Gateway funding must continue, appeals court says

WASHINGTON — The Trump Administration must continue funding the Gateway Tunnel megaproject, after an appellate court on Thursday rejected the administration’s bid to maintain a funding freeze.

In a written ruling, the U.S. District Court of Appeals for the Second Circuit said the federal government failed "to show the irreparable injury" caused by a lower-court ruling issued last month that ordered the Trump administration to unblock nearly $16 billion in funding previously approved by Congress for a new Hudson River rail tunnel.

New York and New Jersey filed a joint lawsuit on Feb. 3 looking to unfreeze funding suspended by President Donald Trump last October. White House budget officials said last fall they were reviewing whether the project complied with the president's executive order banning "diversity, equity and inclusion" initiatives in federal projects, but the Gateway Development Commission, the bistate panel overseeing the project, repeatedly argued it was in compliance and further delays in funding would force the project to stop.

The appellate court noted the potential disruptions to the project in its ruling.

"As for the public interest, just as the public has an interest in the responsible disbursement of federal monies, it also has an interest in the efficient completion of a major public works project and in the avoidance of health and safety threats around inactive construction sites," the judges wrote.

New York Democratic lawmakers celebrated the ruling as work continues on the yearslong effort to build a new tunnel to replace the century-old North River Tunnel.

Senate Minority Leader Chuck Schumer (D-N.Y.) said in a statement that the project "is essential to hundreds of thousands of commuters and travelers, as well as a vibrant regional economy."

State Attorney General Letitia James, who filed the joint lawsuit last month, in a statement said: "My office will keep fighting to ensure the Hudson Tunnel Project moves forward without delay on behalf of New York workers and their good-paying union jobs, commuters, and families."

Gov. Kathy Hochul in an X post wrote: "Another loss for Trump. Another win for New Yorkers."

The Department of Justice did not immediately return a request for comment.

By Laura Figueroa Hernandez

laura.figueroa@newsday.com@Laura_Figueroa

Laura Figueroa Hernandez is the White House correspondent and previously covered New York City politics and government. She joined Newsday in 2012 after covering state and local politics for The Miami Herald.