A federal appeals court has ruled that the U.S. government must continue funding the massive Hudson Tunnel Project, rejecting an attempt by the administration of Donald Trump to halt payments tied to the $16 billion rail initiative.
The project, overseen by the Gateway Development Commission, is designed to build a new commuter rail tunnel between New York City and New Jersey while restoring the aging tunnel that currently handles one of the busiest passenger rail corridors in the United States.
A three-judge panel from the U.S. Court of Appeals for the Second Circuit declined to lift a lower court order that forced the federal government to keep releasing money for construction. The judges warned that stopping payments would immediately stall work at multiple sites, potentially creating safety hazards and leaving states responsible for securing idle construction zones.
The court also noted that both states have a strong interest in seeing the major public works project finished efficiently and without creating risks around abandoned work areas.
Earlier this year, Jeannette Vargas, a judge at the U.S. District Court for the Southern District of New York, directed federal officials to resume funding after payments had been withheld. The Justice Department had attempted to pause that ruling while appealing the decision.
Construction activity had briefly stopped in early February after funds were frozen, but work resumed after the administration released $235 million that had been held back since October. Another $19 million has since been paid, allowing crews to return to sites linked to the tunnel excavation.
State leaders welcomed the latest ruling. Kathy Hochul, governor of New York, celebrated the decision online, framing it as a victory for commuters and infrastructure investment.
The Gateway Development Commission says workers have returned to all previously paused sites. However, the agency cautioned that construction could once again grind to a halt within a few months if federal disbursements stop.
To safeguard the funding stream, the commission has also launched a separate lawsuit against the U.S. Department of Transportation in the U.S. Court of Federal Claims, seeking legal assurance that the money cannot be frozen again.
The Hudson tunnel effort is widely viewed as critical for the Northeast rail network. The existing tunnel, badly damaged during Hurricane Sandy, carries more than 200,000 passengers and hundreds of trains each day, making it a vital link for commuters and intercity travel.
Federal backing for the project surged during the presidency of Joe Biden, with roughly $15 billion committed to the initiative. Nearly $2 billion has already been spent as early construction phases move forward.
