Does the language of the Waterfront Commission Compact, which grants the Waterfront Commission broad policing and regulatory powers, permit New Jersey to unilaterally withdraw from the compact?
This case asks the Court to determine whether New Jersey can unilaterally withdraw from the Waterfront Commission Compact, which it signed with New York in 1953. New York argues that New Jersey cannot withdraw without New York’s agreement because the Compact’s writers intended to bar unilateral withdrawal. New York also argues that unilateral withdrawal would violate New York sovereignty. New Jersey argues that indefinite compacts with continuing duties, like the Waterfront Commission Compact, always allow unilateral withdrawal unless specifically stated otherwise. New Jersey further alleges that requiring mutual withdrawal would prevent New Jersey from reclaiming its sovereign powers. The outcome of this case will impact interstate compacts throughout the nation, state sovereignty, and anti-crime and anti-corruption efforts within the waterfront of New York and New Jersey.
Questions as Framed for the Court by the Parties
Whether the Supreme Court should issue declaratory judgment and/or enjoin New Jersey from withdrawing from its Waterfront Commission Compact with New York, which grants the Waterfront Commission of New York Harbor broad regulatory and law-enforcement powers over all operations at the Port of New York and New Jersey.
In order to address criminal activity and corrupt hiring practices within the Port of New York, former New York Governor Thomas Dewey ordered an investigation of the port in November 1951. Waterfront Commission of New York Harbor v. Murphy at 2. The New York State Crime Commission, in conjunction with the New Jersey Law Enforcement Council, subsequently investigated the port, discovering rampant criminal activity. Id. at 3. To combat the widespread corruption and criminal activity, the state governments of New York (“New York”) and New Jersey (“New Jersey”) both passed the Waterfront Commission Act, which entered their respective states into the Waterfront Commission Compact (“Compact”). Id. The Compact established the Waterfront Commission, which in turn was authorized to regulate and police the waterfronts of New York and New Jersey. Id. Because the Compact is an interstate contract, New York and New Jersey needed congressional approval to execute the compact. See id. Accordingly, Congress approved the Compact by passing Public Law No. 83-252, 67 Stat. 541 (1953). Id. Since 1953, the Waterfront Commission has continued to exercise authority over the waterfronts. See id.
However, recent misconduct within the Waterfront Commission and structural changes within the shipping industry have prompted New Jersey to leave the Compact. Brief in Response of Defendant, New Jersey at 4-5. In January 2018, New Jersey passed Chapter 324 of the 2017 New Jersey Public Laws (“Chapter 324”) to withdraw from and terminate the Compact. Id. at 4-7.
The Waterfront Commission objected to New Jersey’s withdrawal and sued New Jersey Governor Philip Murphy to halt Chapter 324 from going into effect. Id. The United States District Court for the District of New Jersey granted the Waterfront Commission’s request for a preliminary injunction, which temporarily halted New Jersey’s attempt to dissolve the Waterfront Commission. Id. Additionally, the district court granted the Waterfront Commission’s request for summary judgment, barring New Jersey from withdrawing from the compact. Id. Governor Murphy appealed to the United States Court of Appeals for the Third Circuit. Id. Upon review, the circuit court ruled that the Waterfront Commission could not sue Governor Murphy to bar Chapter 324. Id. The circuit court reasoned that suing Governor Murphy to prevent implementation of the statute would infringe on principles of state sovereignty. Id. The Waterfront Commission appealed the Third Circuit’s decision and filed a petition for a writ of certiorari, which the United States Supreme Court denied on November 22, 2021. Id. Hence, the district court injunction was lifted, and New Jersey proceeded with implementation of Chapter 324. Id.
The following month, New Jersey gave New York “its formal notice of withdrawal.” Id. at 6. On March 24, 2022, relying on the Supreme Court’s original jurisdiction, New York filed motions for leave to file a bill of complaint, for preliminary relief, and for expedited consideration of the preliminary relief. Id. at 7. On March 24, 2022, the Court granted New York’s motion for preliminary relief and enjoined New Jersey from enforcing Chapter 324 until the Court could decide the motion for leave to file a bill of complaint. Id. On June 21, 2022, the Court granted New York’s motion for leave to file a bill of complaint and also granted the parties’ joint motion for leave to file cross-motions for judgment on the pleadings. Brief for Defendant, New Jersey at 10.
