A federal judge shortly after 1 p.m. on February 9 temporarily halted his own order blocking the Trump administration’s freeze on funding for the $16 billion Gateway Hudson River Rail Tunnel, granting a brief administrative stay while denying the government’s bid to stay the ruling pending an appeal.
The administrative stay extends until February 12 at 5 p.m. and preserves the status quo while the US Court of Appeals for the Second Circuit considers whether to intervene. Without the appeal action, the court order preventing enforcement of the funding freeze would go back into effect, potentially allowing federal disbursements to move forward.
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The pause came three days after U.S. District Court Judge Jeannette A. Vargas issued a February 6 temporary restraining order barring the U.S. Department of Transportation from continuing to enforce its September 2025 suspension of federal disbursements for the Hudson Tunnel Project. This order was effective immediately and was not suspended when it was issued.
After the Trump administration filed an interlocutory appeal on Feb. 8 and asked the court to stay the ruling pending review — warning that otherwise up to $200 million would have to be disbursed by the early afternoon of Feb. 9 — Vargas rejected the request for the fund.
In a written order issued shortly after that deadline, Vargas said New York and New Jersey had demonstrated that halting construction “will have an immediate and severe impact on the region’s economic interests.” Only after denying the stay did he impose the brief administrative pause to give the appeals court time to consider emergency relief.
Court documents indicate that no disbursements were received between the Feb. 6 order and the Feb. 9 hiatus, and that the project’s owner had already used up available credit before ordering the suspension of construction. Reuters reported that federal payments had not resumed as of February 9 and that construction was halted late last week, with work set to resume once funding is restored. The U.S. Department of Transportation, the White House and the project’s owner had no immediate comment after the decision to suspend, Reuters reported.
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The suspension has stopped active work on the entire project footprint. According to advance notices from the Gateway Development Commission and industry reports, crews began liquidating the first civil construction packages tied to the New Jersey and Manhattan approaches and preparatory work on the Hudson River, while four major procurements covering the remaining construction packages, including items needed to advance full tunnel excavation, were suspended until federal funding is restored.
Project officials have warned that even brief disruptions can cascade through tunnel schedules because workforce remobilization, procurement restarts and safety certifications typically take weeks rather than days.
Two demands, one project at risk
The dispute now unfolds on two parallel legal tracks with different implications for construction. In the Southern District of New York, New York and New Jersey are challenging the legality of the DOT’s decision to suspend funding, arguing that the move violated federal administrative law and caused immediate harm to the project.
Alongside that case is a separate lawsuit filed by the Gateway Development Commission in the United States Court of Federal Claims, alleging that the federal government breached grant and loan agreements by withholding payments and seeking monetary relief.
The Trump administration has argued that the commission’s contract case weakens states’ demand, saying disputes over federal funding should be resolved exclusively in the Court of Federal Claims. Vargas rejected that argument, finding that states had “limited ability to continue a critical infrastructure project out of their own coffers” and that a subsequent breach-of-contract action “will provide no relief to those whose jobs are at imminent risk.”
Labor groups say the evil is already materializing. In a Feb. 6 statement issued after the work stoppage, Construction Unions of North America President Sean McGarvey said halting work on the project endangered “the livelihoods of thousands of skilled construction trades members” and threatened a critical transportation corridor nationally.
New Jersey Gov. Mikie Sherrill also responded Feb. 6 to the initial court order blocking the freeze, saying states will continue to seek full relief so construction can continue to move forward.
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The next turning point now lies with the second circuit. If the appeals court grants a stay, the funding freeze would remain in place during the appeal. If he doesn’t, Vargas’ injunction barring enforcement of the funding freeze will go back into effect when the administrative freeze expires at 5 p.m. on Feb. 12.
For the project’s contractors and partners, the ruling will determine whether federal payments resume quickly enough to restart stalled work or whether the Hudson Tunnel project remains idle while litigation continues on the back burner. Even if funding does eventually flow, project filings and advance warnings show tunnel-related work would return only through a gradual remobilization rather than an immediate acceleration, leaving certainty of the timeline dependent on both court timetables and construction sequencing.
