Federal funding for the $16 billion Hudson Tunnel project was set to resume at 5 p.m. on February 12 unless the US Court of Appeals for the Second Circuit intervened. Once the deadline has passed, a previous order restoring funding is in effect.
U.S. District Court Judge Jeannette A. Vargas on Feb. 9 denied the federal government’s request to stay its Feb. 6 temporary restraining order, but granted a brief administrative break until 5 p.m. Thursday to allow the government to file an emergency appeal. No stay was issued, so his TRO goes into effect.
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The Feb. 6 ruling bars the U.S. Department of Transportation from continuing a Sept. 30 suspension of federal disbursements tied to the $16 billion rail megaproject, which New York and New Jersey argued would force work to shut down without immediate funding. The project includes the construction of a new two-tube rail tunnel under the Hudson River and the rehabilitation of the 116-year-old North River Tunnel, a key rail link between New Jersey and Manhattan.
As of late Feb. 12, the Second Circuit docket (No. 26-282) showed no order granting a stay.
“This is good news for the Hudson Tunnel project, and we anticipate receiving the $205 million in reimbursement funds from the federal government,” the Gateway Development Corporation said in a statement on Feb. 12. “While this is a positive step, we need consistent and reliable access to federal funding for the Hudson Tunnel project to move forward. GDC continues to pursue all avenues to regain access to all federal funds for this urgent project, including our lawsuit. We are confident in our legal position and look forward to resolving this important matter.”
In weighing the government’s request, Vargas acknowledged federal claims that up to $200 million could be disbursed before appellate review, but concluded that the balance of damages and public interest favored allowing relief. The court cited evidence that work had already been suspended, layoffs had begun, and a prolonged delay could cause serious regional economic damage.
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“States have demonstrated limited ability to continue a critical infrastructure project out of their own coffers,” the court wrote in its order denying USDOT’s request despite the brief allowance for appellate review. “Plaintiffs will not be able to recover imminent and ‘overwhelming’ monetary loss if GDC is forced to close its operations.”
The federal government has argued that the dispute belongs in the US Court of Federal Claims, saying the states’ claims amount to contract enforcement outside the scope of the Administrative Procedure Act.
Meanwhile, the Gateway Development Commission has filed a separate breach of contract case in this court seeking payment of allegedly overdue amounts.
In the absence of an appeal, the district court’s order goes into effect Thursday evening. Any subsequent decision by the Second Circuit, which remains possible, could change that stance.
