The federal government has dropped an appeal that sought to again block federal funding for the $16 billion Gateway Tunnel project, removing another legal obstacle for one of the largest transportation projects connecting New Jersey and New York.
According to an order from the U.S. Court of Appeals for the Second Circuit, New Jersey, New York and the federal government agreed to dismiss the appeal. The Trump administration had announced only weeks earlier that it planned to challenge a lower-court ruling that found the funding freeze unlawful.
Governor Mikie Sherrill described the development as the latest in a series of legal victories over attempts to stop the project’s federal funding. In a post Friday, she wrote that there had been “five wins and counting” over what she called the administration’s illegal efforts to block Gateway money.
The latest decision does not represent a new grant or a new round of funding. Instead, it means the federal government is no longer pursuing this particular appeal seeking to overturn the ruling protecting previously committed funds.
What happened to Gateway funding?
The dispute began after the Trump administration suspended payments for the Hudson Tunnel Project in late 2025.
New Jersey and New York sued, arguing that approximately $15 billion in previously committed federal funding was being unlawfully withheld. The Gateway Development Commission separately brought a contract case over the suspended payments.
In February, courts temporarily blocked the funding freeze, and the Second Circuit later ordered the federal government to release money owed to the project. By March, about 1,000 construction workers were back on the job, according to the New Jersey governor’s office.
Another federal ruling in June concluded that the freeze violated federal law, prompting the administration to file another appeal. That is the appeal that has now been dismissed.
Why the Gateway Tunnel matters
The Hudson Tunnel Project is designed to build a new two-track rail tunnel beneath the Hudson River between New Jersey and Manhattan and then rehabilitate the existing North River Tunnel.
The existing tunnel opened in 1910 and was heavily damaged by flooding during Superstorm Sandy in 2012. It carries Amtrak and NJ Transit trains along one of the busiest sections of the Northeast Corridor and serves roughly 200,000 daily riders.
The overall Hudson Tunnel Project is estimated at roughly $16 billion, with most of its financing coming through federal grants and loans combined with contributions from New Jersey and New York.
Sherrill’s administration says completion of Gateway is associated with nearly 100,000 jobs over the life of the project. That figure refers to the broader economic and construction impact of the project, rather than the number of people currently working at Gateway construction sites.
What changes now?
The dismissal removes this particular federal appeal, allowing the earlier court rulings protecting Gateway funding to remain in place.
Construction had already resumed following earlier court orders, so Friday’s development is primarily significant because another attempt to reverse those funding protections is no longer moving forward.
The appeals court order does not explain why the parties agreed to dismiss the case.
For commuters in New Jersey and New York, the broader goal remains unchanged: construction of a new rail crossing under the Hudson and rehabilitation of the century-old tunnel that currently carries NJ Transit and Amtrak trains into Manhattan.
Sources: New Jersey Monitor; Office of Governor Mikie Sherrill; U.S. Court of Appeals for the Second Circuit; Gateway Development Commission; Reuters
By NJ RADAR Team