WASHINGTON — The Trump administration has appealed a federal court ruling requiring the government to continue funding the $16 billion Hudson Tunnel Project, extending a months-long dispute over one of the largest rail infrastructure projects in the United States.
The administration filed its appeal Friday after a federal judge ruled that the Transportation Department unlawfully suspended grant payments for the project, which is building a new rail connection beneath the Hudson River between New York and New Jersey.
The project includes construction of a new two-tube rail tunnel and the eventual rehabilitation of the existing North River Tunnel, which has carried passenger trains beneath the Hudson since 1910.
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The existing tunnel serves Amtrak and NJ Transit trains traveling between New Jersey and New York Penn Station. About 200,000 passenger trips and roughly 450 trains pass through the section of the Northeast Corridor between Newark and New York each day, according to the Gateway Development Commission.
The Transportation Department stopped releasing federal funds for the project in September 2025 while it reviewed whether the Gateway Development Commission was complying with federal nondiscrimination requirements.
The department’s review focused in part on the commission’s Disadvantaged Business Enterprise program. Federal officials questioned whether its contracting policies complied with nondiscrimination rules and an executive order issued by President Donald Trump.
New York and New Jersey challenged the funding suspension in federal court.
U.S. District Judge Jeannette Vargas ruled in June that the suspension of federal grant money was contrary to law. The court rejected the government’s argument that the states had no judicial remedy available and granted them judgment on their claim challenging the suspension of the grants.
The Trump administration is now seeking to overturn that decision.
The funding dispute has repeatedly threatened work on the tunnel. Construction briefly stopped earlier this year, but the federal government released $235 million that had been withheld, allowing work to resume.
The Gateway Development Commission has also pursued a separate breach-of-contract case against the federal government. Court records show that the Transportation Department committed approximately $14.7 billion to the project through three grants and three federal loan agreements.
Trump has opposed the project and previously criticized its cost and its support from Democratic lawmakers, including New York Sen. Chuck Schumer.
The president said last year that he had terminated the project. His administration, however, has faced a series of court challenges over its efforts to withhold the previously approved federal money.
The Hudson Tunnel Project is intended to address the deteriorating condition of the North River Tunnel, which was damaged by flooding during Superstorm Sandy in 2012.
The existing tunnel remains in service but requires continuing maintenance. Because it has only two tubes, disruptions can affect rail service throughout the heavily traveled Northeast Corridor.
Under the current project schedule, the new tunnel is expected to enter service in 2035. Rehabilitation of the existing North River Tunnel is scheduled for completion in 2038.
Friday’s appeal means the dispute over federal funding will now continue in a higher court while construction on the project proceeds.
