A federal judge permanently barred the Trump administration on Monday from withholding critical infrastructure grants for the $16 billion Gateway tunnel project connecting New Jersey and New York.
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District Court Judge Jeannette Vargas finalized a February temporary restraining order, ruling that the administration's sudden halt of three separate federal grants to the Gateway Development Commission violated federal regulations.
The Department of Transportation previously paused the funds over alleged diversity, equity, and inclusion noncompliance, though the court noted the agency never formally determined any violation had occurred.
"Defendants do not dispute that the suspension of federal grants flagrantly violates federal law," wrote Judge Jeannette Vargas.
The federal government attempted to argue that the states lacked standing because the contract dispute belonged in the Court of Federal Claims, a jurisdictional defense the judge rejected.
"Defendants make no attempt to justify their actions as consistent with the governing federal regulations. They have therefore waived any argument to the contrary," wrote Vargas.
The legal victory prompted immediate reactions from local officials who noted the litigation successfully restored funding in February, allowing 1,000 workers to return to the job site.
"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," said Governor Mikie Sherrill and New Jersey Attorney General Jennifer Davenport in a joint statement.
The ruling officially secures the long-term funding necessary to build new rail tunnels under the Hudson River, which officials aim to complete by 2035.
"This victory sends a clear message: the Trump Administration's attempt to halt Gateway funding will not stand," said Sherrill and Davenport.
New York Attorney General Letitia James and New Jersey Attorney General Jennifer Davenport released a parallel statement condemning the federal intervention.
"The Trump administration's attempt to halt Gateway funding will not stand," said Attorneys General Letitia James and Jennifer Davenport.
The court's initial unfreezing order in February forced the federal government to pay $98 million in overdue funding alongside $30 million for work completed in January.
"The ostensible reason for the suspension of funds was to allow DOT to conduct a review of GDC's compliance with federal nondiscrimination laws.
President Donald J.
Trump, however, made contemporaneous statements indicating that he had personally made the decision to 'terminate' funding for the Project 'because the Democrats are so foolish – what they've done to the country,'" read the ruling.
President Trump previously defended his administration's financial freeze on social media, comparing the infrastructure plan to a disastrous California railroad venture.
"Gateway will likewise be financially catastrophic for the region, unless hard work and proper planning is done NOW to avoid insurmountable future cost overruns," wrote Donald J.
Trump on Truth Social.
The administration asserted it would refuse to cover any additional expenses incurred by the bi-state development corporation.
"Under no circumstances will the federal government be responsible for any cost overruns—not one dollar!" wrote Trump.
Once the new Gateway tunnels become operational, transit authorities will begin extensive rehabilitation work on the existing century-old tunnels running beneath the Hudson River.
