A federal judge has ruled that the Transportation Department unlawfully suspended $16 billion in funding for the Hudson Tunnel Project, clearing the way for federal support to resume and dealing a setback to the Trump administration’s effort to halt the massive infrastructure project.

In a decision issued Monday, U.S. District Judge Jeannette Vargas of the Southern District of New York invalidated the funding freeze, concluding that the Transportation Department had failed to follow the legal procedures required to suspend federal grant money.

The 59-page ruling found that the department’s September 2025 decision to freeze the funds violated federal regulations governing grant suspensions. While the administration remains free to pursue another suspension or terminate funding through the proper legal process—or challenge the ruling on appeal—the existing freeze can no longer stand.

Responding to the decision, a Department of Transportation spokesperson told The Wall Street Journal that the agency remains “committed to ensuring hardworking taxpayer dollars are being spent responsibly.”

The Trump administration announced last year that it would withhold the funding while reviewing whether the tunnel project complied with federal nondiscrimination rules and whether it incorporated diversity, equity, and inclusion policies.

In her opinion, however, Vargas pointed to statements made by President Donald Trump suggesting that political considerations also played a role in the administration’s decision. She cited remarks Trump made in October regarding the project, which has long been championed by Senate Minority Leader Chuck Schumer.

“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 Tunnel Project is designed to add two new rail tunnels beneath the Hudson River between Manhattan and New Jersey, supplementing the existing pair of single-track tunnels that have been in service for 116 years. Schumer has repeatedly described it as the nation’s most important infrastructure project.

Earlier this year, the Gateway Development Commission, which oversees construction of the tunnel, warned that work would have to stop if the federal funding remained frozen. Of the project’s federal support, approximately $12 billion consists of grants, while another $4 billion is provided through federal loans that will be repaid by New York, New Jersey, and the Port Authority of New York and New Jersey.

The states of New York and New Jersey subsequently filed suit in federal court in Manhattan, seeking emergency relief to restore the funding.

On Feb. 6—the day construction was expected to be suspended—Vargas issued a temporary restraining order preventing the freeze from taking effect. Although the Trump administration challenged that order and argued the court lacked jurisdiction, Vargas wrote that the government largely focused on procedural jurisdictional issues instead of defending the legality of the funding suspension itself.

In Monday’s ruling, Vargas concluded that the administration had failed to demonstrate that its actions complied with governing federal law.

“Defendants make no attempt to justify their actions as consistent with the governing federal regulations,” Vargas said.

While the ruling blocks the Transportation Department from relying on the September 2025 funding freeze, it does not prevent the department from attempting to suspend the funding again if it follows the procedures required under federal law.

In a joint statement, New York Gov. Kathy Hochul, New York Attorney General Letitia James, New Jersey Gov. Mikie Sherrill, and New Jersey Attorney General Jennifer Davenport praised the court’s decision.

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

{Matzav.com}