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Feds demand New Jersey repay $271 million for tunnel project

By Katie Silver, CNN
  • Gov. Christie killed a Hudson River tunnel project, citing potential cost overruns
  • The project is considered one of the most expensive public works projects in the country

(CNN) -- The federal government wants New Jersey to repay $271 million after the state's Republican governor killed a Hudson River tunnel project, considered among the nation's most expensive public works initiatives.

U.S. Transportation Secretary Ray LaHood made the announcement Friday in a letter to state congressional leaders and in a report delivered to Gov. Chris Christie, saying the governor was not justified in canceling the project.

LaHood argued that terminating the initiative is tantamount to a breach of contract, which would also negatively affect New Jersey and Northeast commuters and reduce employment opportunities.

Christie argued that the potential for major cost overruns and re-estimates prompted him to cancel the project in October.

"New Jersey was unable to move forward with the ... project for reasons beyond the state's control," he said in a statement.

LaHood said the costs had been made clear since August 2008.

The initiative -- considered one of the country's most expensive -- would have expanded commuter train capacity between New Jersey and Manhattan in New York.

The New Jersey governor has made deficit reduction a cornerstone of his administration, pushing cuts to education, local governments and mass transit and tackling state pension plans and benefits packages for public-sector workers.

The recent exchange parallels a similar controversy that brewed earlier this year when Republican Gov. Rick Scott of Florida rejected $2.4 billion in federal money that was to fund a proposed high-speed rail system.

Scott cited concerns about long-term operating costs for the 84-mile rail system that would have linked Tampa and Orlando.

The loss of the Florida project was seen by some as a direct blow to President Barack Obama's vision for a national high-speed rail network.