This audio is automatically generated. Please let us know if you have any comments.
Dive brief:
- A federal judge permanently blocked the US DOT from withholding funds for the $16 billion Hudson Tunnel project in New York and New Jersey because of its Disadvantaged Enterprise Program, according to a Monday ruling.
- Judge Jeannette Vargas of the United States District Court for the Southern District of New York threw out the Funding freeze on September 30 levied by President Donald Trump’s administration and prevented the DOT from blocking funds on the project’s DBE program in the future, according to the court ruling.
- The decision follows months of uncertainty for one of the nation’s largest infrastructure efforts. Construction was briefly halted earlier this year after the DOT halted reimbursements before it was eventually reinstated under a provisional court order.
Diving knowledge:
The Gateway Development Commission, which oversees the project, had warned of another in March the work stoppage could occur in the summer without a permanent resolution on the funds. The ruling effectively removes this legal cloud and allows construction activity to now proceed.
“The DOT did not provide any opportunity for GDC to appeal the September 30 suspension,” Vargas wrote. “This is clearly against the law.”
Trouble began with the project in September 2025 when the GDC received notice that federal disbursements would cease pending a review of the federally mandated Disadvantaged Business Enterprise Program, which sets goals for the inclusion of women- and minority-owned businesses in government contracts.
“The September 30 suspension waived the right to suspension of payment without any finding that GDC had violated the law,” Vargas wrote in the ruling. “This was clearly contrary to Section 200.339 of the Uniform Grant Guide.”
Federal regulations allow agencies to withhold grant payments, albeit in key circumstances. First, the agency must determine that a recipient failed to comply with applicable laws and, second, that corrective action would not solve the problem, the judge wrote in the ruling.
According to the opinion, the DOT suspended the payments while it reviewed GDC’s compliance and never made a formal conclusion that the commission violated federal regulations.
The court also found that DOT failed to provide GDC with an opportunity to challenge the suspension of funding, another requirement of federal grant regulations.
“Furthermore, beneficiaries must receive due process before the grant is terminated, including an opportunity to object and provide information challenging the action,” Vargas wrote. “However, DOT did not provide any opportunity for GDC to appeal the September 30 suspension.”
The opinion repeatedly underscores the consequences of freezing funding for contractors on the site. Vargas wrote that the project was “on the cusp of a suspension-induced work stoppage that would have eliminated hundreds of jobs, left active construction sites abandoned and wreaked havoc on the project’s schedule and budgets.”
He also noted in the ruling that “Defendants do not dispute that the suspension of federal grants flagrantly violates federal law.”
“The timing and sequencing of these projects are closely coordinated to meet key corridor access windows, optimize tunnel productivity, align with environmental and permitting restrictions, organize utility relocations, and ensure continuous construction across state lines,” Vargas wrote. “The current Hudson Tunnel project schedule is designed or was designed to bring the new tunnel into service by 2035.”
The GDC recently awarded a Skanska Creamer Sanzari NJSA JV in June $711.7 million contract for the New Jersey Surface Alignment Project. The award means seven of the 10 construction packages for the Hudson Tunnel project, including all the required tunnels, are already underway or complete, according to the GDC.
In response to the ruling, a DOT spokesperson told Construction Dive, “USDOT remains committed to ensuring that hardworking taxpayer dollars are spent responsibly and do not fund unconstitutional and discriminatory hiring practices.”
GDC will hold its next board meeting on July 8, where it will likely cover project updates.
“We are grateful for New York and New Jersey’s support to restore federal funding to the Hudson Tunnel project,” GDC Executive Vice President Catherine Rinaldi told Construction Dive. “Prior to the federal funding freeze, the Hudson Tunnel project was on schedule and on budget, and we have made significant progress since federal funding for the project resumed in February.”
