Feds Drop Appeal Over Gateway Tunnel Funding Freeze; Gov. Sherrill Calls It 'Fifth Victory'

The federal government on Sept. 18 withdrew its appeal over the freeze on federal funding for the Hudson River Gateway tunnel project. The U.S. Court of Appeals for the Second Circuit said New York, New Jersey and the federal government agreed to dismiss the appeal. As a result, the June federal district court ruling that found the funding freeze "flagrantly" violated the law is now final.

The federal government on Sept. 18 withdrew its appeal over the freeze on federal funding for the Hudson River Gateway tunnel project. According to an order issued that day by the U.S. Court of Appeals for the Second Circuit, New York, New Jersey and the federal government agreed to dismiss the appeal. It came three weeks after the federal government said last month that it would pursue the appeal.

The withdrawal leaves the June ruling by the U.S. District Court intact. The court found at the time that the federal government had "flagrantly" violated the law by blocking the release of funds without following required procedures, and ordered the money to be released. When the federal Office of Management and Budget (OMB) froze Gateway funding last September, it said the move was meant to keep money from going to diversity, equity and inclusion (DEI) principles. The two states promptly filed suit.

In a statement, New Jersey Gov. Mikie Sherrill said, "This is a big win for millions of New Jersey commuters and for the roughly 100,000 jobs this project will create." She added, "We have beaten the federal government in court five times, and we will not stop fighting until the tunnel is finished." The appeals court order does not say how the two sides came to the agreement.

The Gateway project, costing about $16 billion, will bore two new rail tunnels under the Hudson River and rehabilitate the existing North River Tunnel, which was bored in 1910. Currently, all NJ Transit and Amtrak trains between New Jersey and Penn Station pass through that single tunnel, which is more than 100 years old. Since it was flooded during Hurricane Sandy in 2012, frequent signal and electrical failures have caused repeated delays. The new tunnels are targeted to open in the mid-2030s.

However, another lawsuit the federal government filed against the Gateway project remains pending, so the legal battle is not entirely over. The ruling that is now final concerns the freeze on federal funds and the resumption of their release.