Transit Tunnel Dispute Fueled Rancor Between Christie, Obama Administration

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NJ Governor Chris Christie (photo courtesy of NJ Governor's Office/Tim Larsen)

UPDATED: New Jersey Governor Chris Christie made two things perfectly clear in his announcement that he won't run for president.  "Now is not my time" Christie said, saying there was too much work for him to do in New Jersey  to leave now.   And this:  he wants to "make sure Obama is a one-termer."

That feeling may be mutual.

Late last week, New Jersey and the U.S. DOT  settled 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. But bitterness and rancor remain, even as Christie bows out of his chance to take on Obama directly.

(Read down in the post for some choice words U.S. Transportation Secretary Ray LaHood had for Governor Christie, in an overlooked letter LaHood wrote last April.)

Once upon a time,  governors  of both political parties did not fight with the federal DOT, which was seen a source of funds for the kinds of public works that make local officials look good -- roads, bridges, tunnels -- big projects that were seen to create jobs, make constituents happy, and, most of all, give politicians all-important ribbon-cutting opportunities.

But in 2010, Christie showed that he was perfectly willing to stop a big project literally in its tracks, to the increasing consternation of the usually amiable LaHood, himself a former Republican Congressman from Peoria, Illinois.

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. It was to have created an extra pathway for NJ Transit trains, which now share a tunnel with Amtrak. That tunnel is at capacity.

A year ago, Christie halted work, so he could review the project's finances. Christie said he feared the project could cost New Jerseyans billions of dollars more than projected. Big infrastructure projects do tend to run over budget -- but 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. That, at least, was the logic that has propelled these kinds of projects forward in the past.

When I first began calling around to federal officials and Washington insiders in the fall of 2010, there was widespread disbelief that Christie would pull the plug on the project.

Both because billions of dollars of federal money would not be coming to New Jersey (the federal government, the Port Authority of New York and New Jersey, and NJ Transit were each footing a third of the $9 billion bill), and also because no one seemed to think Christie would 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 Ray 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."

"Tens of thousands of jobs that the tunnel would have created will be lost. Future New Jerseyans will face shrinking property values, suffocating road traffic, interminable train delays and increasing air pollution. A $3.358 billion federal investment in the region’s economic future will move elsewhere."

But even though the project was 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. Characteristically pugnacious, 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, Ray LaHood was getting more and more irate. In a letter (pdf) to U.S. 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,”

And, then essentially, LaHood called Christie a liar. “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 U.S. 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.

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