Court Orders Trump Administration to Resume Gateway Funding

By Sean Jeans-Gail | VP of Gov’t Affairs + Policy

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A federal appeals court on Thursday allowed a lower court’s order to take effect requiring the Trump Administration to resume funding for the Hudson Tunnel Project (HTP), one of the most important infrastructure projects in the nation. The ruling, issued by the U.S. Court of Appeals for the 2nd Circuit, represents a significant—though temporary—victory for state officials and passenger advocates who have say that the administration unlawfully froze billions of dollars committed to the project through full funding agreements signed by the U.S. Department of Transportation (USDOT) under previous administrations.

[Thank you to everyone who took part in our campaign to restore funding!]

The decision follows from a legal battle between the Trump Administration and states of New York and New Jersey, which sued the federal government after the USDOT halted support for the $16 billion project in October 2025. The freeze was nominally about the implementation of the implementation of the Disadvantaged Business Enterprise Program; however, as we reported at the time, the decision came in the first days of last year’s government shutdown and is most likely political in nature. Our reporting was vindicated by last week’s revelation that President Donald Trump told Senator Chuck Schumer (D-NY) that he would release the funds if Penn Station and Dulles Airport were renamed after him.

By declining to intervene, the appeals court effectively reinstated a previous judge’s order requiring the federal government to release the funds while litigation continues. The court emphasized that this ruling is not final; oral arguments are scheduled for later this month, after which the panel is expected to issue a more definitive decision. For now, however, the administration must comply with the directive to resume funding.

New York Governor Kathy Hochul welcomed the development, stating that the administration’s “legal stay to avoid funding the Gateway Tunnel has expired” and urging immediate compliance to get the project “back on track.” New York Attorney General Letitia James echoed that sentiment, asserting that the administration “never had the authority to freeze this funding” and must now deliver the money needed to keep workers on the job.

Gateway Development Commission (GDC) officials say they expect more than $200 million in federal reimbursements to flow as a result of the ruling. The funding is essential for restarting construction at multiple sites, where work had been halted after the administration froze the money last week. Project leaders are now coordinating with contractors to determine how quickly operations can resume.

“This is good news for the Hudson Tunnel Project, and we anticipate receiving the $205 million in reimbursement funds from the federal government” stated the GDC in a press release. “While this is a positive step, we need consistent, reliable access to the Hudson Tunnel Project’s federal funding moving forward. GDC continues to pursue all avenues to regain access to all the federal funds for this urgent project, including our lawsuit.”

The Gateway tunnel project, which includes building two new rail tunnels under the Hudson River to connect New Jersey to New York City’s Penn Station, is one of the most important infrastructure undertakings in the country. The existing century‑old tunnels, damaged during Hurricane Sandy, are a major bottleneck for the entire Northeast Corridor (NEC) and for National Network trains coming in and out of Penn Station. Moreover, delays in funding will harm the entire U.S. economy; our friends at New York’s Regional Plan Association found that construction will generate 95,000 jobs and $19.6 billion in economic activity.

While Thursday’s ruling does not resolve the broader legal dispute, it marks a pivotal moment in the ongoing struggle over the project’s future. With the appeals court requiring the Trump administration to release funds in the short term, construction is poised to resume even as the legal and political battles continue.