COMPACT INTERPRETATION AND ORIGINAL INTENT
New York argues that the text and structure of the Compact clearly prohibits unilateral withdrawal. Brief for Plaintiff, New York at 18-19. New York states that compacts must be interpreted based on the authors’ intent, as determined by the language and context of the compact. Id. at 17. New York maintains that, while the Compact does not contain a unilateral withdrawal provision, it establishes two ways for the Compact to end: (1) when both states agree that the compact is no longer necessary, or (2) if Congress repeals the Compact. Id. at 18-19. Thus, New York concludes that the only way for the Compact to end without congressional action is when both states agree to terminate the Compact. Id. at 21. New York claims this conclusion is supported by the fact that amendments to the Compact require unanimity. Id. at 19. Moreover, New York points out that, if the states wanted to be able to withdraw easily, they could have created parallel state agencies that could be terminated at will, but the fact that they chose to create a merged entity suggests that they intended to bind themselves until their joint task was completed. Id. at 26. Finally, New York notes that, until 2018, New Jersey officials repeatedly asserted that New Jersey could not withdraw without New York’s approval. Id. at 29. Thus, New York argues, New Jersey cannot now change its mind, and argue the Compact always allowed unilateral withdrawal. Id.
New York further asserts that allowing unilateral withdrawal would run counter to the history of compact law. Id. at 30. New York maintains that, at the time the Compact was signed, compacts traditionally required mutual withdrawal. Id. New York compares the Compact with other compacts from the same time period and alleges that, before 1953, most compacts did not explicitly mention withdrawal. Id. Moreover, New York maintains that these compacts were widely understood to require mutual termination. Id. New York states that, when states did allow unilateral withdrawal, they explicitly stated so in the terms of the compact. Id. In addition, New York argues that, unlike with contracts, courts are forbidden from reading implied conditions into compacts unless it is clear the writers intended to add the conditions. Id. at 22, 33. New York further notes that, at the time of the Compact, no bistate compact had ever authorized unanimous termination. Id. at 34. Therefore, New York concludes that the Compact’s writers would not have felt the need to explicitly require mutual termination because they would have assumed it was the default. Id. Accordingly, New York asserts that allowing unilateral termination would not only violate the writers’ intent, but also run counter to the historic principles of compact law. Id.
In response, New Jersey states that the Compact was written to allow unilateral withdrawal. Brief for Defendant at 14. New Jersey notes that compacts are a type of contract and are governed by principles of contract interpretation. Id. New Jersey alleges that, when contracts have no set end date and are designed to impose duties indefinitely, each party must have the right to unilaterally terminate the agreement. Id. at 15-16. New Jersey further asserts that, when contract duties are indefinite, courts should interpret ambiguous phrasing narrowly, in favor of allowing states to withdraw at will; otherwise, a vague contract could force duties upon an unsuspecting party in perpetuity. Id. Here, New Jersey maintains that the Compact imposes indefinite duties upon New Jersey and New York, since both states must cede regulatory and policing power to the Waterfront Commission for as long as the Compact exists. Id. at 18. As such, New Jersey concludes that the Compact must allow unilateral withdrawal. Id. In addition, New Jersey rejects New York’s contention that the Compact forbids unilateral withdrawal because it requires unanimity for amendments. Id. at 31. New Jersey points out that amending a compact is not the same as leaving it, since amendments impose new duties on both parties; by contrast, withdrawal allows a party to relinquish its prior duties. Id. at 32-33. New Jersey also points out that the Waterfront Commission cannot take action without the approval of both its commissioners (one for each state). Id. at 25. As a result, New Jersey emphasizes, each state can veto any action, and it does not make sense to allow unilateral vetoes but not unilateral withdrawals. Id. Finally, New Jersey maintains that it has never conceded that unilateral withdrawal is forbidden. Id. at 37 n.9. While New Jersey concedes that a prior governor of New Jersey thought that unilateral withdrawal was forbidden, New Jersey counters by arguing that the prior governor was unable to convince the state legislature to confirm this position. See id. Moreover, New Jersey further points out that the prior governor eventually changed his mind on the issue and ended his term in office supporting unilateral withdrawal. Id.
