Construction on the Gateway Tunnel Project may resume after a federal judge temporarily blocked President Trump’s freeze of federal funds for New York and New Jersey’s $16 billion infrastructure project. But a permanent settlement with the Trump administration over disbursement of federal funds has yet to be resolved.
Work on the project, designed to replace and expand aging Hudson River rail tunnels damaged by Superstorm Sandy in 2012 was suspended at 5 p.m. Friday, but three hours later, a temporary restraining order was issued by Judge Jeannette A. Vargas in the Southern District of New York preventing the shutdown.
The ruling is a temporary measure that allows funding for the tunnel project for two weeks pending a hearing on Feb. 11 that will determine the next phase in the project. Danielle Zanzalari, assistant professor of economics at Seton Hall University, said the court will decide whether to turn the temporary restraining order into a preliminary injunction that keeps the funding in place for a longer period.
“From an economic perspective, the main effect is reduced uncertainty in the very short run,” she said. “The project can keep moving, technically, so existing contractors aren’t suddenly left in limbo, but it pauses long-term planning — do contractors leave the existing plans in place? Do they start taking other jobs?”
On Feb. 3, Attorneys General Letitia James of New York and Acting Attorney General Jennifer Davenport of New Jersey filed a complaint seeking a temporary restraining order enjoining the suspension of funds by the government, claiming the action was “arbitrary and capricious.” They persuaded Vargas that the plaintiffs would suffer irreparable harm absent injunctive relief and that the public interest would be harmed by delaying the infrastructure project.
In their arguments to get the temporary restraining order, New Jersey and New York said Congress already allotted the money and any stoppage would imperil 1,000 construction jobs and impact 200,000 people commuting through century-old tunnels.
Zanzalari said the federal Department of Transportation can ask the court to lift the temporary restraining order, arguing that emergency relief is not met possibly since the Gateway Project is a multi-year project and a short pause or a reassessment of costs does not cause immediate harm. The DOT may argue that federal agencies need discretion over funding decisions for interstate projects and can use fiscal oversight as a reason for their actions.
In September, the Trump administration froze funding for the project to review “unconstitutional DEI principles.” Gateway said the administration did not specify what was under review. Since taking office a year ago, President Donald Trump’s budget hawks have been scrutinizing large public projects to see if they align with the administration’s standards for procurement.
“From an economic perspective, the federal government has a reasonable case against an injunction, since federal infrastructure funding is discretionary,” said Zanzalari. “At the same time, Gateway also has a strong economic argument for an injunction. Large interstate infrastructure projects rely on credibility and continuity. So, temporary funding uncertainty can raise costs, delay planning, and undermine coordination across states and contractors.”
Last week, a White House spokesperson blamed New York Sen. Chuck Schumer and Democrats for “standing in the way of a deal for the Gateway Tunnel Project by refusing to negotiate with the Trump administration.”
“GDC is pleased with the court’s decision today,” the Gateway Development Commission said in a statement. “We thank our partners in New York and New Jersey for taking action to help us access the federal funding for the Hudson Tunnel Project. We are hopeful this means funding disbursements will resume soon, and we can restart site operations and get our workers back on the job.”
Democrats, including New Jersey Gov. Mikie Sherrill, celebrated the news about the restraining order and blasted the Trump administration for freezing the funds for the tunnel project.
“I am thrilled that the court has granted temporary relief, lifting the freeze of billions of dollars of federal funding for Gateway,” said Sherrill. “President Trump’s arbitrary and politically motivated decision to freeze this funding is plainly illegal, and we will continue to pursue full relief so the nation’s most urgent transportation project can keep moving forward.”
