Trump administration to appeal court order on NY-NJ tunnel funds

Michelle Kaske, Bloomberg News on Feb 8, 2026

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The Trump administration plans to appeal a temporary court order that blocks the federal government from withholding funds for a $16 billion rail tunnel under the Hudson River.

The Gateway Development Commission is building the new tunnel but had to stop construction late Friday because it’s exhausted all of its funding sources.

The Trump administration has been in a standstill with Gateway since October, when it halted funding for the tunnel over a new rule that prohibits contracting requirements based on race or sex. New York and New Jersey sued the administration on Tuesday in federal court in Manhattan after Gateway filed its own suit late Monday in an effort to unlock more than $205 million of federal funds in the Court of Federal Claims.

U.S. District Judge Jeannette Vargas on Friday sided with the states and ordered the federal government to release the funds. That money may not be coming soon as the U.S. Department of Transportation late Sunday filed a notice of appeal, according to a court filing.

The Gateway tunnel under the Hudson River is one of the most ambitious infrastructure projects in the U.S. It connects New Jersey with Manhattan and will help relieve congestion in the existing tube, which is more than 100 years old.

“We are encouraged by Friday’s court decision and will continue to pursue all avenues to regain federal funding,” a spokesperson for Gateway said in a statement late Sunday.

A status conference in Gateway’s lawsuit is set for Tuesday in the U.S. Court of Federal Claims.

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(With assistance from Chris Dolmetsch.)