NY & NJ Ports angry, uses 10th Amendment...

From the NY Times:

February 24, 2006
Port Agency to Break Lease in Bid to Block Dubai Sale
By PATRICK McGEEHAN

The Port Authority of New York and New Jersey will break the lease of a big container terminal at Port Newark to stop a company based in Dubai from taking over part of the operation there, the agency's chairman said yesterday.

Anthony R. Coscia, the chairman, said the company that holds a lease on the terminal through 2030 violated the contract by selling a half-interest in it to Dubai Ports World without seeking the landlord's approval. He said the Port Authority would ask a judge in New Jersey Superior Court in Newark today to affirm its right to end the lease.

"Fundamentally, this is a landlord-tenant dispute," said Mr. Coscia, who is a lawyer. "We're terminating their lease because they sublet illegally."

Separately, the State of New Jersey sued the federal government in United States District Court in Trenton yesterday afternoon to block the Dubai deal. The lawsuit said Bush administration officials failed to fulfill their duty to fully investigate the national security implications of the transaction.

The Dubai company has agreed to pay $6.8 billion to buy Peninsular & Oriental Steam Navigation, a port operator based in London. One of the subsidiaries it would acquire, P & O Ports North America, owns half of the company that operates the Port Newark Container Terminal.

Andrew Rice, a spokesman for P & O and Dubai Ports World, said neither company would comment on the litigation.

Last night, Dubai Ports World said it would "not exercise control" over its new operations in the United States while the White House tried to calm opposition in Congress.

New Jersey's suit argues that the federal Committee on Foreign Investment in the United States, which approved the deal last month, has not provided Gov. Jon S. Corzine with the information he needs to protect the state's residents. By withholding it, the suit argues, the committee is interfering with the sovereign rights of the state provided by the 10th Amendment to the Constitution.

The suit asks the court to order the committee to conduct a full investigation of the Dubai Ports World and to share information they gather with New Jersey's Office of Counterterrorism. As defendants, the suit names the heads of the federal agencies that make up the committee, including John W. Snow, the treasury secretary, Condoleezza Rice, the secretary of state, and Donald H. Rumsfeld, the secretary of defense.

"Our federal suit is really about information," Mr. Corzine said, at a ceremony to swear in Zulima V. Farber as attorney general. But he went on to criticize the decision to approve the deal quickly.

"This is very poorly executed foreign policy," Mr. Corzine said. "This should have been reviewed at the highest levels."

The suits were the first by public agencies in the growing controversy over the sale to Dubai, though Mr. Coscia said other port officials were considering taking similar action.

Like Mr. Corzine, Port Authority officials have been frustrated at their inability to obtain information from the Treasury Department about the committee's review. But the Port Authority's only power to slow or block Dubai Ports World from arriving as a tenant rests in the lease.

There was no pending dispute with the operators of the container terminal before the Dubai deal surfaced. But, Mr. Coscia said, the lease states that a tenant must get the agency's approval of a transfer of ownership interest.

"Our approval wasn't sought, so we haven't provided it," he said.

One complication of the dispute is that another port operator, A. P. Moller-Maersk, is caught in the crossfire. Maersk, a Danish company, planned to maintain its half-interest in the terminal but could soon be without a lease to operate at the port.

The Port Authority's message to Maersk, Mr. Coscia said, was, "We're sorry you're in the middle of this, but you're in the middle of this."

A spokeswoman for Maersk in New Jersey declined to comment.

David W. Chen contributed reporting from Trenton for this article.

Copyright 2006The New York Times Company

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