Gateway Tunnel Project gets boost after court declines to overrule order releasing funds

 WASHINGTON — The Trump administration must free up more than $200 million in funding it has withheld from the Gateway Tunnel Project, after an appellate court on Thursday declined to override a lower-court ruling mandating the money’s release.

U.S. District Judge Jeannette A. Vargas earlier this week ordered the administration to release the funding Thursday in response to a lawsuit filed by New York and New Jersey after President Donald Trump declared federal funding for the $16 billion Hudson River rail tunnel was "terminated."

Construction on the project came to a halt last Friday, with the Gateway Development Commission, the bistate board that oversees the project, blaming the administration's freezing of funds since last October. Without the federal funding, the project can no longer continue paying for nearly 1,000 workers, the commission said.

For months, Trump and administration officials ticked off a number of reasons for freezing the project’s funding, including Democrats’ opposition to Trump’s hard-line immigration agenda, but New York Attorney General Letitia James and New Jersey acting Attorney General Jennifer Davenport, in legal filings, argued the funds were illegally withheld as political retribution.

Vargas last Friday ordered the administration to unfreeze the funds, but on Monday granted the administration an extension until Thursday to await the outcome of its appeal to the U.S. Court of Appeals.

The 2nd Circuit Court of Appeals on Thursday agreed to hear the case, but did not schedule a hearing until Feb. 23 and declined to intervene before Vargas’ Thursday deadline for the administration to release the frozen funds.

The White House and Department of Transportation did not return emails seeking comment.

The Gateway Development Commission in a statement said "while this is a positive step, we need consistent, reliable access to the Hudson Tunnel Project’s federal funding moving forward."

Senate Minority Leader Chuck Schumer (D-N.Y.) said in a statement that the money is "congressionally appropriated and contractually committed and should be released immediately by the U.S. Department of Transportation so 1,000 union workers can get back on the job, and this vital transportation infrastructure project can get moving again."

By Laura Figueroa Hernandez

laura.figueroa@newsday.com@Laura_Figueroa

Laura Figueroa Hernandez is the White House correspondent and previously covered New York City politics and government. She joined Newsday in 2012 after covering state and local politics for The Miami Herald.