In New York v. New Jersey, 598 U. S. ____ (2023), the U.S. Supreme Court held that New Jersey may unilaterally withdraw from the Waterfront Commission Compact, which oversees law enforcement at the Port of New York and New Jersey. The Court’s decision was unanimous.
Facts of New York v. New Jersey
In 1953, New York and New Jersey exercised their authority under Article I, §10, of the Constitution to enter into a compact to address corruption at the Port of New York and New Jersey. The Waterfront Commission Compact established a bistate agency known as the Waterfront Commission of New York Harbor.
The Commission consists of two members, one appointed by the Governor of New York and the other by the Governor of New Jersey. Through the Compact, New York and New Jersey delegated to the Commission their sovereign authority to conduct regulatory and law-enforcement activities at the Port. Pursuant to the Compact, New York and New Jersey must agree if they want to make any “[a]mendments and supplements.” The Compact also recognizes Congress’s authority to “alter, amend, or repeal” the Compact. However, the Compact does not address each State’s power to withdraw from the Compact.
In 2018, New Jersey sought to unilaterally withdraw from the Compact, citing that it had outlived its usefulness. New York opposed New Jersey’s withdrawal and maintained that the Compact does not allow either State to unilaterally withdraw. New York filed a bill of complaint in the Supreme Court, and the parties then filed cross-motions for judgment on the pleadings.
Supreme Court’s Decision in New York v. New Jersey
The U.S. Supreme Court unanimously held that New Jersey may unilaterally withdraw from the Waterfront Commission Compact notwithstanding New York’s opposition. Justice Brett Kavanaugh wrote on behalf of the Court.
Because the Compact’s text failed to address whether a State may unilaterally withdraw, the Supreme Court looked to background principles of law that would have informed the parties’ understanding when they entered the Compact. It went on to note that under the default contract-law rule at the time of the Compact’s 1953 formation, as well as today, a contract (like this Compact) that contemplates “continuing performance for an indefinite time is to be interpreted as stipulating only for performance terminable at the will of either party.” As Justice Kavanaugh explained, the contract rule is intended to ensure that parties “need not continue performance after the contractual relationship has soured, or when the circumstances that originally motivated the agreement’s formation have changed.”
“That default contract-law rule—that contracts calling for ongoing and indefinite performance may be terminated by either party—supports New Jersey’s position in this case. Through the Waterfront Commission Compact, New York and New Jersey delegated their sovereign authority to the Commission on an ongoing and indefinite basis,” Justice Kavanaugh wrote. “And the Compact contemplates the Commission’s exercise of that authority on an ongoing and indefinite basis. The default contract-law rule therefore ‘speaks in the silence of the Compact’ and indicates that either State may unilaterally withdraw.”
According to the Court, its decision was reinforced by principles of state sovereignty and the fact that the States did not intend for the Compact to operate forever. “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,” Justice Kavanaugh wrote. “The nature of that delegation buttresses our conclusion that New York and New Jersey did not permanently give up, absent the States’ joint consent or congressional action to terminate the Compact, their authority to withdraw from the Compact and to exercise those sovereign police powers at the Port as each State sees fit.” He added: “Given that the States did not intend for the agreement to be perpetual, it would not make much sense to conclude that each State implicitly conferred on the other a perpetual veto of withdrawal.”