NJ Refuses to Repay $271 Million to Feds for Axed Arc Tunnel

New Jersey Governor Chris Christie told the Federal Transit Administration Tuesday night that he would refuse the agency's demand to have the state pay $271 million for early work done on the cancelled trans-Hudson ARC Tunnel. 

Christie pulled the plug on ARC in October, citing the potential for $5 billion in cost overruns that the state would have to pay. The move won him acclaim from fiscal conservatives and higher approval ratings from New Jersey voters.

But Tuesday's submission to the FTA, filed by Washington, D.C., law firm Patton Boggs, argues no repayment is required because the project was cancelled for reasons beyond the governor's control — or more precisely, of New Jersey Transit's, which was overseeing the project.

It was the project's estimated over-runs in a time of "severe financial stress" for New Jersey that made shutting down the project unavoidable, the filing argues.

The filing further claims the FTA is only authorized to ask for money classified as New Starts funds and that $225.5 million of the $271 million doesn't fit that description.

"The FTA overstates the funds that are even at issue and makes a demand for repayment that is far broader than authorized by statute," read a statement accompanying the filing.

Christie is also claiming that preliminary engineering for the ARC tunnel is proving useful to the study of other projects, such as the proposed extension of the No. 7 subway line from Manhattan to New Jersey and upgrades to Amtrak service in the Northeast Corridor.

The filing finally asserts that New Jersey can't afford to pay the bill.

"Repaying any amount would be deeply counterproductive and harmful to the citizens and taxpayers of NJ," it states. "The work produced with these funds has enduring value to future projects. Moreover, compelling NJT to repay these funds will force NJT to cancel projects it can afford to undertake to reduce congestion, enhance the condition of critical infrastructure and create needed jobs."

Fifty-five densely footnoted pages later, the document concludes: "[F]or the foregoing reasons, NJ Transit respectfully requests that FTA's repayment demand be denied."

U.S. Department of Transportation spokeswoman Olivia Alair said, “The FTA is currently reviewing New Jersey Transit’s response and will make a decision that is in accordance with the law.”