A federal judge has granted the Trump administration a short reprieve to unfreeze over $16 billion in funding for the critical Gateway rail tunnel project, delaying a previous order amid an ongoing legal battle over the stalled infrastructure initiative. This decision, issued on February 9, 2026, gives the administration until Thursday, February 12, to release the funds or secure an appeal, highlighting the high-stakes clash between state governments and the federal executive over infrastructure spending.
On Monday, February 9, 2026, Judge Jeannette Vargas of the Southern District of New York issued an administrative stay, temporarily pausing her earlier temporary restraining order that had directed the federal government to restart reimbursements for the Hudson River Tunnel Project, also known as Gateway. The stay provides a brief window until Thursday at 5 p.m. for the Trump administration to either comply with the unfreezing order or persuade the U.S. 2nd Circuit Court of Appeals to allow continued withholding of the funds. This legal maneuver comes after New Jersey and New York filed a lawsuit last week alleging the funding suspension is unlawful, with the states demonstrating that the construction shutdown would cause immediate and severe economic harm to the region. Judge Vargas noted in her ruling that the project’s halt has already begun to affect workers and regional interests, underscoring the urgency of the matter.
The Gateway project is a $16 billion endeavor to construct new rail tunnels under the Hudson River, connecting New York City and New Jersey, and represents the largest transportation infrastructure project in the United States. Construction was forced to a complete stop last week due to the funding freeze, which began in October 2025, immediately jeopardizing approximately 1,000 jobs and threatening thousands more if the pause continues. State officials have warned that the stoppage could cost between $15 and $20 million each month, with broader economic ripple effects across the Northeast corridor. The project is critical for modernizing aging infrastructure and ensuring reliable rail service for millions of commuters, making the funding dispute a pivotal issue for regional transportation and economic stability.
New Jersey and New York’s lawsuit argues that the Trump administration violated contract terms and federal law, including requirements for reasoned explanations in government decisions. The states contend that the freeze lacks legal justification and has been implemented arbitrarily, causing undue hardship. In court filings, they emphasized that the funding suspension threatens public safety and economic growth, with the Gateway Development Commission warning of imminent layoffs and project delays. Judge Vargas acknowledged these arguments, finding that the states had sufficiently shown irreparable harm, which influenced her decision to grant only a short administrative stay rather than a longer pause.
The Trump administration has provided evolving explanations for the funding freeze, initially citing concerns over ‘unconstitutional DEI principles,’ then pointing to compliance issues with disadvantaged business enterprise programs, and later claiming an impasse over Homeland Security funding. President Donald Trump has publicly indicated that partisan motives underlie the freeze, stating in October that the administration is ‘cutting Democrat programs that we didn’t want.’ This has fueled accusations of political retaliation, as both New Jersey and New York have Democratic governors and legislative majorities, with funding for the project approved by Congress under President Joe Biden. The shifting rationales have complicated the legal proceedings and heightened tensions between state and federal authorities.
Political reactions have been sharply divided, with Democrats like New York Senator Chuck Schumer accusing Trump of lying about negotiations to rename Penn Station and Dulles International Airport after him in exchange for releasing funds. Schumer dismissed Trump’s claims as ‘absolute lies,’ emphasizing that only the president can restart the project with immediate action. Meanwhile, New Jersey Governor Mikie Sherrill has criticized the administration for jeopardizing jobs and families, rallying with workers in North Bergen to demand the release of funds. These confrontations underscore the deep partisan divides influencing infrastructure policy and federal-state relations.
The Gateway Development Commission, which oversees the project, has also pursued legal action in the Court of Federal Claims, alleging breach of contract and seeking to compel payment of over $200 million in owed reimbursements. This parallel lawsuit adds complexity to the legal landscape, with the administration arguing that New Jersey and New York lack standing to sue in federal district court because the dispute is contractual. The commission’s warnings about impending shutdowns and layoffs have put additional pressure on the courts to resolve the matter swiftly, highlighting the interconnected nature of the legal challenges.
Looking ahead, the Trump administration must unfreeze the funds by Thursday or succeed in its appeal to the Second Circuit Court of Appeals. The outcome will have significant implications for the Gateway project’s timeline, regional economic health, and the broader political battle over infrastructure funding. If the administration fails to secure a favorable ruling, it may be forced to release the billions in allocated funds, potentially restarting construction and mitigating job losses. Conversely, a successful appeal could prolong the freeze, exacerbating economic strain and intensifying political conflicts. This case serves as a microcosm of larger debates over federal spending, executive power, and the prioritization of critical national infrastructure projects.
