of contract

Evan Simko-Bednarski, New York Daily News on Mar 12, 2026

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NEW YORK — A federal judge dismissed the bulk of the Gateway Development Commission’s suit over the Trump administration’s refusal to pay for the Hudson River Tunnel, because the funding has been temporarily restored by another court.

Siding with attorneys for the U.S. Department of Transportation, Judge Richard Hertling ruled in the Court of Federal Claims Thursday that six of the lawsuit’s eight counts were moot.

While the Trump administration had most likely breached its contract with the GDC to fund the major rail tunnel project, Hertling said, the funding freeze had already been reversed by a temporary order in the Southern District of New York.

“The plaintiff’s claim, as it stands now, is moot,” Hertling ruled from the bench.

However, he said, “The plaintiff has shown, prima facie, that the DOT breached all of the agreements by withholding the $205 million-and-change in the manner in which it did, without complying with any of the procedural protections which the contract requires (plaintiff) be given.”

But since the money has started flowing again — notwithstanding the USDOT’s ongoing legal fight to restore the freeze — “there’s nothing more to order,” Hertling said. “Plaintiff has been paid.”

The order dismissed six of the suit’s eight counts. Arguments are expected to continue on the remaining two counts, one of which seeks damages for additional costs incurred by last month’s work stoppage after funding ran out, while the other accuses USDOT of breaching the contract’s “implied duty of good faith and fair dealing.”

In October, during the early hours of the federal government shutdown, the Trump administration first announced it would no longer distribute billions in congressionally approved funds to the GDC. Initially, the USDOT cited a need to ensure the project was in compliance with contracting rules that the feds had changed just hours before.

An attorney for the Trump DOT, Geoffrey Long, would not give Hertling a straight answer Thursday when asked why, after five months, the USDOT had not yet issued any finding on the GDC’s compliance or lack thereof.

“Can you tell me what’s going on here? I don’t get it,” Hertling said of the ongoing delay.

“Maybe DOT was severely DOGE’ed and lost, like, half of its people?” the judge added — a reference to oligarch Elon Musk’s quasi-governmental firing squad’s efforts to reduce headcount across myriad federal agencies last year.

“I doubt you’ll find this satisfying,” Long replied, “but the case is moot — I don’t think those points matter.”

“Well, it may be a relevant legal point,” Hertling said. “It may ultimately prove to be relevant on the eighth count (regarding fair dealing).”

“It’s been eating at me — why are we even here?” the judge mused. “It would have been better for the executive branch to tend to its own house.”

But the Trump administration’s stated reasons for freezing funding for the tunnel have shifted wildly.

During the government shutdown last fall, President Donald Trump gloated he’d “terminated” the tunnel simply because it was favored by Democratic politicians.

White House spokesman Kush Desai later claimed the funding freeze was over the fact that Democratic lawmakers had supposedly not been “prioritizing the interests of Americans over illegal aliens.”

Trump even floated the notion, as reported in the Daily News and elsewhere, that funding would be restored if Democratic lawmakers threw their support behind naming New York City’s Penn Station or Washington’s Dulles International Airport after the president.

A parallel suit, currently working its way through the federal district court system, was brought last month by the states of New York and New Jersey, which argue they have a fiduciary responsibility to upkeep the project’s construction sites should GDC become insolvent.

The restoration of funding and resumption of work on the tunnel was made possible last month when a Manhattan federal judge issued a temporary order suspending the Trump administration’s interference.

USDOT attorneys were in court this week seeking to end those payments once again, but on Thursday a federal appeals court denied their motion.

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