By David Shepardson
WASHINGTON, Aug 28 (Reuters) - The Trump administration on Friday appealed a court order requiring it to make payments for the $16 billion Hudson Tunnel project after losing its latest bid to halt funding for the New York - New Jersey rail link.
The project aims to build a new commuter rail tunnel connecting Manhattan and New Jersey and repair a century-old tunnel used by more than 200,000 travelers and 425 trains daily.
The funding dispute is the latest clash between the Trump administration
and congressional Democrats over one of the nation's largest infrastructure projects. Trump has said he opposes the tunnel, which received about $15 billion in federal support under former President Joe Biden.
The U.S. Transportation Department on October 1 abruptly stopped releasing grant funds for the project in the wake of a partial government shutdown President Donald Trump blamed on congressional Democrats. A U.S. judge ordered the payments to resume in February.
Trump said in October he had terminated the project, citing its backing by U.S. Senator Chuck Schumer, a New York Democrat, and concerns about potential cost overruns.
The department, which did not immediately comment on Friday, said earlier the freeze was to ensure compliance with rules barring improper use of diversity, equity and inclusion policies in funding.
The tunnel, heavily damaged by Hurricane Sandy in 2012, needs frequent emergency repairs that disrupt travel on the nation's most widely used passenger rail line.
Construction was briefly halted in February but resumed after the Trump administration released $235 million in funding it had withheld since October.
The Gateway Development Commission, which oversees the project for New York and New Jersey, has separately sued the Transportation Department in the U.S. Court of Claims to ensure the funds are not frozen.
Trump offered in January to unfreeze the funds in return for support from Democrats to rename Washington Dulles Airport and New York's Penn Station after him, Reuters reported. Democrats criticized the suggestion.
Around $2 billion of the project's federal funding has been spent so far.
(Reporting by David Shepardson; Editing by Sanjeev Miglani)
