Transit Dispute Fueled Rancor Between Christie, Obama Administration

When New Jersey Governor Chris Christie said he was not running for president but vowed to make President Barack Obama a “one-termer,” the feeling may have been mutual.

The New Jersey Transit board approved a settlement last week between New Jersey and the U.S. Department of Transportation – the final disposition of a year-long tussle over a transit tunnel that was to run under the Hudson River from New Jersey to Manhattan, a project Christie pulled the plug on last year.

And although Christie may have said good-bye to his chance to take on the president directly, the bitter aftertaste of the contentious deal between the governor and federal agency still remains.

Historically, governors did not spar with the federal DOT, which was seen as a source of funds for public works projects – roads, bridges, tunnels – that create jobs and make politicians look good.

But last year, Christie dug in and showed he was willing to stop a big project in its tracks to the increasing consternation of Transportation Secretary Ray LaHood, himself a former Republican Congressman from Peoria, Ill.

At issue was a $9 billion transit tunnel under the Hudson River, the largest new transit project in the nation.

The tunnel, known as the Access to the Region’s Core, or ARC tunnel, was already under construction, and was intended to provide an extra pathway for NJ Transit trains, which now share an at-capacity tunnel with Amtrak.

The lost ARC

Christie halted work, so he could review the project’s finances because he feared the project could cost New Jerseyans billions of dollars more than projected.

Project supporters argued that the construction jobs it would create, along with increased business activity and rising property values along the train line, would offset any increases.

In fall 2010, there was widespread disbelief among federal officials and Washington insiders that Christie would pull the plug on the project. Why, they wondered, would Christie miss out on billions of dollars of federal money coming to New Jersey? And why would he be willing to generate such animosity amongst federal officials whom he might need help from later?

But he was.

In fact, as Christie was publicly mulling a decision he’d already clearly made, the U.S. DOT was strenuously lobbying him (Ray LaHood himself traveled to Trenton twice to make the case).  But publicly, no one from the federal government was talking.  There were no red hot pokers from the Obama administration side.

Just how angry LaHood became only began to come out as the tunnel was being buried — literally, as workers began throwing dirt back into the hole after the project had been killed (a second time, as it happened, since Christie, in response to LaHood’s treatises, gave the project a temporary reprieve.)

“Chris Christie’s decision to terminate America’s largest transportation project was particularly disappointing,” LaHood wrote in an op-ed in the Newark Star Ledger the day after the project died. “Unfortunately, his choice comes with profound consequences for New Jersey, the New York metropolitan region and our nation as a whole.”

A killed project escalates tensions

With the project dead, the bitterness only seemed to escalate. The U.S. DOT demanded that New Jersey pay back $271 million in funds already spent on the project, which Christie refused to do.

Christie hired the well-connected law and lobbying firm, Patton Boggs, to argue his case in Washington.

Periodically, the DOT would release stats on how interest and penalties were accruing on the project.

Privately, LaHood was getting more and more irate. In a letter (pdf) to New Jersey Senator Frank Lautenberg in April, LaHood wrote:

“In February 2010, Governor Christie sat in my office and expressed his full commitment to the completion of the ARC project. In March of 2010, when several news stories called Governor Christie’s commitment to the completion of the ARC project into question, I asked the Governor to restate that commitment in writing. He did so in a letter to me dated April 6, 2010.”

He continued: “The possibility that this project’s cost could run [as high as $12 billion] was first shared with New Jersey Transit as far back as August 2008. Any notion that the potential for cost growth constituted new and emergent information when the governor made his decision is simply not accurate.”

LaHood held to his position that he would not relent on his demand that Christie pay back the $271 million.

By last week, with interest and penalties, the bill had grown to $274 million.  But New Jersey’s two Democratic Senators, Lautenberg and Robert Menendez, had been arguing that New Jersey could pay a lesser amount and at the same time agree to direct $128 million for transit projects in New Jersey.

A settlement reached

On Friday, the U.S. DOT announced that it had agreed to settle the case.  It would accept $95 million from New Jersey, plus the $128 commitment for transit spending.

But Christie tossed into his statement a claim that the $95 million would be offset by $100 million in insurance premium refunds.

“First I’m hearing of that,” shot back one federal official when asked.

The implication –- and Christie said as much in his statement –- was that the settlement contains “not one additional dollar of New Jersey taxpayer money.”

But that’s not exactly right. If Christie had gotten his way, and paid zero to the federal government, presumably New Jersey would have been able to pocket the $100 million in insurance premium refunds, not use it to offset a $95 million payment.

Still, though, Christie was able to create the impression he’d boxed his opponent into a corner, again.

That’s a stance we’ll likely see much of from Christie in the next year — whether he’s a candidate for president or not.

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