$16 Billion for Hudson River Rail Tunnel Unfrozen by Federal Judge
By Reuters | 06 Feb, 2026

Work on the project would have been forced to halt Friday as apportioned funds had been frozen by Trump after Zohran Mamdani was elected mayor of New York City.

A New York federal judge on Friday unfroze funds withheld by U.S. President Donald Trump's administration for a $16 billion project to overhaul critical rail infrastructure in New York and New Jersey.

The Gateway Project will build a new commuter rail tunnel between Manhattan and New Jersey and repair a century-old tunnel used by more than 200,000 travelers and 425 trains daily.

The existing Hudson Tunnel was heavily damaged by Hurricane Sandy in 2012 and needs frequent emergency repairs that disrupt travel on the nation’s most heavily used passenger rail line.

U.S. District Judge Jeannette Vargas in Manhattan handed down the temporary ruling hours after New York and New Jersey said construction would halt for lack of funding.

Vargas said the states were likely to succeed on their claims that a Trump administration directive freezing the funds was arbitrary and ran afoul of legal procedures for making policy changes.

The White House and Department of Transportation did not immediately respond to requests for comment on the ruling.

New Jersey Acting Attorney General Jennifer Davenport and New York Attorney General Letitia James issued statements praising the ruling. 

“The Trump Administration must drop this campaign of political retribution immediately and must allow work on this vital infrastructure project to continue,” Davenport said.

The states said in a January 3 lawsuit that Trump’s Republican administration had frozen the funds in a “brazen act of political retribution” against their Democratic leaders. They said a work stoppage would hold up a crucial infrastructure project, damage their economies and saddle them with costs from securing idled construction sites. 

The Trump administration has withheld $205 million in reimbursements for the project since October 1.  

Trump has reportedly demanded that Washington Dulles Airport and New York's Penn Station be renamed for him in exchange for unfreezing the funds, drawing strong criticism from Democrats.

He told reporters on Friday that he had not proposed renaming Dulles or Penn Station. Trump did not comment on Vargas' decision. 

The Department of Transportation said on September 30 that it froze the funds pending a review of the project’s compliance with new prohibitions against race- and sex-based considerations in contracting decisions. 

The Gateway Development Commission informed the department that it had made changes and conducted a review to ensure compliance with the regulations but has not heard back, according to the lawsuit.

Gateway said the suspension would idle 1,000 construction workers and that Trump's decision had endangered passengers who had to rely on "decaying, century-old rail infrastructure."

Gateway had previously said work was already suspended.

DEMOCRATS CRITICIZE TRUMP FOR WITHHOLDING FUNDS

Trump last month asked U.S. Senator Chuck Schumer to back the renaming of Washington Dulles Airport and Penn Station, but the New York Democrat told the White House he did not have the power to rename them, a source familiar with the matter told Reuters.

Trump told reporters on Friday that Schumer had proposed renaming Penn Station and said "numerous people" had suggested renaming Dulles. 

Schumer called Trump's claim about Penn Station an "absolute lie" in a social media post. 

U.S. Senator Cory Booker, a Democrat from New Jersey, told a press conference near the project on Friday that Trump was holding the tunnel hostage because he "seems to want to put his name on everything."

Since returning to office in January, the Republican president has affixed his name to prominent Washington buildings, a planned class of Navy warships, a visa program for wealthy foreigners, a government-run prescription drug website, and federal savings accounts for children.

New York Senator Kirsten Gillibrand, a Democrat, called Trump's suggestion ridiculous.

"These naming rights aren't tradable as part of any negotiations, and neither is the dignity of New Yorkers ... The president continues to put his own narcissism over the good-paying union jobs this project provides and the extraordinary economic impact the Gateway tunnel will bring."

The project was allocated about $15 billion in federal support under former President Joe Biden. Nearly $2 billion has been spent on the project so far.

(Reporting by David Shepardson and Jack Queen; Editing Nia Williams, Edmund Klamann and Rosalba O'Brien)