Judge keeps Gateway funding frozen as Trump officials pursue appeal

WASHINGTON — Construction on the $16 billion Gateway Tunnel project remained on hold Monday, after the Trump administration appealed a federal court ruling requiring it to release funding for the massive rail project.

U.S. District Court Judge Jeannette A. Vargas, with the Southern District of New York, ordered the administration on Friday to unblock funding it has withheld from the New York and New Jersey megaproject since October. But on Monday, she granted the administration an extension until Thursday to issue the money as it awaits an appellate court ruling.

Lawyers for the Trump administration, in a filing to Vargas, argued they should not be forced to release the funding until the appellate court weighs in because "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."

In her ruling, Vargas said the states continue to show that any further delays to the project, a new Hudson River rail tunnel to replace the 116-year-old North River Tunnel, will lead to further financial losses for the region.

"Moreover, and most compellingly, the states have demonstrated that the shutdown of operations will have an immediate and severe impact on the region’s economic interests," Vargas wrote, adding that Gateway’s project managers have "already begun laying off workers who depend upon the Hudson River Tunnel for their livelihood."

Gateway Development Commission CEO Tom Prendergrast said Friday that the project would need to be suspended indefinitely and nearly 1,000 workers would lose their jobs by the end of the day, if previously approved Biden-era federal funding was not released.

President Donald Trump and top administration officials announced in October that funding for the project was suspended, first citing a need to review whether the project promoted diversity hiring practices banned by a Trump executive order, and later pointing to congressional Democrats’ opposition to Trump’s immigration policies. State officials have argued the money was unlawfully stopped as a means of political retribution.

State Attorney General Letitia James, in a legal filing Monday, urged Vargas to reconsider the extension, writing that the "irreparable harm the States are facing remains and has worsened."

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.