The state of New Jersey will pay the federal government $95 million to settle a financial dispute stemming from Gov. Chris Christie’s decision to cancel the Hudson River commuter rail tunnel between North Bergen and Manhattan.
The cost is $176 million less than the $271 million the state government was initially billed.
"I am pleased to announce that we have negotiated a good-faith settlement with the Federal Transportation Administration that puts the interests of New Jersey taxpayers first by substantially reducing the federal government’s original demand," Christie said Friday. "The 5-year payment schedule on a $95 million settlement — which contains not one additional dollar of New Jersey taxpayer money — would be offset by more than $100 million in insurance premium refunds. This represents a fraction of the federal government’s initial claim and won’t cost New Jerseyans any additional money, which would otherwise go to infrastructure improvements."
The state government charged the Federal Transit Administration was holding New Jersey to a different standard than other states that canceled partially federally-funded public works projects. The state spent more than $1 million in legal bills to oppose the $271 million bill.
Christie canceled the $9.8 billion tunnel in October, saying he was concerned about potential cost overruns and the lack of a connection to other train routes from a station planned under West 34th Street in Manhattan.
The governor has said he is open to two proposals to increase train capacity under the Hudson. One is Amtrak’s proposed Gateway Tunnel from Secaucus to Manhattan’s Penn Station. The other proposal is to extend New York’s No. 7 subway line to Secaucus.
In an effort to reduce the $271 million federal bill, U.S. Sens. Frank Lautenberg and Robert Menendez (both D-N.J.) reached an agreement with the U.S. Department of Transportation to reduce the tab to $143 million, with the other $128 million going to transit-related projects reviewed and approved by the agency. The DOT reduced the state’s bill by another $48 million and agreed not to charge New Jersey penalties and interest.
Assembly Transportation Chairman John Wisniewski (D-Middlesex) said of the settlement, “While the governor may tout his settlement as a win for New Jersey, the fact is the cancellation of the commuter tunnel project cost New Jersey billions in federal funds and tens of thousands of jobs.
“Every commuter stuck in the tunnel or delayed on their way to and from work knows how important this project was to our economy and quality of life,” Wisniewski said. “The governor can brag all he wants but there is no getting around the fact that New Jersey lost when the governor canceled the tunnel.”
New Jersey Sierra Club Director Jeff Tittel said, “Finally New Jersey and the Federal Transportation Administration (FTA) have settled the ARC tunnel dispute for $95 million. We are glad that is considerably less than the $274 ($271) million that could have cost New Jersey plus interest and penalties. This is a substantial amount of money for the taxpayers of New Jersey to have to pay because of how Christie canceled the ARC tunnel project. However commuters still need a second set of tunnels to get to New York. The Gateway tunnel should be a priority for Christie administration and the FTA. We hope this $95 million can be put toward the cost of making the Gateway tunnel a reality.