New Jersey also rejects New York’s claim that historical precedent forbids unilateral withdrawal without explicit authorization. Id. at 24. New Jersey states that, contrary to New York’s assertions, at the time the Compact was signed there was only one type of compact that required unanimous withdrawal: compacts which allocated property or granted permanent rights (such as water rights). Id. at 27. By contrast, New Jersey contends that the Compact only delegates regulatory authority. Id. at 29. Thus, New Jersey states that the Compact does not fall into the narrow category of compacts that require unanimous withdrawal. Id. Instead, New Jersey concludes that when the Compact was signed it was governed by the clearly established contract rule allowing for unilateral withdrawal from indefinite contracts. Id. at 15. New Jersey supports this claim by analyzing other interstate compacts. Id. at 34. According to New Jersey, the vast majority allow unilateral withdrawal, and provisions providing for unilateral withdrawal are three times more common than provisions requiring unanimity. Id. New Jersey posits that, given this history, the Compact’s writers intended to allow unilateral withdrawal. Id. at 15, 22.
New York argues that allowing New Jersey to unilaterally end the Compact would infringe upon New York’s sovereignty. Brief for Plaintiff at 36. New York argues that, because compacts are agreements between two co-equal sovereigns, one of their key features is their ability to permanently bind states, unless both states agree to end the agreement. Id. at 35. New York compares compacts between states to treaties between nations. Id. at 41. New York states that, when sovereigns sign treaties, they are expected to maintain their end of the bargain; countries are not allowed to renege on their promises by unilaterally withdrawing without permission. Id. New York thus concludes that, since countries cannot unilaterally withdraw from treaties, sovereign states cannot unilaterally withdraw from compacts unless given explicit permission. Id. at 42. New York claims this unanimity is especially important in compacts like the Waterfront Commission Compact. Id. at 35. New York alleges that when New York and New Jersey created the Waterfront Commission, both states voluntarily ceded some of their sovereign authority to the Commission; the resulting entity is not fully controlled by either state, and its powers and assets belong to New Jersey and New York. Id. at 35. Thus, New York warns, New Jersey cannot withdraw and decide for itself which parts of the Commission “belong” to New Jersey; if it did so, it would violate New York sovereignty by unilaterally claiming powers and assets that belong, in part, to New York. Id. at 20.
In opposition, New Jersey claims that forcing it to remain in the Compact despite its wishes violates New Jersey sovereignty. Brief for Defendant at 22. New Jersey rejects the idea that the inability to unilaterally withdraw is a crucial element of compacts and argues that sovereigns often can and do unilaterally withdraw from compacts and treaties. Id. at 41, 43. New Jersey also asserts that a state can only cede sovereign power when the compact or contract clearly outlines the power the state is giving up. Id. at 23. New Jersey argues that this is especially true when ceding police and regulatory power, since legislatures have a duty to the people to respond to new situations and changing circumstances. Id. at 20-21. According to New Jersey, when a legislature gives up its ability to withdraw from or amend a compact, it is limiting the ability of future legislatures to tweak the agreement or adopt different measures. Id. New Jersey contends that, because of the vague nature of the Compact, New Jersey was not given clear notice that it could be held responsible in perpetuity. Id. at 24. Thus, New Jersey posits, it did not sign away its sovereign powers indefinitely. Id. New Jersey concludes that disallowing unilateral withdrawal would give New York the power to violate New Jersey sovereignty, by forcing New Jersey to remain in the Compact and preventing it from regaining its sovereign authority. Id. at 43.
