Trump admin fights federal order restoring funding for Hudson River Gateway tunnel project

Evan Simko-Bednarski and Molly Crane-Newman, New York Daily News on Feb 9, 2026

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NEW YORK — The Trump administration on Monday filed papers to fight a court order that would restore federal funding to the $16 billion Hudson River Tunnel as a deadline looms to resume payments.

Attorneys for the US Department of Transportation filed a notice asking the Second Circuit federal appeals court to pause a Friday night ruling that ordered the federal government to stop blocking money to the infrastructure project as a lawsuit filed by New York and New Jersey to restore those funds plays out in court.

“Unless this Court’s order is stayed by 1 p.m. today, the government will be forced to disburse up to $200 million, without any obvious mechanism for recovering that money later if the government prevails on appeal,” Assistant U.S. Attorney Tara Schwartz wrote in the filing, which asks the court to halt the order from taking effect pending the government’s appeal.

The suit is one of two seeking to stop the Trump administration’s months-long interference in congressional funding for the tunnel.

The states of New York and New Jersey sued last week, arguing that they have fiduciary responsibility for the project and for maintaining the safety of any active construction sites after the federal money runs out.

“Project sites cannot simply be abandoned,” Shankar Duraiswamy, an attorney for New Jersey, argued before Manhattan Federal Judge Jeannette Vargas on Friday. “There is literally a massive hole in the earth in North Bergen, New Jersey that must be secured.”

But the feds argued Friday, and again Monday, that the states have no claim to sue, and that any legal recourse must come from a separate action, a breach-of-contract claim brought the bi-state Gateway Development Commission charged with building the tunnel.

That suit, also brought last week, says the feds violated their contract with the GDC by refusing to pay out funds promised by congress.

Donald Trump officials first announced a freeze on the funding last year in the hours after the government shutdown began, blaming the project’s supposed “unconstitutional DEI principles” in the selection of contractors and purported noncompliance with newly implemented contracting rules.

A few weeks later, Trump bragged he’s “terminated” the project because of its importance to Democratic Senate Minority Leader Chuck Schumer.

Later, after the GDC had demonstrated compliance with the new contracting rules, the White House’s press shop changed tack and claimed the funding remained frozen because Democratic lawmakers had somehow not been “prioritizing the interests of Americans over illegal aliens.”

As The News reported last week, Trump also said in recent negotiations that he’d stop meddling with the project if Schumer advocated for slapping Trump’s name on Penn Station and Dulles International Airport in Washington, D.C., a deal Schumer rejected.