Trump Administration Files Hudson Tunnel Funding Appeal

The Hudson Tunnel funding appeal, filed by the Trump administration, challenges a federal judgment preventing the U.S. Department of Transportation from withholding funding for the $16.04-billion project. Federal reimbursements are continuing, and construction remains underway on the New York-New Jersey rail link.

In August, crews were installing a floodwall around the Hudson County, N.J., access shaft as work continued on the project.

Hudson Tunnel funding appeal

The Justice Department filed the appeal on Aug. 28, asking the U.S. Court of Appeals for the Second Circuit to reverse the final judgment issued June 30 by U.S. District Judge Jeannette Vargas in Manhattan. Two days earlier, the appeals court rejected the administration’s request to pause payments while the appeal proceeds.

Vargas found that the federal DOT violated U.S. regulations when it suspended federal grant disbursements on Sept. 30, 2025. Those regulations govern when an agency may withhold grant funding that has already been obligated. Her judgment vacated the suspension and permanently prohibited the department from relying on it to withhold future disbursements.

The federal DOT said it froze the payments while examining whether the Gateway Development Commission’s disadvantaged business enterprise program complied with federal nondiscrimination requirements. The department had not found that the commission violated federal law when it suspended the payments.

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Construction resumes after funding freeze

The funding freeze eventually brought construction to a halt. After exhausting its available funding and credit, the commission suspended work on Feb. 6, affecting nearly 1,000 workers.

Work restarted later in February after Vargas temporarily blocked the suspension and the federal DOT released approximately $205.3 million in withheld payments.

In a separate case brought by the commission, the Court of Federal Claims found that the federal DOT had not followed procedures required under six grant and loan agreements totaling approximately $14.7 billion before suspending the funding.

Judge Richard Hertling dismissed the commission’s $205.3-million claim after the department released the money but found that the commission had established a prima facie case that the federal DOT breached the agreements.

Tunnel scope and reimbursement status

The $16.04-billion Hudson Tunnel Project includes construction of a new two-tube railway tunnel beneath the Hudson River between New Jersey and Manhattan, along with rehabilitation of the existing North River Tunnel.

In April, the Gateway Development Commission awarded a $1.29-billion contract to a joint venture comprising Traylor Bros., Walsh Construction and Skanska USA Civil to bore the section beneath the Hudson River.

New Jersey Gov. Mikie Sherrill and New York Gov. Kathy Hochul called the June judgment a victory that would allow construction to continue. In a joint statement following the ruling, they said the funding freeze had been found unlawful and pledged to keep defending the project.

On Sept. 1, the commission said the administration’s latest appeal had not interrupted federal reimbursements. Gateway Development Commission spokesperson Molly Beckhardt told ENR that since funding restarted in February, the commission:

“has received all reimbursements on the schedule established in GDC’s federal funding agreements with our federal partners,”

The commission added in a statement:

“We will continue working with our federal partners to maintain access to funding so we can keep workers on the job and this nationally important project moving forward,”

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