By Joseph De Avila and Victoria Albert
A federal judge has ordered the Trump administration to temporarily unfreeze funding for a $16 billion rail tunnel under the Hudson River.
U.S. District Judge Jeannette Vargas, appointed by former President Joe Biden, on Friday granted the states of New Jersey and New York a temporary restraining order preventing the Trump administration from suspending the release of funds for the project while the case proceeds. The Trump administration said in October it had frozen the funds while it reviewed whether the project included any diversity, equity and inclusion policies.
New York Attorney General Letitia James called Friday's order a critical victory for commuters. "The Hudson Tunnel Project is one of the most important infrastructure projects in the nation, and we will keep fighting to ensure construction can continue without unnecessary federal interference," she said.
The White House didn't immediately respond to a request for comment.
The Trump administration had opposed the temporary restraining order, saying the federal district court didn't have the jurisdiction to review the dispute and that the matter belonged in the Court of Federal Claims.
Vargas ruled Friday that the states were likely to succeed in their claims and that they had shown they would suffer significant harm without the temporary restraining order.
The project manager overseeing construction of the Hudson Tunnel Project connecting New York and New Jersey said last month it would have to stop all work on the project unless funding was resumed.
About $12 billion in funding for the project comes in the form of federal grants, while $4 billion comes from federal loans to be repaid by New York and New Jersey and by the Port Authority of New York and New Jersey, according to the Gateway Development Commission, the project's manager. Funding from all these sources had been paused by the Trump administration, the commission said.
The states alleged in their lawsuit that the federal government was illegally withholding billions in funds already committed to the project and that it had offered different explanations for withholding the funds.
The Trump administration initially said it was reviewing the project to ensure the Gateway Development Commission was following new regulations it had issued barring certain "race- and sex-based presumptions" from a small business program, according to court papers filed by New York and New Jersey. Later, the Trump administration suggested the Gateway Development Commission violated other regulations for failing to ensure contractors met certain requirements for the small business program, the plaintiffs said.
"Whatever DOT's shifting official reasons, statements by the President and other officials tell the true story," New York and New Jersey said in court papers. "DOT suspended project funding to punish New York officials for opposing unrelated Presidential demands."
Trump administration officials told Senate Minority Leader Chuck Schumer (D, N.Y.) in January the funds would be released if he helped name New York's Penn Station and Washington Dulles International Airport after President Trump, according to a person familiar with the matter. Schumer rejected the offer, which was earlier reported by Punchbowl News.
The White House didn't respond to a request for comment on that proposal.
Write to Joseph De Avila at joseph.deavila@wsj.com and Victoria Albert at victoria.albert@wsj.com
(END) Dow Jones Newswires
February 06, 2026 20:41 ET (01:41 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.