New Jersey cannot stop the federal government from striking deals with private companies to maintain immigration detention centers in the state, a federal appeals court ruled.

The 2-1 decision by the U.S. Third Circuit Court of Appeals marks a significant legal victory for the Trump administration in its effort to detain people it suspects of being in the country illegally. The appellate opinion stems from a 2021 New Jersey law that banned private companies, as well as state and local governments, from having immigration detention agreements with the federal government.

But this law infringes on federal authority, the appellate court held, as the federal government is in fact the only entity that would be able to strike or extend such an agreement concerning the detainment of alleged illegal immigrants. While the law’s avoidance of a direct reference to the federal government is “admittedly clever,” the majority opinion states, “we can easily see the law for what it really is: a regulation ‘laid upon the contract of the government.'”

The legislation “directly regulates the federal government by banning contracts that only the federal government can make,” added the majority opinion written by Stephanos Bibas, a Donald Trump appointee. Cheryl Ann Krause, a Barack Obama appointee, joined the majority opinion, while Thomas Lee Ambro, a Bill Clinton appointee, dissented.

After the plaintiff, CoreCivic, sued New Jersey Gov. Phil Murphy and state Attorney General Matthew Platkin in 2023 over its ability to operate the Elizabeth Detention Center, a U.S. district judge sided with the private company, finding that the law was unconstitutional.

The state officials appealed the ruling, which placed the case before the U.S. Court of Appeals for the Third Circuit. The appellate court, however, rejected the state’s arguments that it was merely targeting private industry of its state – under its own authority – rather than the federal government.

“The law prevents the federal government from choosing how and through whom it will carry out a core federal function,” Bibas wrote. “It does so by banning private parties from selling immigration detention when ‘the only entity in the business, so to speak, of [buying private] immigration det[ention] is the federal government.'”

“Only the federal government has the power to decide whether, how, and why to hold aliens for violating immigration law,” the majority opinion continued. “It alone has the power to make these contracts in the first place. So this ban is in substance a direct regulation; it destroys the federal government’s marketplace.”.

The Elizabeth Detention Center is crucial to the federal government, the Trump administration maintained. To be deprived of it would thus also present a clear issue of efficiency, the majority opinion noted, with the nearest ICE center capable of assisting being in the middle of Pennsylvania more than 250 miles away.

Furthermore, the federal government could be burdened by losing the detention center as immigration levels “shift.” Bibas drew an analogy to the military. “[U]nder [New Jersey’s] logic,” every single state could pass legislation to ban federal contractors from building weapons for the U.S. military – thereby destroying national defense, he said.

“At bottom, this law is an ‘effort to hamstring [the federal government’s immigration] power,’ making it as hard as possible for it to hold aliens in New Jersey. That is a big step down a slippery slope,” Bibas wrote, before once again calling out the state for its actions.

“Because New Jersey knew that it could not openly bar the federal government from contracting to detain immigrants, it instead eliminated everyone with whom the federal government might contract within its borders. It asks us not to notice the federal elephant in the room,” he added.

Platkin, the state attorney general, expressed his disappointment in the ruling, pointing to the chaos at a separate ICE center in New Jersey earlier this year where several public officials were arrested and saying, “entrusting detention to for-profit companies poses grave risks to health and safety.”

He added that they are evaluating their next steps.