The Trump administration cannot withhold funding for the Gateway Tunnel rail project, a federal judge ruled Monday, ending a months-long legal fight between New York and New Jersey and the federal government over the $16 billion infrastructure endeavor.
U.S. District Judge Jeannette Vargas ruled that the Trump administration had no legal justification to freeze federal funds for the reconstruction of the 116-year-old rail tunnel last fall and that doing so would cause “irreparable harm.”
Vargas, a Biden appointee, likened Trump’s action to “unlawful executive decisionmaking” in a win for the two states that had brought the suit in February to lift the president’s funding block days before it went into effect.
New York and New Jersey Govs. Kathy Hochul and Mikie Sherrill, along with Attorneys General Letitia James and Jennifer Davenport, in a Monday night joint statement, commended Vargas’ ruling.
“We are thrilled 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.”
The massive infrastructure project aims to replace a two-tube rail tunnel beneath the Hudson River connecting the Empire and Garden States, which is used by hundreds of Amtrak and New Jersey Transit trains carrying tens of thousands of commuters every weekday. The tunnel not only brings office workers into Manhattan, but also serves as a vital link in Amtrak’s Northeast Corridor between Boston and Washington D.C.
The current passage — known as the North River Tunnel — must be replaced because it is at risk of shutting down after over a century of use, coupled with severe damage from 2012’s Hurricane Sandy. Local officials have warned that if the tunnel is not replaced, the old one will fail, snarling essential travel throughout the region.
The Gateway Development Commission — the bi-state entity leading construction — is currently assembling a massive tunnel boring machine that will carve the first section of the new tunnel through the New Jersey Palisades, starting later this year, at a work site across the Hudson.
The Trump administration’s freeze on hundreds of millions of dollars in already committed funding caused GDC to halt work for much of February. GDC ended the work stoppage later that month, when the feds began sending funds again following Judge Vargus’ ruling that they had to release over $200 million they had put on ice.
Although Vargas had ordered funding to be reinstated as the case played out, those working on the project have told amNewYork that the lack of certainty over the past few months has still caused delays and difficulties.
“Yesterday’s ruling should put an end to the uncertainty surrounding one of the nation’s most important infrastructure projects,” the Regional Plan Association said in a statement. “The court made clear that funding approved by Congress for the Gateway Program cannot be withheld indefinitely. Every unnecessary delay comes at a steep cost.”
The Trump administration argued it was withholding funds because it was investigating whether GDC was in compliance with the administration’s new diversity, equity and inclusion standards. However, New York and New Jersey alleged the funding freeze was political retribution, citing Truth Social posts and other statements the president made in September, days before his pause on the project’s funding.
“We’re cutting a $20 billion project that Schumer fought for 15 years to get, and I’m cutting the project. The project is gonna be dead,” Trump said just before freezing the funding, adding later, “The project in New York. It’s billions and billions of dollars that Schumer has worked 20 years to get. It’s terminated. . . . It’s terminated because the Democrats are so foolish . . . . Right now, there is no funding – because it’s up to me.”
In an April hearing on the matter, assistant U.S. attorney Chibogu Nzekwu told Vargas, “I don’t think you need to look at,” the president’s comments, a position the judge appeared to find suspect.
“Isn’t he part of the executive branch?” Vargas asked, questioning how she could be asked to disregard Trump’s statements. “Isn’t that how I’d determine the pretext for … [whether his decision was] arbitrary and capricious?”
Trump also slammed the project as a “boondoggle” in a February Truth Social post, claiming without evidence that it would run billions of dollars over budget.
When asked for a comment on the ruling, Trump’s Department of Transportation didn’t directly opine on it. The agency claimed on Monday evening that it “remains committed to ensuring hardworking taxpayer dollars are being spent responsibly and do not fund unconstitutional, discriminatory contracting practices.”
Vargas cited the administration’s September statements in her Monday decision, also noting that GDC had said it has always been in compliance with the federal government’s standards and had offered all the proof it had been asked to. She emphasized that the Trump administration never provided actual proof that GDC had violated the law, including over the five months the suit stretched on for.
“Only if DOT determines that no corrective conditions could remedy the noncompliance may it
withhold payments until corrective action is taken,” Vargas’ Monday decision reads. “The Sept. 30 Suspension skipped right to payment suspension without any finding that GDC had violated the law.”
Her decision also shot down arguments from the federal government that Manhattan’s federal court wasn’t the right one to bring the case in, agreeing with the states’ position that they were allowed to ask her to lift the Trump administration’s decision to end the funding because it would be a ruling on an illegal agency action, not explicitly a ruling that demanded the feds offer monetary relief, which district courts aren’t allowed to do.