Feds drop appeal over New York, New Jersey tunnel funding fight

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(The Center Square) — The Trump administration has dropped its appeal of a federal court ruling blocking an attempt to cut funding for the Gateway tunnel and other infrastructure projects in the New York and New Jersey region. 

In a new filing Friday in the 2nd Circuit Court of Appeals, New York, New Jersey, and the federal government agreed to dismiss the appeal of a lower court ruling that barred the Department of Transportation from freezing funding for the $16 billion rail project under the Hudson River.

The move comes less than a month after the Department of Justice indicated that it was moving forward with an appeal. 

"This is a big victory for millions of New Jersey commuters and for the nearly 100,000 jobs the Gateway Tunnel Project will create," New Jersey's Democratic Gov. Mikie Sherrill said in a statement. "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."

The cuts were announced in October by Office of Management and Budget Director Russell Vought, who said funding for the Hudson Tunnel is "under administrative review" to determine if "to ensure funding is not flowing based on unconstitutional [diversity, equity and inclusion] principle."

Politicians from both New York and New Jersey blasted the move, saying the funding freeze would have put thousands of good-paying jobs and the economy of both states at risk. 

A lawsuit filed by New York Attorney General Letitia James and acting New Jersey Attorney General Jennifer Davenport claimed the DOT's  decision to withhold the funding was not because of noncompliance with laws but because the President Donald Trump is "engaged in political retribution" against the states.

The Gateway Commission also filed a legal challenge in the U.S. Court of Federal Claims. That complaint made similar arguments about the funding cuts and asked the court to release "contractually obligated" grant and loan money for the project that was pulled back by the federal government.

In June, U.S. District Court Judge Jeannette Vargas ruled that the funding freeze "flagrantly" violated federal law and prohibited the DOT from blocking the money. Vargas had previously issued an injunction requiring the funding to be released after the project was briefly shut down, and workers laid off temporarily.

The Gateway project, years in the making, calls for renovating the 1910 tunnel, which carries about 200,000 weekday passengers on Amtrak and NJ Transit beneath the Hudson between New Jersey and Manhattan. 

New York and New Jersey have agreed to split the 30% local share of tunnel construction costs, a move required to apply for federal funding.

The upgrades are aimed at increasing capacity on the Northeast Corridor line between Newark and New York City and easing a bottleneck of rail traffic coming to and from the city.