TRENTON—In the last two months, federal judges have dismantled NJ Transit's legal shields while the White House attacked the state's immigration authority, leaving Trenton caught in a Washington turf war.

Cedric Galette spent years waiting after an NJ Transit bus struck him in Philadelphia. Jeffrey Colt got hit in Manhattan. Both were barred from suing because the agency hid behind sovereign immunity. That is until March 4, when the U.S. Supreme Court stripped that protection away, exposing NJ Transit to roughly $431 million in liability.

Five days later, a federal judge in Pennsylvania kicked the Trump administration's handpicked New Jersey prosecutors out of office, ruling that Acting U.S. Attorney Alina Habba and her deputy had been illegally appointed and had "chafed at limits on their power." 

That ruling came shortly after the DOJ sued the state over Governor Mikie Sherrill’s Executive Order 12, which restricted ICE use of state property. U.S. Attorney General Pam Bondi claimed that Sherrill’s order violated the Constitution’s Supremacy Clause and vowed to overturn the order.

New Jersey walked into a federal crossfire in March, taking heat from the judiciary on transit finance while the executive branch unloaded on immigration enforcement. The double hit puts Trenton and NJ Transit in a political vice: they must cover court-imposed liabilities while defending against White House lawsuits, with 250,000 daily transit riders and half a million undocumented immigrants caught in the collateral damage.

The Fiscal Hammer

The Supreme Court's unanimous decision in Galette v. New Jersey Transit Corporation turned on corporate form. Justice Sonia Sotomayor wrote that NJ Transit's 1979 creation as a "body corporate and politic," its statutory power to "sue and be sued," and its explicit disclaimer of state debt liability meant it could not claim protection from civil suits under the Eleventh Amendment to the Constitution.

For Galette and Colt, the ruling finally opens the courthouse doors. For the agency, it blows up decades of liability protection. NJT’s 2025 annual report acknowledges approximately $431 million in estimated exposure for accidents and property damage. Insurance benchmarks show transit liability costs rising roughly 9% annually since 2022.

New Jersey carries a $5.4 billion surplus for fiscal year 2027, making the $431 million hit roughly 8 percent of reserves. That cost will be painful but absorbable, assuming bond markets don't panic. But rating agencies have stayed silent since the March 4 ruling, and NJ Transit hasn't said whether it will petition the legislature for indemnification or try to restructure its corporate form to buy back its immunity.

The Courtroom Coup

While the Supreme Court exposed NJ Transit's wallet, U.S. District Judge Matthew Brann delivered a separate gut-punch to the Trump administration on March 9. Brann ruled that Alina Habba and First Assistant John Giordano had been illegally appointed to run the U.S. Attorney's Office for New Jersey in March 2025, yanking them off every case in the district.

In a 130-page opinion, Brann wrote that the appointees had "chafed at limits on their power" and were installed through a succession chain that violated federal statute. The ruling effectively decapitated federal law enforcement leadership in New Jersey, creating a leadership vacuum while the federal DOJ scrambled to appeal.

Habba fired back that the ruling was "ridiculous" and accused the judge of playing politics. The clash put the federal judiciary in open revolt against executive branch appointments, just as the executive branch was gearing up to sue the state.

Bondi's February 23 lawsuit, filed less than 2 weeks after EO 12 was signed, argues that the sanctuary laws violate the Supremacy Clause. The legal merits remain contested; Ninth Circuit precedent (San Francisco v. Trump, 2025) has held that sanctuary non-cooperation is constitutionally protected, with district courts blocking funding cuts to sanctuary jurisdictions.

On March 25, Governor Mikie Sherrill further kicked the hornets nest by signing legislation codifying New Jersey's 2018 Immigrant Trust Directive into permanent statute. The Phil Murphy-era directive bars state police from aiding ICE raids, sharing databases, or giving office space to federal agents. The bills had been introduced on February 12, before the transit ruling or the federal lawsuit, but the signing further drew the state into direct conflict with a Trump administration already smarting from the Brann rebuke.

Last April, the Trump Administration abruptly withdrew funding to programs by New Jersey’s Department of Law and Public Safety, cuts that then-Attorney General Matthew Platkin described as “callous and reckless.” Federal retribution for this year’s clashes could lead to further reductions in funding.

