NEWARK—A federal appeals court has rejected an effort by the administration of President Donald Trump to halt federal funding for the Hudson Tunnel Project, allowing construction on the major rail infrastructure project linking New Jersey and New York to continue for now.

The ruling represents the latest development in an ongoing legal dispute between the federal government and officials in New Jersey and New York over the future of the multibillion-dollar project.

Court Rejects Federal Effort to Halt Payments

The U.S. Court of Appeals ruled that federal funding for the Hudson Tunnel Project must continue flowing while litigation over the project proceeds. The decision upheld a lower court ruling that had ordered the federal government to release project funding after payments were temporarily halted.

The appeals court’s decision allows construction work on the tunnel project to continue after warnings earlier this year that the project could be forced to stop due to a lack of federal funding.

Officials previously said construction had already slowed and that approximately 1,000 workers could be affected if the funding dispute halted work on the project.

Governors Say Ruling Protects Critical Infrastructure

New Jersey Governor Mikie Sherrill and New York Governor Kathy Hochul both welcomed the court decision.

Sherrill said the state had taken legal action to ensure federal funding commitments for the project were honored, calling the court ruling an important step in keeping the project moving forward.

Hochul similarly described the ruling as a victory for regional transportation infrastructure, emphasizing the project’s importance to commuters, workers, and the broader economy of the Northeast.

Federal Funding Dispute Continues

The Trump administration had moved to freeze federal funding tied to the tunnel project, arguing that the payments should be paused while the federal government reviewed aspects of the project’s financing and related policy requirements.

New Jersey and New York officials responded by filing lawsuits arguing the federal government was improperly withholding previously approved funding commitments.

The court rulings so far have required the federal government to continue releasing funds while the broader legal dispute continues.

One of the Nation’s Largest Infrastructure Projects

The Hudson Tunnel Project, part of the larger Gateway Program, is designed to build a new passenger rail tunnel under the Hudson River between New Jersey and Manhattan and to rehabilitate the existing tunnel that was damaged during Hurricane Sandy in 2012.

The current rail tunnel, which opened in 1910, carries a significant portion of passenger traffic along the Northeast Corridor, one of the busiest rail lines in the United States.

Transportation officials estimate the full project will cost about $16 billion and serve more than 200,000 daily rail passengers traveling between New Jersey and New York.

Legal Fight Not Yet Over

Although the court decision allows funding to continue for now, the broader legal dispute over the project has not been fully resolved.

Officials involved in the project have warned that construction timelines could still face uncertainty if federal funding interruptions continue or if additional legal challenges arise.

For the moment, however, the court ruling allows work on the project to proceed while the case continues through the federal court system.

Sources

• Reuters, "Trump administration must make New York tunnel payments, appeals court rules" (March 11, 2026)

• Reuters, US judge unfreezes funding for $16 billion New York City tunnel project (February 6, 2026)

• Office of the Governor, New Jersey

• Office of the Governor, New York

• Gateway Program website