Trump renews legal fight over Gateway Tunnel funding

The administration is challenging a judgment that permanently blocked a funding freeze.

The Trump administration has appealed a federal judge’s ruling that permanently blocked its attempts to cut off funding for the Gateway Tunnel project, a mammoth rail infrastructure program that includes two new tunnels under the Hudson River.

A one-page notice, submitted by James McDonald, the U.S. attorney for the Southern District of New York, on Friday, said simply that “all defendants appeal to the United States Court of Appeals for the Second Circuit from the final judgment entered on June 30, 2026.”

The appeal will likely revive the controversy over the $16 billion project, which had been tied up in months of litigation before U.S. District Judge Jeannette A. Vargas cleared the way for work to continue with her June ruling.

In that decision, Vargas wrote that even the government did not dispute that the administration’s September funding freeze “flagrantly violates federal law” because it did not follow the correct procedures or give the Gateway Development Commission a chance to object.

The ruling meant that work could continue unabated on the vast rail improvement program, which seeks to modernize the most congested part of Amtrak’s Northeast Corridor: a 9-mile stretch of track between Newark and Manhattan that sees 200,000 passenger trips and 450 trains each day.

Besides the construction of a new two-tube Hudson River Tunnel, the plan calls for the rehabilitation of the 116-year-old North River Tunnel, which was damaged during Hurricane Sandy in 2012, and the replacement of several old, failing bridges, among other things.

Supporters have called Gateway the most critical transportation project in the nation, and they say the regional economy and rail network could face years of disruptions without it.

Work had already begun when the U.S. Department of Transportation abruptly decided Sept. 30 that it would “indefinitely suspend payment of all project funds” pending a review of Gateway’s compliance with new federal discrimination laws.

Trump muddied the reasoning two weeks later when he implied that he had made the call himself because of a political rivalry with New York Sen. Chuck Schumer, the Democratic minority leader.

“The project in Manhattan … It’s billions and billions of dollars that Schumer has worked 20 years to get,” Trump said during an Oct. 15 news conference. “It’s terminated. Tell him it’s terminated.”

Both the Gateway Commission and the states of New Jersey and New York sued in separate filings, with the states claiming the move was “arbitrary and capricious, contrary to law, and without observance of procedure required by law,” according to court filings.

In February, Vargas sided with the states and said the funding freeze was illegal. She issued a temporary restraining order that required the Trump administration to immediately release more than $200 million in withheld funds.

The 2nd U.S. Circuit Court of Appeals declined to block Vargas’ order, and construction started back up on Feb. 13, just seven days after work stopped because of a lack of funds.

The Gateway Commission said the project, slated for completion in 2035, was on schedule before the stoppage and has made “significant progress” since.

Around $2 billion of the project’s federal funding has reportedly been spent so far.