New Jersey sought to withdraw from the interstate compact that established the Waterfront Commission of New York Harbor, an interstate compact entity. The Waterfront Commission sued to enjoin New Jersey’s Governor from moving forward to terminate the Compact. The Third Circuit refused to allow the suit, holding that it was barred by sovereign immunity.
In a post on this page dated June 21, 2020, On the Waterfront: Can Compact Agencies Sue A Signatory States?, I observed:
“The Third Circuit’s decision Waterfront Commission v. Murphy is fundamentally flawed. It will be interesting to see if the Waterfront Commission petitions for Supreme Court review.”
“And, of course, the State of New York could always file an original action to enforce the Compact’s obligations.”Emphasis added.
Those predictions all came true. The Commission filed for a writ of certiorari, which the Court denied. On March 14, 2022, the State of New York filed an original action against the State of New Jersey to prevent New Jersey from moving forward with its efforts to withdrawn from the Compact. The petition for leave to file an original complaint can be found here.
On March 24, 2022, the Supreme Court issued an order enjoining New Jersey from enforcing its legislation withdrawing from the compact or from “taking action to withdraw unilaterally from the Compact or terminate the Commission pending disposition of the motion for leave to file a bill of complaint and, if granted, disposition of the case.” The docket sheet for the case, New York v. New Jersey, Dkt No. 22 Orig. 156, can be found here. (For the SCOTUSblog coverage of the case, see Andrew Hamm, New York sues New Jersey over compact governing Port of New York and New Jersey, SCOTUSblog (Apr. 2, 2022)).
Readers may never know when and from where the idea of filing an original action arose (perhaps it predated my June 21, 2020 post in these pages). I cannot answer the provocatively-phrased question in the title of this post. Nevertheless, a summary of the proposed complaint seems appropriate in these pages.
The Proposed Complaint
Because both New York and New Jersey border New York Harbor, port facilities for passengers and cargo ships are located both in states. New York and New Jersey, by enactment of identical statutes, agreed to enter into the Waterfront Commission Compact. The Compact would, inter alia, establish a joint bi-state Commission clothed with the authority to both oversee licensing and registration of the waterfront workforce and investigate and expose unfair labor practices and criminal activity at the Port of New York (consisting of the port facilities serving New York Harbor in both New York and New Jersey). Congress enacted legislation ratifying the Compact.
Article XVI, § 1 of the Compact provides that any amendments to the Compact must be made by legislation enacted by one State and “concurred in by the Legislature of the other.” Moreover, in ratifying the Compact, Congress reserved for itself the right to repeal the Waterfront Compact Act. (Ch. 407 § 2, 67 Stat. 541, 557 (1953)).
The Allegations of the Complaint
The Ongoing Need for the Commission’s Law Enforcement and Anti-Discrimination Efforts
In its proposed complaint, in New York v. New Jersey, New York set forth the following allegations. The Waterfront Commission was designed to combine New York’s and New Jersey’s law-enforcement and regulatory powers to root out corruption, organized crime, racketeering, and other unlawful activity at port facilities serving New York Harbor. The Commission has engaged in ongoing efforts to root out and eliminate such activity in the Port of New York since its inception.
In recent times, Commission investigations have produced convictions and guilty pleas for crimes including drug trafficking, theft, racketeering, illegal gambling, loansharking, extortion, and even murder. The Commission’s investigations have also led to the seizure of illegal drugs and firearms, as well as the proceeds derived from various illegal activities. Yet the Commission’s efforts have not yet eradicated Port’s culture of organized crime and racketeering.
Moreover, for the past decade the Commission has been proactive in seeking to assure that port employers hire “in a fair and non-discriminatory manner, in accordance with state and federal equal employment opportunity laws.” In September 2013, the Commission imposed a requirement that port employers certify compliance with equal opportunity laws. The Commission noted the resistance to the imposition of the requirement and the continued racial and gender disparity in employment opportunities as the port.
New York summarized the current situation as follows. Individuals connected to organized crime families or other corrupt enterprises are often rewarded high-paying, low-show or no-work jobs at the Port. At the same time, residents in communities surrounding port facilities, such as Newark, have difficulty obtaining legitimate port employment.
New Jersey’s Attempts to Withdraw from the Compact
In 2017, the New Jersey Legislature passed Chapter 324, which then-Governor Christie was signed into law on January 15, 2018 (one day before his term ended). Chapter 324 directed the State’s executive officials to effect New Jersey’s unilateral withdrawal from the Waterfront Compact and provided for the Commission’s subsequent dissolution. Chapter 324 directed the transfer of several of the Commission’s powers to the New Jersey State Police. Among those powers were the power (1) to adopt rules and regulations governing employment in the Port areas geographically located within New Jersey; (2) to issue and revoke licenses to pier superintendents and stevedores; and (3) to establish a registry for longshore workers. Chapter 324 provided that Port employers pay over to New Jersey, rather than the Commission, the portion of payroll assessments attributable to work in New Jersey.
Further, Chapter 324 purported to order the Commission to transfer to the State Treasurer all funds the Commission held that were “applicable to” New Jersey. It also provided for New Jersey’s abandonment of all Commission “debts, liabilities, and contracts” unrelated to New Jersey.
The effectuation of the legislation was delayed by a Commission lawsuit to prohibit Chapter 324’s implementation. Shortly after the lawsuit was dismissed for lack of federal jurisdiction, by letter dated December 27, 2021, New Jersey’s Governor advised the Governor of New York, the Waterfront Commission, and the U.S. Congress of New Jersey’s intention to effectuate the State’s “withdraw[al] from the interstate compact that established the Waterfront Commission of New York Harbor.”
