Feds Drop Appeal That Sought to Block Funding for Gateway Tunnel Project

55081779319_7f4c67a594_b — New Jersey Governor Mikie Sherrill joins Cory Booker, U.S. Senator, State of New Jersey, Rob Menendez, U.S. Congressman, 8th Congressional District of New Jersey Frank Pallone, U.S. Congressman, 6th Congressional District of New Jersey Josh Gottheimer, U.S. Congressman, 5th Congressional District of New Jersey Nellie Pou, U.S. Congresswoman, 9th Congressional District of New Jersey LaMonica McIver, U.S. Congresswoman, 10th Congressional District of New Jersey and union representatives regarding the Gateway Tunnel Project due to the funding for the project will officially run out on Friday per the Trump Administration, while in Weehawken, N.J. on Friday, Feb. 6, 2026. (Office of Governor / Tim Larsen)

(by Nikita Biryukov, New Jersey Monitor, September 18, 2026) — The federal government dropped an appeal that attempted to again block federal funding for the Gateway tunnel and other infrastructure projects in the region just weeks after asking a federal court to overturn a lower decision that found the funding freeze flagrantly violated law .

In a mandate issued by the U.S. 2nd Circuit Court of Appeals, court clerk Catherine O’Hagan Wolfe said New York, New Jersey, and the federal government agreed to dismiss the appeal. The federal government said just last month that it was moving forward with an appeal.

The $16 billion Gateway project will add new rail tunnels under the Hudson River, and is considered one of the most important infrastructure projects in the nation. After the Trump administration moved to cut funding, New Jersey and New York sued and won.

“This is a big victory for millions of New Jersey commuters and for the nearly 100,000 jobs the Gateway Tunnel Project will create. The Trump Administration has tried, over and over again, to illegally stop the funding for the nation’s most urgent infrastructure project. We took them to court and we won for New Jerseyans, five times. I won’t stop fighting until this project is built,” Democratic Gov. Mikie Sherrill said in a statement.

The court’s order does not detail how the parties came to an accord, but the Gateway funding freeze threatened political consequences in competitive House districts in New York and New Jersey, including in the 7th Congressional District. There, Republican Rep. Tom Kean Jr. faces former U.S. Navy helicopter pilot Rebecca Bennett, a Democrat, in what is expected to be the closest House contest in the state.

The Trump administration first froze funding for Gateway last September.

Russel Vought, the director of the federal Office of Management and Budget, at the time said the freeze was meant to ensure funds did not flow to “unconstitutional DEI principles.”

Trump, meanwhile, repeatedly said the freeze was meant as political punishment for Democrats amid a federal government shutdown.