A federal judge on Monday overturned the Transportation Department’s suspension of $16 billion in federal funding for the Hudson Tunnel Project, ruling the freeze violated federal law.
In a 59-page decision issued in the Southern District of New York, Judge Jeannette Vargas determined that the Department of Transportation’s September 2025 action to halt funds was unlawful because it failed to follow proper procedures for suspending federal grants. The administration could still seek to suspend or terminate funding if it complies with legal requirements or wins an appeal.
The Department of Transportation had previously stated it remains “committed to ensuring hardworking taxpayer dollars are being spent responsibly,” according to a spokesperson. However, Vargas noted that President Donald Trump had publicly acknowledged political reasons for stopping the tunnel project — an initiative Senate Minority Leader Chuck Schumer, D-N.Y., had championed for over a decade.
“We’re cutting a $20 billion project that Schumer fought for 15 years to get, and I’m cutting the project,” Vargas quoted Trump as saying in October. “The project is gonna be dead. It’s just pretty much dead right now.”
The Hudson River tunnel would supplement two aging 116-year-old rail tubes connecting Manhattan with New Jersey. Schumer has called it the most critical infrastructure project in the United States. The Gateway Development Commission, which oversees the construction, reported that without federal funds, work on the project would be forced to stop immediately. Approximately $12 billion of the project’s funding comes from federal grants, while an additional $4 billion is provided through loans repayable by New York and New Jersey and the Port Authority.
The states of New York and New Jersey had sued the Trump administration in Manhattan federal court earlier this year, seeking an emergency order to end the suspension. On February 6 — the day work was scheduled to halt — Judge Vargas granted a temporary restraining order. Despite the administration’s opposition, she found that it focused on jurisdictional arguments rather than proving the funding freeze itself was lawful.
“Defendants make no attempt to justify their actions as consistent with the governing federal regulations,” Vargas wrote in her ruling.
The decision removes the legal basis for the current suspension but does not prevent the Transportation Department from pursuing a new freeze through proper legal channels. In a joint statement Monday, New York Governor Kathy Hochul, New York Attorney General Letitia James, New Jersey Governor Mikie Sherrill, and New Jersey Attorney General Jennifer Davenport praised the ruling.
“We are grateful that a federal court has once again agreed that the Trump Administration’s decision to freeze billions of dollars in grants for the Gateway Tunnel Project is flagrantly unlawful,” they said. “This is the most important infrastructure project in the nation, and thanks to our litigation, 1,000 people are back on the job and construction continues every day.”
