- The Washington Times - Thursday, February 23, 2006

The Port Authority of New York and New Jersey said it would sue today to block the sale of port terminal operations to a company owned by the government of Dubai.

Maryland officials said yesterday they are “considering available options” to block Dubai Ports World (DPW) from operating at the Port of Baltimore.

The planned March 2 acquisition of the current port terminal operator, Peninsular & Oriental Steam Navigation Co. (P&O;), by DPW would allow the Middle Eastern company to operate at six major U.S. ports — Baltimore, New York, New Jersey, Philadelphia, Miami and New Orleans.

“All State of Maryland procurement contracts contain termination provisions,” said Kevin J. Enright, spokesman for the Maryland Attorney General.

Democratic Delegate Peter Franchot of Montgomery County said at a hearing yesterday that the contract should be terminated without additional security assurances. Maryland port officials will discuss the deal today at an emergency briefing called by the Maryland General Assembly’s Democratic leadership.

Other states are weighing options to block DPW from their ports while Congress examines the deal.

• In New York, Mayor Michael R. Bloomberg said city attorneys were examining whether the city could terminate its lease with P&O.;

• In Pennsylvania, Gov. Edward G. Rendell said he would try to replace P&O; with a different operator when the company’s lease expires in May.

• In Florida, the Tampa Bay Port Authority this week approved a measure to allow a business unit of P&O; to operate at the port unless the DPW acquisition is completed, in which case the port authority could revise the contract.

The states’ moves, with similar attempts to intervene by the federal government, might be unauthorized under current laws, legal and foreign affairs analysts say.

Although the U.S. Constitution gives Congress authority to regulate commerce, it is not supposed to override a legal contract between private parties.

“Existing law does not give Congress a lot of leverage,” said Michael O’Hanlon, senior fellow of foreign policy studies for the Brookings Institution public-policy foundation.

States have even shakier legal authority over the deal because national security is the exclusive domain of the federal government, said Seth Stodder, a lawyer for the law firm Akin Gump Strauss Hauer and Feld, who previously worked as director of policy and planning for U.S. Customs and Border Protection.

“If New Jersey were simply to say ‘No Arab company can operate in Port Elizabeth,’ or even ‘No foreign company can operate,’ that might also raise a 14th Amendment equal protection issue,” Mr. Stodder said.

The 14th amendment requires that laws apply equally to everyone, regardless of national origin, race or religious affiliation.

States generally have authority to terminate contracts only if a state interest is involved, such as a violation of agreement terms with a state agency.

The acquisition by DPW already has been approved by the Bush administration.

The law being reviewed most closely by congressional aides is the 1988 Exon-Florio provision of U.S. foreign trade law, which allows the president to void foreign investments that threaten national security.

“The president has the ability to stop the transaction” under the provision, said a Republican House aide who asked not to be named because she was not authorized to speak for any specific committee.

“As the statute is currently written, Congress does not have an up-or-down vote,” the aide said, referring to Congress’ lack of authority to override international contracts.

Nevertheless, several members of Congress are proposing legislation to block the DPW deal.

Yesterday, Rep. Peter T. King, chairman of the Homeland Security Committee, said he would introduce a bill to give Congress authority to terminate the sale of P&O; assets in the United States.

“The current law was passed in 1988 at a time when encouraging foreign investment was the primary focus,” Mr. King, a New York Republican, said in a letter to colleagues. “The September 11, 2001, terrorist attacks have taught us that homeland security concerns must be at the forefront for [foreign investment] considerations — particularly when critical national infrastructure is affected.”

Even if Congress lacks authority now, it could change the laws to override the DPW acquisition, some legal analysts say.

“Congress could impact the Dubai Ports deal by simply passing a statute,” Mr. Stodder said. “It could be narrow, specifically banning the Dubai Ports deal, or it could be broader, say banning any foreign-owned company from being in charge of terminal operations at a U.S. port.”

S.A. Miller contributed to this report.

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