By Kristen Johanson

TRENTON, NJ. (CBS) — Another legal setback for Margate in the ongoing dune controversy. A federal appeals court has denied the town’s motion to suspend the dune building project along the shoreline.

A federal appeals court on Wednesday upheld a federal judge’s order to continue with the dune construction project, denying the town’s motion it be halted.

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Judge Renee Bumb’s ordered the project continue after hearing a full day of testimony from experts, business owners and residents last week.

Both Margate attorneys and officials have argued that ponding water near the construction site has caused a safety hazard, because of a build-up of bacteria and it’s harming the town’s economy.

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Another lawsuit remains in state-court. A judge there is trying to delay the project until the town’s busy season is over.

The work is part of a statewide effort to protect New Jersey’s 127-mile coastline following the devastation that Superstorm Sandy caused in 2012.