The Squeeze

The federal pressure now comes on twin tracks: judicial contempt threats against ICE officials who violate court orders, and a lawsuit that may bring federal funding freezes and other threats to New Jersey state law enforcement capacity.

The timing leaves Trenton holding the bag for now. The federal judiciary has stripped the state's transit agency of legal cover while simultaneously checking the feds’ law enforcement appointments. All while the federal executive has sued the state over immigration and possibly put funding at risk. The combined federal assault and loss of protections puts New Jersey Transit at particular risk. 

Assemblywoman Ellen Park (D-37), the sanctuary bill sponsor and one of the Legislature's only immigrants, said at the signing that a "sense of safety is only possible when there is trust in our law enforcement, our health care providers, and our public servants. These measures are about preserving that trust." At the same event, Nedia Morsy of Make the Road New Jersey directly addressed the federal response: "the threats coming out of Washington are evolving every day, so our laws need to keep up." She added that the new law "means closing loopholes that leave people exposed, responding to new tactics, and making sure every person in the state has their rights protected.”

Yet those protections face federal challenge precisely as the state confronts transit fiscal exposure. Whether Sherrill's team calculated that immigrant labor protection would play better politically than transit fiscal consolidation remains speculation; the timeline suggests parallel developments rather than a coordinated strategy. But the effect is the same: Washington is squeezing New Jersey from both sides.

The Bottom Line

Trenton enters April caught in a federal pincer. The District Courts have checked executive power, but the Supreme Court has simultaneously exposed state corporate entities to litigation and market discipline. The Department of Justice has retaliated against state autonomy, even while hobbled by judicial scrutiny of its own leadership.

New Jersey’s $5.4 billion budget surplus provides some fiscal room to absorb the transit hit, and Ninth Circuit precedent offers legal cover for the sanctuary stance. But the simultaneous pressures—the transit liability on one flank, the federal lawsuits and grant freezes on the other—create an administrative nightmare without a clear exit.

These weren't coordinated attacks, but the damage is compounding anyway: federal branch dysfunction has made New Jersey a battlefield, and state institutions are absorbing the shrapnel.

Related Articles

• Judge Brann Disqualifies NJ U.S. Attorney's Office Leadership Over Unlawful Appointments

• Federal Judge Erupts in NJ Court, Says Trump DOJ ‘Lost Trust’ as Prosecutor Removed

• DOJ Sues NJ Gov. Mikie Sherrill Over ICE Executive Order 12 

• Sherrill Signs ICE Mask Ban, Sanctuary Bills Into Law

Sources

• U.S. Supreme Court, Galette v. New Jersey Transit Corporation, No. 24-1021 (March 4, 2026)

• Judge Matthew Brann, U.S. District Court for the Middle District of PA, Memorandum Opinion in United States v. Raheel Naviwala and United States v. Daniel Torres (March 9, 2026)

• Office of the Governor, "Governor Sherrill Presents Fiscal Year 2027 Budget" (March 10, 2026)

• Office of the Governor, "Governor Sherrill Signs Legislation to Protect Constitutional Rights, Keep New Jerseyans Safe" (March 25, 2026)

• New Jersey Transit Corporation, Fiscal Year 2025 Annual Report

• U.S. Department of Justice, "Justice Department Files Lawsuit Against New Jersey for Interfering with Federal Immigration Laws" (February 24, 2026)

Ashleigh Fields, The Hill, "DOJ sues New Jersey over Sherrill order meant to rein in ICE" (February 24, 2026)

• NJ.com, "N.J. attorney general fumes after Trump cuts law enforcement money. ‘I damn well want to be called.’" (April 25, 2025)

• Sophie Nieto-Munoz, New Jersey Monitor, "Gov. Sherrill signs bills limiting state role in immigration enforcement" (March 25, 2026)

• Lauren Gill, Bolts Magazine, "New Jersey Becomes the 10th State with a Law Barring Local ICE Contracts" (March 25, 2026)

• LegiScan, New Jersey Senate Bill 3521 text and amendment history

• Hunton Andrews Kurth LLP, "Supreme Court Recalibrates Sovereign Immunity for State-Created Entities" (March 26, 2026)

• Constitutional Accountability Center, "Galette v. New Jersey Transit Corp. and New Jersey Transit Corp. v. Colt" (retrieved March 31, 2026