Judge bars Trump from cutting off Hudson Tunnel funding

MANHATTAN (CN) — A federal judge blocked the Trump administration on Monday from freezing funding for the Hudson Tunnel, a massive infrastructure project between New York and New Jersey that would modernize rail travel under the Hudson River.

In a 59-page ruling, U.S. District Judge Jeannette Vargas found the administration’s 2025 suspension of funding was a violation of the Administrative Procedure Act.

The Department of Transportation announced last September that it would be pausing cash flow for the project while investigating whether it was in violation of the administration’s rejection of diversity, equity and inclusion initiatives. But Vargas invoked statements made by President Donald Trump — which suggested the funding freeze was actually political retribution against New York City politicians — in finding that the suspension was arbitrary and capricious.

“The ostensible reason for the suspension of funds was to allow DOT to conduct a review of … compliance with federal nondiscrimination laws,” Vargas wrote. “President Donald J. Trump, however, made contemporaneous statements indicating that he had personally made the decision to ‘terminate’ funding for the project ‘because the Democrats are so foolish — what they’ve done to the country.’”

Vargas, a Joe Biden appointee in the Southern District of New York, already issued a temporary restraining order in February, ordering the government to resume funding the tunnel’s construction. Without that order, the project would have run out of cash and been abandoned, at least temporarily, causing a “substantial public safety and public health threat,” she said.

Her Monday ruling is a permanent extension of that previous order.

“Plaintiffs have demonstrated that they suffered actual, concrete, and particularized harm from defendants’ Sept. 30 suspension before the court entered its TRO and that they would suffer such harm again were the court to dissolve its order,” the judge wrote.

Vargas added the government didn’t make any substantial arguments that the Department of Transportation’s funding suspension wasn’t arbitrary and capricious.

Instead, it relied heavily on its claim that the states lack standing to sue under the Tucker Act, which allows the United States Court of Federal Claims to adjudicate certain claims against the government. Vargas disagreed with that claim.

“Relying almost entirely on their jurisdictional arguments, defendants practically concede that the suspension of the [Gateway Development Commission] grants decision was unlawful,” she wrote.

In a statement to Courthouse News, a spokesperson for the Department of Transportation said the agency “remains committed to ensuring hardworking taxpayer dollars are being spent responsibly and do not fund unconstitutional, discriminatory contracting practices.”

Officials in New York and New Jersey — the two states behind the underlying suit — celebrated Vargas’ ruling. The states’ governors, Kathy Hochul and Mikie Sherrill, as well as their attorney generals, Letitia James and Jennifer Davenport, issued the following joint statement on Monday:

“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. 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. This victory sends a clear message: the Trump administration’s attempt to halt Gateway funding will not stand.”

New York and New Jersey sued the agency in February when the project was in danger of becoming seriously delayed because of the lack of funding. The states accused the Trump administration of using the project as a political pawn to pressure congressional Democrats into a budget deal.

Trump targeted Senate Minority Leader Chuck Schumer, who represents New York. Last October, he boasted on social media that he was “cutting a $20 billion project that Schumer fought for 15 years to get,” in reference to the Hudson Tunnel.

An administration official suggested earlier this year that the project’s backing was conditional on Democrats accepting a budget deal to fund immigration enforcement efforts. In their lawsuit, New York and New Jersey called the funding freeze a “politically motivated attempt to punish and coerce those with whom the president disagrees.”

Vargas scrutinized these comments during a hearing in April, asking government attorneys: “What do I make of the president’s statements?”

A federal prosecutor urged the judge to look past them entirely.

“I don’t think we need to look at the president’s statements here,” Assistant U.S. Attorney Chibogu Nzekwu replied.

Set to be completed by 2035, the Hudson Tunnel is aimed at increasing reliability for Amtrak and NJ Transit riders. Supporters say the project is now more necessary than ever, as the more than century-old Hudson River rail tunnels continue to deteriorate following damage from Hurricane Sandy in 2012.

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