Hudson Tunnel Project funding secured by court

Updated on 8 July 2026

A US federal judge has permanently barred the Department of Transportation (USDOT) from withholding grant payments to the Hudson Tunnel Project in New York.

The Hudson Tunnel Project, valued at roughly $16 billion, ranks among the country's largest rail infrastructure schemes. A prolonged funding block would have threatened continued construction and put hundreds of jobs on the site at risk.

The ruling confirms that a state cannot be left without legal remedy when a federal agency suspends already-obligated grants.

In a ruling issued on 29 June, district judge Jeannette Vargas made permanent the temporary restraining order she had issued on 6 February, in a case brought jointly by the states of New York and New Jersey. A panel of judges will now review the case to determine whether the law was correctly applied.

According to the ruling, the administration violated federal regulations governing the suspension of already-obligated infrastructure grants, halting payments without establishing any non-compliance by the Gateway Development Commission (GDC), the project's delivery body, and without giving it a chance to respond.

Judge Vargas also rejected USDOT's argument that the dispute belonged exclusively before the US Court of Federal Claims, finding that it centred on compliance with federal grant regulations.

GDC was forced to pause work temporarily on 6 February, with the immediate loss of around 1,000 jobs, and is now pursuing a separate case against USDOT seeking damages for losses sustained during the shutdown. Catherine Rinaldi, GDC's executive vice-president, says the project was on schedule and on budget before the funding freeze, and that significant progress has been made since funding resumed in February. USDOT has not said whether it will take the case to the Supreme Court if the ruling is upheld on appeal.