TRENTON — In a sharply worded letter, the U.S. transportation secretary said he was ordering New Jersey to repay $271 million after Gov. Chris Christie backpedaled on a plan to build a new rail tunnel under the Hudson River.

"The law is clear on this matter," Transportation Secretary Ray LaHood said Friday. The state had only received the money on the condition that it complete the multibillion-dollar project, he wrote in the letter explaining his decision.

"After the initial contract was entered into and later expanded at Governor Christie’s request, the state of New Jersey broke the terms," LaHood said. "The governor’s unfortunate decision will affect the commuters in New Jersey and the entire Northeast region for generations."

Christie’s office said it disagreed with LaHood’s conclusion but had not decided how to respond or whether it would appeal.

"We’re evaluating all our options," a spokesman for the governor, Kevin Roberts, said.

But LaHood said there were no options left for the state, and that the Department of Transportation had many ways to extract the money, including withholding a wide range of federal funds.

• Read U.S. Transportation Secretary Ray LaHood's letter to Sen. Frank Lautenberg

He said he would prefer to work out a payment schedule with the Christie administration, however, because of New Jersey’s tough financial situation.

Launched under Gov. Jon S. Corzine with the support of Democrats and Republicans as well as labor unions, Christie abandoned the tunnel — known as ARC for Access to the Region’s Core — in October after initially expressing his support for the project.

He said it was only then that he had learned the state would be liable for $2.5 billion in cost overruns on top of the $8.7 billion price tag.

"New Jersey was unable to move forward with the ARC project for reasons beyond the state’s control," Roberts said today. "Billions of dollars in unaccounted-for cost overruns and re-estimates of project costs late in the process only continued to increase New Jersey’s already heavy financial burden."

But LaHood wrote in the letter, which was sent to U.S. Sen. Frank Lautenberg, that state officials were well aware in August 2008 — before Christie became governor in January 2010 — that costs could grow to as much as $12 billion.

"Any notion that the potential for cost growth constituted new and emergent information when the governor made his decision is simply not accurate," he wrote.

Roberts declined to comment on whether the governor knew about the higher cost projections in 2008. New Jersey Transit, which received the federal funds, also chose not to comment.

The Christie administration hired the Washington law firm Patton Boggs in December to help clear the state of its debt obligations, and it has paid the firm over $800,000 in legal fees. The law firm did not respond to several requests for comment.

"This is an unfortunate situation," Lautenberg and Sen. Robert Menendez said in a joint statement issued today. "The state’s outside lawyers pursued an all-or-nothing approach, which brings substantial risk to New Jersey taxpayers."

Assemblyman John Wisniewski (D-Middlesex), the state Democratic chairman, said Christie was "taking his conservative mantra of cutting and not looking at revenue to an absurd level."

"The agreement clearly spelled out that this was a possible consequence," said Wisniewski, who also heads the Assembly transportation committee. "The governor very cavalierly ignored that fact and put the folks of the state of New Jersey on the hook for a $271 million bill."

It’s unclear where the state will find the money to repay the federal government. The Christie administration is already awaiting a decision from the state Supreme Court that could force the governor to find $1.7 billion in additional funds for poor school districts.

Interest began to accrue on the $271 million today at an annual rate of 1 percent, according to federal law.

"Not only is my decision fair to the taxpayers of New Jersey," LaHood wrote in his letter to Lautenberg. "It is the only one that is fair to all taxpayers across the United States who made the financial investment in what was to be the largest public works project in the nation.

Previous coverage:

• N.J. legal tab to fight $271M federal bill for scrapped ARC tunnel reaches $800K

• N.J. is billed $330K by law firm fighting tab for canceled ARC tunnel

• N.J. senators, Amtrak official to announce new commuter train tunnel project across the Hudson

• Gov. Christie is appealing $271M bill from U.S. government for ARC tunnel

• N.J. faces deadline to pay federal government for canceled ARC tunnel

• N.J. is given final deadline to appeal or repay $271M ARC tunnel bill

• N.Y. Sen. Charles Schumer slams Gov. Christie for redirecting ARC tunnel funds to N.J. roads

• N.J. Democrats push to end toll hikes intended to fund canceled ARC tunnel