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New Jersey files suit to block US port deal

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PHILADELPHIA, Feb 24 (Reuters) New Jersey has sued the US federal government to prevent a United Arab Emirates company from managing a terminal at the Port of Newark until security risks there have been fully assessed.

The suit filed in US District Court in Trenton seeks to bar state-owned Dubai Ports World from taking over the Newark facility as part of a deal under which it also would manage terminals at five other major U.S. ports following its takeover of P&O, a British company that had been operating the ports.

It claims the federal panel that approved the port-management takeover -- the Committee on Foreign Investments in the United States -- failed to conduct a full investigation of the sale as required by law and it asks the court to order an investigation.

New Jersey Gov. Jon Corzine said the presence of the UAE company may threaten the security of an area that the FBI has called the most dangerous two miles in America because it also contains chemical plants, oil storage facilities, rail lines, and Newark Liberty International Airport.

''We cannot tolerate any situation that heightens our vulnerability,'' Corzine said in a statement yesterday. ''Turning port operations over to a company owned by a country that recognized the Taliban as a legitimate government goes beyond the realm of common sense.'' The transaction has sparked a storm of protest from government officials and lawmakers who argue that giving control to a company whose owner has been accused of having ties to terrorist groups is a danger to national security.

Pennsylvania Gov. Ed Rendell this week wrote to President George W. Bush expressing his concern for the security of the Port of Philadelphia, which is included in the deal.

Bush has defended the deal, calling the UAE, a ''valuable ally in the war on terror.'' He has said he would veto any federal legislation seeking to void the deal.

The suit also claims the deal harms New Jersey's duty to ensure security at the port because it did not know what information was submitted by the UAE company or what assurances were offered on security. Failure to provide that information interferes with the state's sovereign rights under the 10th amendment of the U.S. Constitution, the suit says.

It names the Committee on Foreign Investments as well as Treasury Secretary John Snow, Secretary of State Condoleezza Rice, Defense Secretary Donald Rumsfeld, Attorney General Alberto Gonzales and Homeland Security Secretary Michael Chertoff.

Earlier yesterday, senior Bush administration officials defended the deal before a Senate panel, saying that the committee's investigation was thorough.

The Port Authority of New York and New Jersey, which controls the Newark port, is expected to file its own suit in a New Jersey state court on Friday claiming P&O violated its lease by failing to inform it of the change of management.

A Florida firm, Continental Stevedoring and Terminals Inc., a subsidiary of Eller and Co., filed suit last week to block the deal in Miami.

Reuters PDS VP0630

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