By David Shepardson

Feb 13 (Reuters) – A U.S. judge ordered a hearing on Friday afternoon after New York and New Jersey on Friday said the Trump administration had not transferred $205 million in frozen federal funding for the $16 billion Hudson Tunnel Project in New York. 

A U.S. appeals court on Thursday declined to undo a lower court order requiring the funding, which had been frozen in October and forced the project to halt construction last week. The two states told U.S. District Judge Jeannette Vargas that the U.S. Department of Transportation suggested “additional processes are needed” and once completed it could still take the Treasury Department another one or two days to release the funds.

The Transportation Department declined to comment.

The halt to construction triggered last week by the funding freeze put 1,000 workers out of work.

Vargas last week ordered the federal government to release funds for the project to overhaul critical rail infrastructure in New York and New Jersey, which had been frozen by Republican President Donald Trump since October 1.

Trump offered last month to unfreeze the funds, a source said, in return for support from Democrats to rename Washington Dulles Airport and New York’s Penn Station after him. Democrats strongly criticized the offer.

The Hudson Tunnel Project is intended to build a new commuter rail tunnel connecting Manhattan and New Jersey and repair a century-old tunnel used by more than 200,000 travelers and 425 trains daily. Vargas handed down her ruling hours after New York and New Jersey said construction would halt for lack of funding.

The existing Hudson Tunnel, heavily damaged by Hurricane Sandy in 2012, needs frequent emergency repairs that disrupt travel on the nation’s most heavily used passenger rail line.

The project was allocated about $15 billion in federal support under then-President Joe Biden, a Democrat. Nearly $2 billion has been spent so far.

(Reporting by David Shepardson, Editing by Franklin Paul and Jonathan Oatis)