A US federal judge on Monday temporarily halted her prior order requiring the US Department of Transportation (DOT) to release funds to New York and New Jersey for the Hudson Tunnel Project, to allow the administration time to appeal.

The order denied the Trump administration’s request for a longer stay, only granting the pause until Thursday, February 12. US District Judge Jeannette Vargas, issuing the order, found that the administration was unlikely to succeed on the merits of its claim and that allowing the funding freeze to continue would cause irreparable harm to the states. Specifically, the court found that a prolonged delay of the project could cause a loss of 95,000 jobs and billions of dollars in GDP.

However, the court noted that the DOT raised valid questions about the court’s jurisdiction and that if there was no stay at all, it would be required to release $200 million in a matter of days. This prompted the court to allow the brief pause on the release of funds for appeal.

The Hudson Tunnel Project is an effort by New York and New Jersey to improve the tunnel that connects the two states underneath the Hudson River. The DOT, originally granting funds for the project, issued a letter on September 30 stating that the project was undergoing review to ensure it complied with the Department’s policies regarding the use of race and sex in funding projects. In October 2025, it had permanently removed all race- and sex-based presumptions of social and economic disadvantage.

The Hudson Tunnel Project no longer has any funds to continue working until the federal funds are released. New York and New Jersey sued to have the funds released.

Prior to the temporary stay, the court granted an injunction, requiring DOT to release the funds. The states’ complaint argued that the administration’s freezing of funds was contrary to law, arbitrary and capricious under the Administrative Procedure Act. 2 C.F.R. § 200.339 requires the government to make conditions and allow for corrective action of grant recipients, in the face of alleged violations of the grant, before blocking funding. By failing to do this, the states allege the DOT violated the law. The Trump administration responded that the court did not have jurisdiction to hear the case with the proper court being the Court of Federal Claims.

New Jersey Governor Mikie Sherill said she is seeking accountability from the Trump administration for its contractual promises. Multiple US senators and members of Congress also sent a letter to President Trump, calling for him to release the funds. Trump reportedly said he would release the funds in exchange for Penn Station and Dulles Airport being named after him.

The DOT has until 5:00pm on Thursday to seek and receive a stay from the Second Circuit Court of Appeals before it is required to release the funds.