A federal judge just handed Donald Trump a major legal blow over a massive infrastructure project. A recent ruling permanently blocks the administration from freezing billions in funding for a critical rail tunnel.
Judge reportedly blocks Donald Trump to use Hudson Tunnel funding
A federal judge permanently barred the Trump administration from suspending funding for the Gateway tunnel project, The New York Times reported on June 29. Judge Jeannette A. Vargas of the Southern District of New York ruled that the administration’s attempts to withhold money for the $16 billion rail project were “flagrantly” illegal. The decision also prevents the federal government from trying to freeze the grants in the future.
The administration broke federal guidelines when it halted reimbursements to the tunnel’s builders in September 2025. That freeze triggered a construction shutdown and a brief layoff of roughly 1,000 workers across New York City and New Jersey in February. Federal officials initially justified the pause by citing a review of the project’s hiring practices.
Yet Judge Vargas pointed out that President Trump had revealed political motivations behind the funding freeze. Trump specifically targeted the tunnel because Senator Chuck Schumer, the Democratic minority leader from New York, had long championed it. “We’re cutting a $20 billion project that Schumer fought for 15 years to get, and I’m cutting the project,” Trump stated in October. “The project is gonna be dead. It’s just pretty much dead right now.”
The Gateway project aims to supplement two 116-year-old single-track tunnels running under the Hudson River between Manhattan and New Jersey. Construction funds dried up roughly five months after the federal government stopped issuing payments. New York and New Jersey then filed a joint lawsuit against the Trump administration in Manhattan’s federal court.
Catherine Rinaldi, executive vice president of the Gateway Development Commission, stated the tunnel project “was on schedule and on budget” before federal funding was frozen. Governors Kathy Hochul of New York and Mikie Sherrill of New Jersey jointly praised the court’s decision.
The federal Department of Transportation maintained it remains “committed to ensuring hard-working taxpayer dollars are being spent responsibly.” Separately, the development commission continues pursuing a lawsuit against the Transportation Department for monetary damages caused by the forced shutdown.
Originally reported by Vritti Johar on Mandatory.com.
