A federal judge on Feb. 9 temporarily allowed the Trump administration to reinstate its four-month-old freeze on federal funding for the Hudson Tunnel Project that will connect rail lines between New York and New Jersey.

The $16 billion Hudson Tunnel Project involves building a new tunnel and railroad infrastructure for passenger rail trains under the Hudson River while rehabilitation efforts take place on the existing tunnel. The new tunnel will carry Amtrak and New Jersey Transit Northeast Corridor passenger trains between New Jersey and New York.

Federal grants and loans are expected to cover $12 billion, and the two states are responsible for the remaining $4 billion. Almost $2 billion has already been spent on the project.

Judge Jeannette Vargas of the Southern District of New York put an administrative stay on her Feb. 6 temporary restraining order that required the federal government to restore the funding.

The administrative stay gives the federal government until 5 p.m. on Feb. 12 to file an emergency motion with the U.S. Court of Appeals for the Second Circuit and receive a decision on its motion to stay the Feb. 6 order.

At the same time, the judge denied the federal government’s request for a protracted stay, saying New York and New Jersey have shown that shutting down operations “will have an immediate and severe impact on the region’s economic interests.”

Vargas said that the Gateway Development Commission, which oversees the project on behalf of New York and New Jersey, is already experiencing hardship because of the funding cutoff. She said the commission has begun laying off workers who are dependent on the tunnel project for their livelihoods and that lengthy delays could lead to as many as 95,000 jobs being lost.

The U.S. Department of Justice (DOJ) argued that the U.S. Department of Transportation (USDOT) should be allowed to withhold the funding. DOJ said in a court filing that if the Feb. 6 order weren’t stayed, USDOT would be forced to disburse as much as $200 million “without any obvious mechanism for recovering that money later if the government prevails on appeal.”

DOJ also said in the filing that the district court lacks jurisdiction, or authority, to hear the case, and that it should have been filed with the U.S. Court of Federal Claims.

When the federal government cut off funding for the project last year, it cited concerns that some specific state-related expenditures were unconstitutional because they were based on so-called diversity, equity, and inclusion (DEI) principles.

The Gateway Development Commission said that since October 2025, the Trump administration has held back $205 million in reimbursements for the project.

In Executive Order 14151, President Donald Trump directed the Office of Management and Budget to terminate discriminatory programs, including DEI programs. Programs that promote DEI are “illegal and immoral,” the order states.

In their legal complaint, the states said that on Dec. 1, 2025, USDOT told the Gateway Development Commission that the commission had violated federal minority contracting rules by presuming that contracting companies were qualified if they were female-, black-, Hispanic-, Asian-, or Native American-owned without ensuring that they actually met legal requirements.

USDOT said in an October 2025 statement that “Illinois, like New York, is well known to promote race- and sex-based contracting and other racial preferences as a public policy.”

USDOT noted that it was reviewing several projects, including those involving the Hudson Tunnel, New York’s Second Avenue Subway, and the Chicago Transit Authority, “to ensure no additional federal dollars go towards discriminatory, illegal, and wasteful contracting practices.”

The Epoch Times reached out for comment to the Gateway Development Commission and the DOJ, which represents federal agencies in court. No replies were received by publication time.

Reuters contributed to this report.

This article by Matthew Vadum appeared Feb. 9, 2026, in The Epoch Times.