The Department of Environmental Protection wanted the court to force them to update environmental studies and take other steps to ensure the project doesn't harm the river.
But in a decision issued Thursday, U.S. District Judge Joel Pisano denied the DEP's motions for summary judgment.
The state and many environmental groups oppose the project to deepen 102 miles of the Delaware River channel below Philadelphia, saying it threatens water quality.
Proponents say the dredging will create jobs by boosting port business.
DEP Commissioner Bob Martin said he was disappointed with the decision and that the agency was reviewing its options, including a possible appeal.