Federal funds for $16B Hudson River rail tunnel released after court overrules Trump freeze, resuming construction amid political tensions in NYC and NJ.
Court Orders Release of Funds to Revive Hudson Tunnel Project:
A federal judge has compelled the Trump administration to resume funding for the $16 billion Gateway Hudson Tunnel Project, releasing an initial $107 million after a four-month freeze that halted construction and laid off hundreds. Announced amid Democratic accusations of political retribution, the ruling averts immediate shutdown of the nation’s largest infrastructure endeavor, safeguarding daily commutes for 200,000 riders and bolstering the Northeast’s economy. As funds begin to flow, the decision exposes deep partisan rifts over federal spending, with potential ripple effects on regional transit reliability.
Hudson Tunnel Project Resumes:
Construction on the Gateway Hudson Tunnel Project ground to a halt on February 6, 2026, as federal funds ran dry, leading to the layoff of approximately 1,000 union workers. That same day, U.S. District Judge Jeannette Vargas issued a temporary restraining order, mandating the Trump administration restore over $200 million in funding to prevent irreparable harm. The ruling came hours after an emergency hearing in the Southern District of New York.
New York and New Jersey had filed a joint lawsuit on February 3, 2026, accusing the administration of illegally withholding funds as political payback. The Gateway Development Commission, overseeing the project, filed a separate suit the same week. The administration appealed the ruling, seeking a stay, but Vargas granted only a brief administrative pause until February 12. On February 12, the U.S. Court of Appeals for the Second Circuit declined to overturn the order, referring it to another panel and allowing the ruling to take effect.
By February 13, the first $30 million was disbursed, with an additional $77 million following by February 17, bringing the total to $107 million. Workers rallied at Secaucus Junction on February 13, urging full release of the $4 billion appropriated in 2024. The commission plans to use the funds to restart operations incrementally.
Hudson Tunnel: Infrastructure at the Mercy of Politics:
The Gateway Program, encompassing the Hudson Tunnel Project, aims to construct two new rail tunnels under the Hudson River and rehabilitate the existing 114-year-old tunnels, damaged by Superstorm Sandy in 2012. These tunnels form the backbone of the Northeast Corridor, handling 800 trains and 200,000 passengers daily for Amtrak and NJ Transit. A failure could cripple regional economies, costing billions in lost productivity.
During Trump’s first term (2017-2021), the project faced delays, with funding deprioritized despite congressional approvals. Under President Biden, progress accelerated: In 2023, a $6.88 billion federal grant was awarded, part of $12 billion in grants and loans finalized in 2024. Construction began in earnest, with tunnel boring set for 2026.
The 2025 freeze, imposed in September/October, was officially for reviewing contracts against a federal DEI ban. However, states claimed it was retribution against Democratic leaders like Schumer, tied to a government shutdown. Reports suggest Trump conditioned release on renaming Penn Station and Dulles Airport after himself. This echoes similar freezes on other Democratic-led projects. The project’s significance lies in its role as a national economic lifeline, with completion targeted for 2035 to prevent catastrophic disruptions.