BALANCING STABILITY AND STATE SOVEREIGNTY
Professor Jeffrey B. Litwak et al. (“Professor Litwak”), in support of New York, contends that ruling for New Jersey would sow interstate instability. Brief of Amici Curiae Professors Jeffrey B. Litwak, Phillip J. Cooper, et al., in Support of Plaintiff at 17. In particular, Professor Litwak argues that ruling for New Jersey would jeopardize “the peace, good neighborhood, and welfare” that interstate compacts provide by casting doubting on the stability of such compacts. Id. at 22-26. Accordingly, Professor Litwak asserts that allowing New Jersey to withdraw from the Compact would harm states by generating uncertainty with regard to the interstate compacts that states rely on for critical interstate programs. Id. Similarly, Compact Entities, also in support of New York, contend that compacts will lose their capacity as effective policy tools with longevity if the Court finds for New Jersey and allows the state to unilaterally withdraw from the Compact. Brief of Amici Curiae Compact Entities, in Support of Plaintiff at 21.
Port Businesses et al. (“Port Businesses”), in support of New Jersey, counter that preventing New Jersey’s withdrawal would infringe on New Jersey sovereignty. Brief of Amici Curiae Port Businesses et al., in Support of Defendant at 21. In particular, Port Businesses assert that ruling for New York would infringe on New Jersey sovereignty by restricting New Jersey’s ability to exercise its police power over its own ports. Id. at 21-22. Texas and seven other states (“Texas”), also in support of New Jersey, echo this sentiment, arguing that ruling for New York would impermissibly and indefinitely put the power to protect New Jersey citizens in the hands of New York officials. Brief of Amici Curiae The State of Texas et al., in Support of Defendant at 11.
IMPACT ON THE WATERFRONT
The Waterfront Commission, in support of New York, argues that ruling for New Jersey would undermine anti-crime and anti-corruption efforts within the waterfront. Brief of Amicus Curiae Waterfront Commission of New York Harbor, in Support of Plaintiff at 25-26. According to the Waterfront Commission, ruling for New Jersey would undermine these efforts by increasing red tape for interstate investigations. See id. In particular, the Waterfront Commission asserts that terminating the Compact would deprive New Jersey and New York of Commission detectives who have the authority to investigate cases in both states without needing to wait for ad-hoc approval. Id. In addition, the Waterfront Commission argues that ruling for New Jersey would make the regulation of the waterfront less efficient, since two separate governmental entities would have to perform background checks, register companies, and promulgate rules within the waterfront instead of one joint entity. Id. at 27.
Texas contends that ruling for New York would force New Jersey to police and regulate its waterfronts in a manner that even New York officials have deemed ineffective. Brief of the State of Texas et al. at 11. Likewise, Port Businesses assert that ruling for New York would maintain a system of inefficient regulations that stifle hiring, increase worker shortages, and interfere with the collective bargaining process. Brief of Port Businesses et al. at 11-13. In addition, Port Businesses counter the Waterfront Commission’s claim that replacing Commission detectives with state officials would undermine anti-crime and anti-corruption efforts, since other states have been able to effectively combat crime and corruption within their shared waterfronts with agents who lack automatic multi-state jurisdiction. See id. at 21. Moreover, Port Businesses assert that New Jersey’s law enforcement officials have already demonstrated their ability to effectively combat crime involving multiple jurisdictions without the need for automatic multi-state jurisdiction. Id. at 20-21. According to Port Businesses, New Jersey’s law enforcement officials were able to effectively address these cases through existing means of coordination with neighboring jurisdictions. Id.
- Paul Berger and Jess Bravin, New York vs. New Jersey Port Fight Heads to U.S. Supreme Court, Wall Street Journal (June 21, 2022).
- U.S. Supreme Court to Resolve Interstate Compact Dispute between New York and New Jersey, The Council of State Governments (July 15, 2022).
- Elura Nanos, New York and New Jersey Set to Argue Over Control of Docks Near Statute of Liberty in Supreme Court Case, Law & Crime (Dec. 12, 2022).