Trump move to halt funding for Gateway project was ‘flagrantly’ illegal, judge says

A federal judge found Monday that the Trump administration’s decision to halt funding for the Gateway tunnel project ran afoul of the law and permanently barred it from freezing the grants again.

U.S. District Court Judge Jeannette Vargas’ decision extends into perpetuity a temporary restraining order she granted to New Jersey and New York in February after finding the sudden freeze of funding for new tunnels crossing the Hudson River was likely illegal.

“Defendants do not dispute that the suspension of federal grants flagrantly violates federal law,” the judge wrote.

The Department of Transportation froze funding to the Gateway Development Commission, which is overseeing the $16 billion project, from three separate grants in what the administration said was a bid to stop money from flowing to “unconstitutional DEI principles.” But Trump himself repeatedly said he froze funding to punish Democrats over an impasse on federal spending that spurred what was then the second shutdown under Trump to become the longest in the nation’s history.

The department never determined the commission had failed to comply with federal law, but it froze the funding anyway, the court said. That freeze prompted a costly work stoppage earlier this year.

Vargas’s preliminary order restored funding in February, but the case wore on. The administration claimed the two states lacked standing to sue in the district court because the matter involved contracts with the federal government and such disputes are overseen by the Court of Federal Claims, where the commission launched its own suit.

The states are not parties to the Gateway Development Commission’s contracts with the federal government and have no standing to sue there. The Trump administration’s reliance on jurisdictional arguments belied the weakness of their case, the judge said.

“Defendants make no attempt to justify their actions as consistent with the governing federal regulations. They have therefore waived any argument to the contrary,” Vargas wrote.

Gov. Mikie Sherrill and New Jersey Attorney General Jennifer Davenport celebrated the final ruling.

“This is the most important infrastructure project in the nation, and thanks to our litigation, 1,000 people are back on the job and construction continues every day,” they said in a joint statement. “This victory sends a clear message: the Trump Administration’s attempt to halt Gateway funding will not stand.”