Pursuant to that statement of intent, by letter dated February 9, 2022, New Jersey’s Governor sent the Commission “sweeping demands” for documents. Among the Commission materials requested were staff personnel files, police work assignments, documents containing the details of the Commission’s ongoing criminal investigations, and the confidential intelligence database the Commission had developed over the course of its work. In the same letter, Governor Murphy set a date by which the Commission’s authority over Port areas located in New Jersey would cease — March 28, 2022.
At least one entity representing businesses subject to the Commission’s authority, the New York Shipping Association (“the NYSA”), has already contested the basis of the Commission’s continuing authority, relying on New Jersey’s purported withdrawal from the Compact. On March 4, 2022, via letter, the NYSA advised the Commission of its view that the Commission no longer possessed any authority within New Jersey’s borders. More particularly, the NYSA asserted, the Commission’s authority to levy assessments on employers at the Port had lapsed. Indeed, the NYSA asserted that the employers who were members of the NYSA owed no assessments to the Commission after January 1, 2022.
The Consequences of New Jersey’s Unilateral Withdrawal From the Compact
Having laid out the series of events above, New York alleged that several serious consequences would flow from New Jersey’s attempted withdrawal from the Compact. It noted that although the Port of New York encompasses facilities in two separate States, the Port is a single entity. The Port operates as a unified whole, with workers, companies, and freight operating in, and moving through, both New York and New Jersey. Likewise many of the criminal organizations whose efforts the Commission seeks to combat operate without observance of the two states’ boundaries.
Given those realities, New York listed nine consequences of New Jersey’s course of action, encompassing harm to its regulatory and law enforcement missions as well as its very existence.
First, New Jersey’s assumption of “many of the . . . law enforcement and regulatory functions” the Commission exercised at New Jersey port facilities, including the Commission’s power to levy assessments, would create “severe logistical and budgetary challenges” in the regulation of New York Harbor ports.
Second, New Jersey’s unilateral withdrawal from the Compact would comprise many of the Commission’s ongoing criminal investigations.
Third, New Jersey’s refusal to recognize the Commission’s jurisdiction within New Jersey would “create obstacles for Commission investigators” and compromise many of the Commission’s bi-state investigations.
Fourth, New Jersey’s actions would create clashing jurisdictional authority over the New Jersey waterfront, with both the Commission and the New Jersey State Police purporting to exercise independent jurisdiction. Indeed, the Commission averred, the New Jersey Division of State Police had already asserted that it would not recognize the jurisdiction of the Commission’s law enforcement officers in New Jersey.
Fifth, New Jersey’s action would create substantial uncertainty regarding the locus of the powers the Commission has heretofore exercised exclusively. Such powers would include the power “to issue or revoke licenses for waterfront employment, maintain a register of longshore workers eligible and available to work at the Port, and levy assessments on wages paid.” Indeed, the Commission reiterated, the NYSA had already challenged the Commission’s jurisdiction to continue to collect assessments on their payroll.
Sixth, the provisions of Chapter 324, by imperiling the Commission’s funding, would endanger the lives of the Commission’s undercover officers.
Seventh, New Jersey’s actions would weaken the screening of Port workers. The Commission averred that it “maintains the central repository of intelligence on criminality and organized crime influences at the Port.” And, over the years, it had “developed expertise in detecting criminal backgrounds and associations with organized crime.” Even if the Commission managed to remain in operation despite New Jersey’s withdrawal, New Jersey would take over the screening function at New Jersey facilities without benefit of the Commission’s resources and expertise. As a result, at the New Jersey’s Port facilities more individuals with criminal ties would be employed and “unfair and discriminatory hiring practices” would be perpetuated, and indeed increase.
Eighth, the confusion resulting from splitting the extant unitary central hiring system into two separate systems would likely disrupt Port operations. In turn, such disruptions could potentially impair the flow of commerce into the region, as well as nationwide supply chains.
Finally, New Jersey’s attack upon the Commission’s funding sources would prevent the Commission from satisfying its current financial obligations, such as making rental payments due under it ten-year lease on the office spacing housing its headquarters in Manhattan.
New York’s Claims and Prayer for Relief
New York asserted three causes of action against New Jersey for its actions.
First, it asserted, the Compact itself is enforceable against its signatories in an original action. Thus New Jersey’s violation of the express provisions of the Compact, essentially purporting to unilaterally amend the Compact by withdrawing from it, gave rise to an action to enforce the Compact’s provisions.
Second, under the “law of the Union doctrine,” “congressional consent transforms an interstate compact . . . into a law of the United States.” Accordingly, under the conflict and obstacle preemption doctrines, the Supremacy Clause invalidated any New Jersey law purporting to unilaterally withdraw New Jersey from the Compact.
Third, given that the Compact should be treated as an enforceable contract, like any other contract, Chapter 324 constituted a “Law impairing the Obligation of Contracts,” in violation of the U.S. Constitution’s Contracts Clause. New York asserted that New Jersey had substantially impaired its contractual obligations under the Compact, and that Chapter 324 was not “drawn in an appropriate and reasonable way to advance a significant and legitimate public purpose.” (Quoting Sveen v. Melin, — U.S. —, 138 S. Ct. 1815, 1821-22 (2018)).
In its prayer for relief, New York sought various forms of declaratory and injunctive relief as well as specific performance to preclude New Jersey from proceeding further with its efforts to withdraw from the Compact.
It will be interesting to see how the Court grapples with New York’s proposed original action. If the Court grants the motion to file the complaint and resolves the case, the Court will almost certainly need to elaborate upon the law of interstate compacts, for which there are precious few U.S. Supreme Court precedents. And any Court decision may have a substantial impact on the stability of interstate compacts.