A federal judge on Thursday said that the Trump administration had paid what it owed on the rail tunnel project being built under the Hudson River and largely dismissed a lawsuit over the federal government’s temporary hold on more than $200 million in funding.
Now that the federal Department of Transportation has provided all of the money it had promised for the tunnel project, known as Gateway, the agency overseeing the work no longer has much of a claim against the department, said the judge, Richard A. Hertling of the Court of Federal Claims in Washington.
The funding freeze, which began in October, led to the layoff of about 1,000 workers last month and a halt of almost all work on the $16 billion project for more than a week. That brief shutdown raised fears among elected officials in the New York City region about a permanent end of construction of the tunnel, which would connect New York and New Jersey and has been billed as the most urgent infrastructure project in the United States. The federal Department of Transportation has pledged a total of more than $11 billion for the construction.
The agency overseeing the project, the Gateway Development Commission, said that it had run out of money to pay the workers while the funding freeze was in place. As a last resort, the commission sued the federal government for breach of contract on Feb. 2.
On Thursday, a lawyer for the Gateway commission, Colleen Roh Sinzdak, argued that it needed a judgment from the court to prevent the federal government from trying to claw back the money and that it deserved to be compensated for additional costs it had incurred while funding was frozen. But the judge agreed with a government lawyer, Geoffrey M. Long, who countered that, in paying about $205 million in reimbursements to the commission last month, the Transportation Department had done all that it was required to do.
The judge dismissed most of the commission’s complaint, saying that the reimbursements made it moot. But he did not immediately rule on two counts in the complaint that sought compensation for additional costs.
A spokeswoman for the commission said that it was holding out hope that Judge Hertling would award some compensation for the costs of temporarily shutting down the project before funding was restored. She added that the judge had “made it clear that the court would provide expedited review of similar claims if they arise in the future.”
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New Jersey’s governor, Mikie Sherrill, responded to the decision on Thursday by saying, “We will continue to fight, and continue to win, if Donald Trump tries to illegally stop funding again.”
The hearing in Washington followed a defeat for the Trump administration in Manhattan federal court last month in a separate lawsuit over Gateway that was filed by the states of New York and New Jersey. In that case, a judge ordered the Department of Transportation to stop withholding the project’s funding.
After that ruling, the department paid $205 million that the commission said it was owed, plus nearly $50 million that subsequently came due. After the money began to flow again, the commission brought back the laid-off workers and resumed work on the tunnel at sites in Manhattan, New Jersey and at the bottom of the Hudson.
The government’s lawyer argued on Thursday that those reimbursements showed that it had resolved any breach of its contracts.
But the Gateway commission said that it continued to have concerns that the administration might freeze the funding again. That uncertainty led the commission to postpone the awarding of two big contracts, including one for the digging of the tunnel beneath the river bottom.
The Gateway project would supplement the 116-year-old, two-track train tunnel that sits at the center of the nation’s busiest rail corridor. That tunnel’s owner, Amtrak, has warned that the existing tunnel has been deteriorating rapidly since Hurricane Sandy flooded it in 2012.
The Gateway tunnel would allow twice as many commuters to cross the Hudson during rush hours. A significant expansion of Pennsylvania Station in Manhattan would be necessary to accommodate the increased train traffic.
President Trump had directed Amtrak to develop a plan to renovate Penn Station. But that plan is primarily intended to improve the experience of commuters and travelers and may not include a significant increase in capacity for trains.
Patrick McGeehan is a Times reporter who covers the economy of New York City and its airports and other transportation hubs.
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