Federal Judge Orders Release of $16 Billion in Gateway Tunnel Funds Frozen by Trump Administration

A Biden-appointed federal judge ordered the Trump administration on Friday to unfreeze $16 billion in funds for the Gateway tunnel project connecting New York and New Jersey beneath the Hudson River. Judge Jeannette Vargas of the Southern District of New York issued the 11-page order on the same day construction ground to a halt after a line of credit keeping the project alive ran dry.

The ruling came after New York, New Jersey, and the Gateway Development Commission filed suit against the administration earlier in the week. The Gateway Development Commission warned that nearly 1,000 jobs faced immediate elimination from the work stoppage.

In her order, Judge Vargas wrote:

"Plaintiffs have adequately demonstrated that they would imminently suffer such loss if [the Gateway Development Commission] is forced to shut down its operations."

The Backstory Behind the Freeze

The federal government approved funding for the tunnel project in 2021, and construction began in 2023 with a projected completion date of 2035. Last October—on the first day of what became a record-breaking 43-day government shutdown—President Trump froze a combined $18 billion in funding for both the Gateway tunnel and New York's Second Avenue subway project.

That freeze sat at the center of a broader confrontation between the administration and blue-state officials who have made themselves adversaries of federal policy on everything from immigration enforcement to energy regulation. New York and New Jersey aren't exactly paragons of cooperative federalism. They've spent years resisting federal authority when it suits them—and then turning around to demand federal dollars flow without conditions, as New York Post reports.

That tension produced one of the more entertaining subplots of the saga. Last month, during negotiations with Senate Minority Leader Chuck Schumer, Trump reportedly offered to restore the funds in exchange for renaming New York's Penn Station and Washington's Dulles International Airport after him. Schumer reportedly told Trump he didn't have the authority to fulfill that request.

Trump, speaking to reporters aboard Air Force One, offered his version of the exchange:

"Chuck Schumer suggested that to me about changing the name of Penn Station to Trump Station."

Schumer fired back on X:

"Absolute lie. He knows it. Everyone knows it. Only one man can restart the project and he can restart it with the snap of his fingers."

The he-said-he-said is entertaining political theater. But underneath it lies a real question about how much leverage the federal government should exercise over infrastructure spending that states treat as their birthright.

Blue-State Officials Take a Victory Lap

New York Attorney General Letitia James wasted no time framing the ruling as a triumph:

"This is a critical victory for workers and commuters in New York and New Jersey. I am grateful the court acted quickly to block this senseless funding freeze, which threatened to derail a project our entire region depends on."

She continued:

"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."

"Unnecessary federal interference." That phrase does a lot of heavy lifting from an attorney general whose office has made a second career out of interfering with federal priorities. James has positioned herself as a perpetual antagonist to the Trump administration on virtually every front. The idea that she would then demand the same administration hand over $16 billion without exercising any oversight or leverage is a fascinating act of cognitive flexibility.

New Jersey's Democratic Governor Mikie Sherrill struck a similar tone on X:

"Trump's decision to freeze this funding is illegal, and we'll continue to pursue full relief so the nation's most urgent transportation project keeps moving forward."

Sherrill notably described the court's action as "temporary relief"—an acknowledgment, however quiet, that this fight is far from settled.

The Judicial Pattern

The ruling fits a pattern that has become numbingly familiar. A Biden-appointed judge in a friendly jurisdiction issues an order blocking executive action. Blue-state attorneys general celebrate. The administration appeals. The cycle repeats.

None of this is to say the Gateway tunnel isn't a real infrastructure project with real consequences for real commuters. It is. The existing Hudson River tunnels are aging, and the Northeast Corridor's rail capacity matters to the national economy. These are facts.

But federal funding is not an entitlement that flows regardless of whether recipient states cooperate with federal law. The states suing over this freeze are the same states that have declared themselves sanctuaries from immigration enforcement, that have obstructed ICE operations, and that have sued the federal government more times in the last five years than most people can count. The expectation that billions in federal dollars should arrive on schedule while state officials wage legal and political war against the administration sending the check—that expectation deserves scrutiny.

What Comes Next

The temporary nature of the relief Sherrill acknowledged matters. This order keeps the lights on and the tunnel boring machines running—for now. But the underlying legal battle over whether the administration can condition or withhold congressionally approved funds will work its way through the courts. The administration's position on executive authority over appropriated funds is a serious constitutional question, not a whim.

The White House did not respond to a request for comment on the ruling. That silence may signal that the administration views this as a skirmish in a longer war rather than a decisive loss.

Meanwhile, the nearly 1,000 workers whose jobs hung in the balance on Friday are back in limbo—employed today, uncertain tomorrow, pawns in a fight between officials who will never miss a paycheck regardless of the outcome.

The Deeper Question

The Gateway tunnel saga crystallizes something important about the relationship between blue states and the federal government in the Trump era. These states want two things simultaneously: total autonomy to resist federal policy and unconditional access to federal money. They want to sue the administration on Monday and cash its checks on Tuesday.

At some point, that contradiction becomes untenable. You cannot treat the federal government as an illegitimate adversary in the courtroom and a generous benefactor at the Treasury window. Federalism is not a buffet where states pick the parts they like and send back the rest.

The tunnel may get built. The funds may ultimately flow. The courts may decide that once Congress appropriates money, the executive branch lacks discretion to withhold it. Those are legitimate legal outcomes.

But the political reality underneath remains: states that want federal investment might consider whether permanently antagonizing the federal government is the shrewdest way to secure it. Nearly 1,000 workers almost learned that lesson the hard way on Friday.