US Supreme Court says New Jersey can withdraw from Waterfront Commission News
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US Supreme Court says New Jersey can withdraw from Waterfront Commission

The US Supreme Court Tuesday held that New Jersey may unilaterally withdraw from the Waterfront Commission Compact, an interstate compact between the two states created to fight crime in the Port of New York and New Jersey.

In the case New York v. New Jersey, a unanimous court found that interstate compacts are governed by the principles of contract law. Because the compact was silent as to unilateral withdrawal, contracts that contemplate “continuing performance for an indefinite time [are] to be interpreted as stipulating… performance terminable at the will of either party.”

The Waterfront Commission Compact was created in 1953 “for the reduction of criminal and corrupt practices in the handling of waterborne and air freight within New York and New Jersey.” The compact was granted Congressional authorization, as is required by the US Constitution.

The New Jersey Legislature passed a bill in 2018 to permit the New Jersey governor to withdraw from the commission and to permit the New Jersey State Police to handle the commission’s functions. The commission sued in US District Court to stop New Jersey the day after then-Governor Chris Christie signed the law.

The district court ruled that New Jersey could not unilaterally withdraw, and the US Court of Appeals for the Third Circuit reversed. The Supreme Court agreed with the Third Circuit, holding that New Jersey could unilaterally withdraw, and found that principles of both contract law and state sovereignty guided New Jersey’s decision.

When the commission was created, over 70 percent of waterfront employees worked on the New York side of the port. In 2018, more than 80 percent of work hours occurred on New Jersey’s side. The court’s decision claims New Jersey viewed the Commission as “ill-equipped to handle 21st-century security challenges and as a source of overregulation that impedes job growth.” New Jersey Governor Phil Murphy released a statement that he was proud that “New Jersey’s sovereign right to govern [its] ports has been vindicated.”