Federal Funds for Gateway Tunnel Project Remain Frozen After Trump Administration Appeals Order

Judge pauses her decision to force the release of $200 million in federal funds for the critical rail project connecting New York and New Jersey

Published on Feb. 9, 2026

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Federal funds for the $16 billion Gateway Tunnel rail project remain frozen after a U.S. District Judge paused her order that would have forced the Trump administration to temporarily release up to $200 million in funding. The judge's initial ruling came in response to a lawsuit filed by the attorneys general of New York and New Jersey, but the federal government has appealed the decision, halting construction and leading to the layoff of over 1,000 workers.

Why it matters

The Gateway Tunnel project is a critical infrastructure endeavor that would build two new rail tubes under the Hudson River to replace an aging, 116-year-old tunnel that serves hundreds of thousands of Amtrak and New Jersey Transit commuters daily. The project's pause could have major economic consequences for the entire New York City region if the existing tunnel were to fail.

The details

On Friday, U.S. District Judge Jeannette A. Vargas ruled that the Trump administration had to temporarily release the federal funds it had withheld from the Gateway rail tunnel project. However, the judge paused her own order on Monday to allow the Justice Department to appeal the decision to a higher court. The Trump administration had argued that New York and New Jersey do not have the right to sue over the funding pause, as they were not directly named in the contract. But the states contend the funding freeze was an act of political retaliation and that they have independent interests in ensuring the project's success.

  • On February 6, Judge Vargas ruled that the federal government must temporarily release up to $200 million in funds for the Gateway Tunnel project.
  • On February 9, the Trump administration asked Judge Vargas to stay her Friday ruling, and she granted a brief stay until February 12 at 5 p.m. to allow for a decision from the Second Circuit Court of Appeals.

The players

Jeannette A. Vargas

A U.S. District Judge who ruled that the federal government must temporarily release funds for the Gateway Tunnel project, but later paused her own order to allow for an appeal.

Letitia James

The Attorney General of New York, who joined with New Jersey's Attorney General to file a lawsuit seeking to force the release of federal funds for the Gateway Tunnel project.

Jennifer Davenport

The Attorney General of New Jersey, who joined with New York's Attorney General to file a lawsuit seeking to force the release of federal funds for the Gateway Tunnel project.

Mikie Sherrill

The Governor of New Jersey, who joined workers rallying for the release of federal funds to restart construction on the Gateway Tunnel project.

Chuck Schumer

A U.S. Senator from New York, who warned that the pause in the Gateway Tunnel project could lead to the shutdown of the existing 116-year-old rail tunnel, dealing a major blow to the national economy.

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What they’re saying

“There are working men and women feeding their families on this job, and every day that goes by that he doesn't release the funds is a day that our families are in trouble.”

— Mikie Sherrill, Governor of New Jersey (Instagram)

“If this tunnel were to collapse, and we know it will if we don't build a new one, there'll be a recession, a depression in New York, New Jersey and all across America. We are not going to let that happen.”

— Chuck Schumer, U.S. Senator from New York (Instagram)

What’s next

The Second Circuit Court of Appeals is expected to rule on the Trump administration's appeal of the judge's order by February 12 at 5 p.m. If the government loses its appeal, the judge's Friday order mandating the unfreezing of funds will take effect.

The takeaway

The ongoing political battle over the Gateway Tunnel project's federal funding highlights the high stakes involved, as the failure to complete this critical infrastructure project could have devastating economic consequences for the entire New York City region. The dispute also raises broader questions about the role of politics in infrastructure decision-making.