Trump administration permanently barred from freezing Gateway funds

WASHINGTON — The Trump administration is permanently barred from freezing federal funding for the massive Gateway Tunnel project, according to a federal court order issued Monday.

U.S. District Judge Jeannette Vargas, of the Southern District of New York, said the administration "flagrantly" violated federal law when it put a freeze in October on the $16 billion project, which looks to construct a new rail tunnel under the Hudson River connecting New York and New Jersey.

President Donald Trump in October declared the project "terminated" in remarks from the Oval Office, citing an impasse with Senate Minority Leader Chuck Schumer (D-N.Y.) over a funding bill. But the president’s top budget officer Russell Vought at the time offered a different reason, saying the funding was suspended while the administration reviewed whether the project violated the president’s executive order banning the use of diversity initiatives to hire contractors for federal projects.

New York and New Jersey sued the administration in February to unblock the funds, and Vargas issued a temporary restraining order shortly afterward to keep the funding flowing. As the lawsuit played out, the Gateway Development Commission, the bistate panel overseeing the project, was forced to stop work on the tunnel for nearly two weeks.

Monday’s court ruling by Vargas permanently extends her earlier temporary ruling, essentially blocking the administration from future attempts at withholding money for the new tunnel, which is aimed at improving rail travel along the Northeast that currently relies on the century-old North River Tunnel, which was damaged by Superstorm Sandy.

Vargas wrote the Trump administration "skipped right to payment suspension without any finding that [the Gateway Development Commission] had violated the law."

In a joint statement, Gov. Kathy Hochul and Attorney General Letitia James celebrated the ruling, saying, "This victory sends a clear message: the Trump administration's attempt to halt Gateway funding will not stand."

The White House referred questions about the case to the Department of Transportation, which in a statement to Newsday wrote: "USDOT remains committed to ensuring hardworking taxpayer dollars are being spent responsibly and do not fund unconstitutional, discriminatory contracting practices."

The Gateway Development Commission repeatedly has said it has complied with all of the Trump administration’s rules surrounding contractors.

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.