This post assesses the Solicitor General’s argument, in New York v. New Jersey, that Congressionally-ratified interstate compacts obligating states to ongoing obligation include an implicit right of unilateral withdrawal from the compact and assumption of a compact agency’s authority by the withdrawing state within its state boundaries.  The Solicitor General’s argument ignores state practices in drafting compacts (which often specify withdrawal rights), would require the Supreme Court to create impromptu compact agency dissolution procedures, would undermine the chosen structure of mutual dependence between signatory states, and would interfere with Congresses ability to resolve such impasses between states in ways that are much more nuanced than recognition of an unconstrained right of unilateral withdrawal.

I. The Waterfront Compact, New Jersey’s Discontent and Attempted Departure

In 1953, New York and New Jersey agreed to create the Waterfront Commission by interstate compact. Congress ratified the Compact by statute that same year, Pub. L. No. 83-252, 67 Stat. 541 (1953).  The Commission was created in response to journalistic exposés as well as separate extensive hearings conducted by the New York Crime Commission, New York Governor Thomas Dewey, and congressional committees.  Bernard W. Bell, On the Waterfront: Can Compact Agencies Sue A Signatory States?

Changes in shipping, namely the rise of containerization, have undoubtedly shifted the economics of cargo shipping in New York Harbor, leading to the vast majority of cargo landing at port facilities located in New Jersey.  See generally, Sheldon Howard Laskin, The Nostalgia of Eternity: Interstate Compacts, Time, and Mortality, 49 Rutgers L. Rec. 25, 35, 38-39 (2021).[1]  And there was a time in which the Waterfront Commission succumbed to corruption.  Id. at 41. 

But the Waterfront Commission seems to have become controversial due to its efforts over the past decade to ensure 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 has noted the resistance to the imposition of the requirement, as well as the continued racial and gender disparity in employment opportunities as the port.  Bernard W. Bell, On the Waterfront: Was a Post on this Page the Genesis of an Original Action in the Supreme Court?  The challenge of the New York Shipping Association, representing many of the Ports’ employers, and several unions, representing many of the Ports’ longshoremen, was turned back by the Third Circuit.  New York Shipping Assn v. Waterfront Commission, 835 F.3d 344 (3d. 2016).

In 2017, the New Jersey Legislature passed, and then-Governor Chris Christie was signed, legislation directing the State’s executive officials to effect New Jersey’s unilateral withdrawal from the Waterfront Compact and providing for the Commission’s subsequent dissolution.  2017 N.J. Sess. Law Serv. ch. 324, §§ 2, 31 (West 2018) (SENATE 3502).[2] Chapter 324 directed the transfer of several of the Commission’s powers to the New Jersey State Police.[3] 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 New Jersey’s 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 Commission initiated litigation in the U.S. District Court for the District of New Jersey to enjoin implementation of Chapter 324 and to declare New Jersey’s attempted withdrawal from the Compact invalid.  The case was ultimately dismissed on jurisdictional grounds.  Waterfront Commission v. New Jersey, 429 F. Supp. 3d 1 (D.N.J. 2019), rev’d, 961 F.3d 234 (3d Cir. 2020), cert. denied, — U.S. —, 142 S.Ct. 561 (2021).

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.

The parties and various amici are now briefing New Jersey’s motion for judgment on the pleadings in New York v. New Jersey.  The docket sheet for the case can be found here.

II.  The Solicitor General’s Position

The Solicitor General of the United States has weighed in on the side of New Jersey, asserting that both states have a right to unilaterally withdraw from the Compact.  Brief of the United States as Amicus Curiae, New York v. New Jersey, No. 156 Orig. (Aug. 2022)(“S.G. Brief”).  She notes that consideration of the structure and text of the Compact should be dispositive.  Id. at 6.  As to the text, the Solicitor General acknowledges that the Compact makes provision for amendment or modification of the compact, by mutual consent, but none for unilateral withdrawal.  Id. at 9-13.  She argues for the application of a default rule imported from the law of contracts, that either party to a Compact retains the right to unilateral withdrawal at any time, or at least after an unspecified reasonable period of time.  Id. at 17-18.  She carefully notes that the default rule would preserve compacts resolving boundary disputes and the allocation of the waters of interstate rivers and other interstate bodies of water.  The implicit default rule exists only for Compacts that “contemplate[] an ongoing exercise of each State’s sovereign authority.” The Solicitor General distinguishes contracts, and compacts, that “require continuing performance by the parties” from those that “merely transfer or recognize property rights or otherwise create vested rights.” S.G. Brief, supra, at 17.[4]

