The Supreme Court unanimously ruled on April 18 that New Jersey may unilaterally withdraw from the interstate compact that created the Waterfront Commission of New York Harbor in the 1950s to combat corruption.
New Jersey decided in 2018 to leave the interstate compact that created the commission in 1953 that bestowed regulatory and law-enforcement functions on the commission. That year, then-New Jersey Gov. Chris Christie, a Republican, signed legislation allowing the Garden State to withdraw from the compact. Christie was succeeded in the post by Phil Murphy, a Democrat.
The New Jersey law would dissolve the commission and divert revenues that would otherwise fund the body to the New Jersey State Police, which would assume the commission’s responsibilities over the New Jersey side of the port.
New York Attorney General Letitia James, a Democrat, previously said that allowing New Jersey to leave the compact would cause “immediate and irreparable harm to New York” and lead to more crime, higher prices on goods, and racial inequities in port hiring.
Commentators say that allowing New Jersey to exit the compact would effectively kill it. The Biden administration sided with New Jersey.
New York opposed the withdrawal at oral arguments on March 1, contending that New Jersey may not simply walk away from the interstate compact. The compact, a contract between the states, was approved by Congress, an action that transformed it into federal law. The commission has about 70 employees.
New Jersey claimed it no longer benefits from the commission because the compact was created in 1953 when most of the economic activity in the port was on the New York side. Still, nowadays, more than 80 percent of the action is reportedly on the New Jersey side. New Jersey also claimed that the commission was inefficient and overly bureaucratic.
The storied Port of New York and New Jersey’s reckoning with organized crime was immortalized in director Elia Kazan’s 1954 film, “On the Waterfront.” Still, organized crime was reportedly driven out years ago, and critics have long accused the commission of over-regulating businesses involved in the port and causing labor shortages.
The court heard the case last month, exercising its original jurisdiction. Because individual states lack jurisdiction over each other, state courts cannot hear cases dealing with another state. Hence, the U.S. Constitution allows the Supreme Court to hear disputes between states.
New York argued that both states would have to agree on amendments to the compact. Still, the compact “does not address each State’s power to unilaterally withdraw: It neither expressly allows nor expressly proscribes unilateral withdrawal,” Kavanaugh wrote for the court.
Although contract law does not supersede an interstate compact, when the compact is silent on a specific issue, the court will look to the principles of contract law, which allow a party to withdraw.
“Parties to a contract that calls for ongoing and indefinite performance generally need not continue performance after the contractual relationship has soured, or when the circumstances that originally motivated the agreement’s formation have changed,” he wrote.
Kavanaugh wrote that the principles of state sovereignty also support New Jersey’s position.
“Here, the Compact involves the delegation of a fundamental aspect of a State’s sovereign power—its ability to protect the people, property, and economic activity within its borders—to a bistate agency,” he wrote.
“We draw further guidance from the fact that, as is undisputed, New York and New Jersey never intended for the Compact and Commission to operate forever.”
