A federal judge in Manhattan ordered the Trump administration on Friday to restore funding for a new rail tunnel project linking New York and New Jersey, just as construction was set to shut down amid a federal funding freeze.
Judge Jeannette A. Vargas granted a temporary restraining order requested by New York and New Jersey, directing the administration to stop withholding money while the states pursue a preliminary injunction in their lawsuit. The judge ruled that delaying a “critical infrastructure project” would cause irreparable harm, adding that the public interest would be affected by postponing the project.
The funding dispute centers on the Gateway project and its planned new rail tunnel, intended to reduce strain and delays tied to an existing tunnel that connects New York and New Jersey for Amtrak and commuter trains and is more than 110 years old. The project’s work had been moving toward completion before the administration announced it was halting $16 billion in support for the project earlier this week.
The administration’s decision to pause support was announced months after a government shutdown, with a top federal budget official raising concerns about unconstitutional spending tied to diversity, equity and inclusion principles, according to the reporting. A request for comment by the White House and the U.S. Department of Transportation did not receive an immediate response.
Vargas’s order approved the states’ request to keep funds flowing as the litigation proceeds. In the decision, the judge wrote that the court was persuaded the states would suffer irreparable harm without an injunction and that the public interest would be harmed by a delay.
New York Attorney General Letitia James hailed the ruling as swift action to prevent disruption. In a statement, James said she was “grateful the court acted quickly to block this senseless funding freeze,” which she said threatened to derail a project the region depends on, and she said the states would keep fighting to ensure construction can continue “without unnecessary federal interference.”
The Gateway Development Commission had said work would stop late Friday afternoon because of the federal funding freeze, resulting in the immediate loss of about 1,000 jobs, with thousands more expected to be affected over time. In a nighttime statement, the commission said, “As soon as funds are released, we will work quickly to restart site operations and get our workers back on the job,” and it was not immediately clear when work would resume.
New York and New Jersey filed suit over the funding pause this week, and the Gateway Development Commission also joined the effort to restore the federal support. The suspension was also described as a pressure tactic during a broader political dispute involving Democratic Senate Minority Leader Chuck Schumer of New York, with the White House blaming him for the government shutdown last year; that shutdown ended a few weeks later.
During public comments on Air Force One, Donald Trump was asked about reports that he would unfreeze the tunnel funding if Schumer agreed to a plan to rename Penn Station in New York and Dulles International Airport in Virginia after Trump. Trump responded that Schumer had suggested changing Penn Station’s name and said Dulles Airport was “really separate.”
In the states’ lawsuit hearing earlier in Manhattan, Shankar Duraiswamy, representing the New Jersey attorney general’s office, argued that the states needed “urgent relief.” Duraiswamy told the judge there was “literally a massive hole in the earth in North Bergen,” and he said abandoning the sites even temporarily “would pose a substantial safety and public health threat.” He also argued that even a short stoppage would trigger longer delays because workers would be laid off and would be difficult to remobilize quickly if funding returned.
Tara Schwartz, an assistant U.S. attorney arguing for the government, disagreed with what she described as the “parade of horribles” presented by the states’ attorneys. She said the states had not made clear how long the sites could be maintained by the Gateway Development Commission, and when the judge pressed Duraiswamy, Duraiswamy said the commission could maintain the sites for a few weeks and possibly a few months—while continuing to argue the states would suffer irreparable harm because trains would keep running late through reliance on the outdated tunnel.
As the parties continue litigating, the immediate effect of Vargas’s order is to prevent the administration from carrying forward the freeze while the case proceeds on the preliminary injunction request.