A Manhattan federal judge has permanently blocked the Trump administration from withholding federal money designated for the $16 billion Gateway tunnel project, ruling that the attempt to freeze funding in September was "flagrantly" illegal. The ruling by U.S. District Judge Jeanette Vargas, appointed by President Biden, solidifies a temporary restraining order she issued on February 6, the same day construction on the project halted due to a lack of funds.
Although work on the Gateway project resumed after a nearly three-week pause, the legal challenge continued. The administration had argued that New York and New Jersey lacked the standing to contest the funding freeze. Judge Vargas stated in her 59-page order that the defendants did not dispute that the suspension of federal grants violated federal law and made no attempt to justify their actions as consistent with governing federal regulations, thereby waiving any contrary argument.
The Department of Transportation (USDOT) initially claimed it was holding the funds to assess whether the Gateway Development Commission (GDC) was adhering to federal anti-discrimination laws in its contract awarding processes. However, Vargas cited statements attributed to former President Trump indicating the freeze was a punitive measure against Senate Minority Leader Chuck Schumer (D-NY) for his role in a government shutdown. Trump reportedly told Fox Business Network in October that he was cutting the project, stating, "The project is gonna be dead."
The funding freeze took effect in February, prior to any determination by the USDOT regarding the GDC's compliance with civil rights law. The GDC is pursuing separate litigation against USDOT for damages related to the forced suspension.
New Jersey Governor Mikie Sherrill, State Attorney General Jennifer Davenport, New York Governor Kathy Hochul, and State Attorney General Letitia James issued a joint statement expressing gratitude for the court's decision. They asserted that the ruling confirms the Trump administration's attempt to halt Gateway funding was unlawful and that the project, which they described as the nation's most important infrastructure project, is back on track with 1,000 workers resuming their jobs. A USDOT spokesperson reiterated the department's commitment to ensuring taxpayer dollars are spent responsibly and do not fund discriminatory practices.