Appeals court will wait to hear Gateway case; order demanding release of funds now in effect

A federal appeals court announced that it will not hear an appeal from the White House asking for a delay in delivering Gateway funds until later this month, meaning a temporary order requiring the Trump administration to release the funds is now in effect. 

Last Friday, federal District Judge Jeannette A. Vargas ordered the White House to release funds earmarked for the Gateway tunnel, a monumental rail project connecting New Jersey and Manhattan. On Monday, however, Vargas hit pause, putting a temporary stay on her order as the White House sought to appeal to the Court of Appeals for the Second Circuit. Vargas’s stay ended at 5 p.m. on Thursday, and the 2nd Circuit’s decision to wait until later this month means the Trump administration is now on the hook to release more than $200 million in Gateway construction funds.

The 2nd Circuit’s one-sentence order simply stated that the matter is referred “to a motions panel sitting as early as the week of February 23, 2026.”

“The 2nd Circuit’s order today means the $200 million owed to the Gateway Tunnel project needs to be released immediately,” Gov. Mikie Sherrill said in a release Thursday evening. “The 1,000 workers currently out of work because of President Trump’s illegal action can’t wait any longer.”

In September, the Trump administration froze funding for the $16 billion bipartisan project to review “unconstitutional DEI principles,” but did little to specify what exactly was under review. Leaders of the project, known as Gateway, looked to the Trump administration for guidance, but they say no such guidance came. New Jersey and New York sued earlier this month as Gateway’s reserves finally ran out, alleging the White House illegally froze funding for the project.

The Trump administration’s next plans are not immediately clear. The Gateway Development Commission, a bi-state agency leading the construction efforts, said it looks forward to receiving the $205 million at stake under Vargas’s order, and Sherrill and acting Attorney General Jennifer Davenport threatened further legal action if the White House did not release the funds.

The U.S. Department of Transportation deferred comment to the Department of Justice; the Department of Justice did not immediately return a request for comment.

Earlier this month, Punchbowl News reported that President Donald Trump told Senate Minority Leader Chuck Schumer that he would release the funding if Schumer helped rename Dulles International Airport in D.C. and New York’s Penn Station after Trump. Schumer declined.

“While this is a positive step, we need consistent, reliable access to the Hudson Tunnel Project’s federal funding moving forward,” a GDC spokesperson said Thursday. “GDC continues to pursue all avenues to regain access to all the federal funds for this urgent project, including our lawsuit. We are confident in our legal position and look forward to resolving this important matter.”