The Gateway Tunnel site near W. 30th St. and 11th Ave. in Hudson Yards, New York City, on Oct. 23, 2025.
A New York federal judge on Friday unfroze funds withheld by U.S. President Donald Trump's administration for a $16 billion project to overhaul critical rail infrastructure in New York and New Jersey.
The Gateway Project will build a new commuter rail tunnel between Manhattan and New Jersey and repair a century-old tunnel used by more than 200,000 travelers and 425 trains daily.
The existing Hudson Tunnel was heavily damaged by Hurricane Sandy in 2012 and needs frequent emergency repairs that disrupt travel on the nation's most heavily used passenger rail line.
U.S. District Judge Jeannette Vargas in Manhattan handed down the temporary ruling hours after New York and New Jersey said construction would halt for lack of funding.
Vargas said the states were likely to succeed on their claims that a Trump administration directive freezing the funds was arbitrary and ran afoul of legal procedures for making policy changes.
The White House and Department of Transportation did not immediately respond to requests for comment on the ruling.
New Jersey Acting Attorney General Jennifer Davenport and New York Attorney General Letitia James issued statements praising the ruling.
"The Trump Administration must drop this campaign of political retribution immediately and must allow work on this vital infrastructure project to continue," Davenport said.
The states said in a January 3 lawsuit that Trump's Republican administration had frozen the funds in a "brazen act of political retribution" against their Democratic leaders. They said a work stoppage would hold up a crucial infrastructure project, damage their economies and saddle them with costs from securing idled construction sites.
The Trump administration has withheld $205 million in reimbursements for the project since October 1. Trump has reportedly demanded that Washington Dulles Airport and New York's Penn Station be renamed for him in exchange for unfreezing the funds, drawing strong criticism from Democrats. He told reporters on Friday that he had not proposed renaming Dulles or Penn Station. Trump did not comment on Vargas' decision.
The Department of Transportation said on September 30 that it froze the funds pending a review of the project's compliance with new prohibitions against race- and sex-based considerations in contracting decisions.
The Gateway Development Commission informed the department that it had made changes and conducted a review to ensure compliance with the regulations but has not heard back, according to the lawsuit.
Gateway said the suspension would idle 1,000 construction workers and that Trump's decision had endangered passengers who had to rely on "decaying, century-old rail infrastructure."
Gateway had previously said work was already suspended.