As to the structure, the Solicitor General notes that the Compact establishes a structure that requires mutual consent for the Waterfront Commission to operate effectively, and concludes that “[i]t is improbable that the Compact permits either State to grind Commission operations to a halt, but at the same time precludes either State from simply withdrawing from the Compact.”  Id. at 11.    

The Solicitor General argues that a rule permitting unilateral withdrawal also protects the signatory states’ sovereignty.  Given that “[s]tates rarely relinquish their sovereign powers,” she asserts, the Supreme Court has required “a clear statement in a compact that they have done so”. Id. at 8 (citing Tarrant Regional Water Dist. v. Herrmann, 569 U.S. 614, 631-32 (2013)). “More generally,” she continues, “the Court seeks to construe contracts to avoid foreclosing the exercise of sovereign authority.” Id.(citing Bowen v. Public Agencies Opposed to Soc. Sec. Entrapment, 477 U.S. 41, 52-53 (1986)).  In the Solicitor General’s view, these principles “militate against” interpreting compacts to preclude states “from providing for the exercise of its police powers as it sees fit within its own borders.”

The Solicitor General finally notes that both signatory states considered the Waterfront Commission a temporary measure to combat the influence of organized crime in the ports of New York Harbor. Id. at 27-28. Thus, she concludes, the states’ entitlement to withdraw unilaterally, if the experiment proved unsuccessful or fully eradicated the problem, was surely contemplated.  Id. It was presumably not contemplated that one state would be locked into the Commission in perpetuity.

The Solicitor General’s approach is, in some sense, a practical one.  As a correspondent of mine has observed, it is difficult to see how a bi-state commission can continue to operate effectively if one signatory refuses to cooperate and adamantly insists on leaving.  The Nostalgia of Eternity, supra, 49 Rutgers L. Rec. at 47.  But unlike the Solicitor General, my correspondent has set forth an array of methods to revitalize aging compacts, none of which involve recognizing an implied right of unilateral withdrawal. The Nostalgia of Eternity, supra, 49 Rutgers L. Rec. at 46-55.[5]

Perhaps most tellingly, the Solicitor General does not point to a single instance, prior to New Jersey’s attempt to withdraw from the Waterfront Compact, in which a state has purported to withdraw from a Compact against the wishes of the other Compact signatories on the theory that there is an implicit unilateral withdrawal right in all compacts that involve ongoing obligations.  Cf., National Federation of Independent Businesses v. Sibelius, 567 U.S. 519, 549 (2012)(“sometimes “the most telling indication of [a] severe constitutional problem . . . is the lack of historical precedent” (quoting Free Enterprise Fund v. Public Company Accounting Oversight Bd., 561 U.S. 477, 505 (2010)).

III.  Critique: Mutual Dependence — A “Bug” or a “Feature”?

Ultimately, however, the Solicitor General’s approach is deeply flawed.

1. The Textual Argument and the Difficulty of Dissolving Compact Agencies

First, recognizing a unilateral right of withdrawal would assume an authority that Congress and the states simply did not create, a legitimacy problem in its own right. All the more so given that Congress and states were well aware of how to craft withdrawal provisions. But worse, recognizing a signatory state’s ability to unilaterally withdraw would require the Court to craft out of whole cloth a dissolution procedure for interstate compact agencies. 

A. Omission of Withdrawal Provisions as a Conscious Choice

In 1953, states were well aware of how to craft provisions permitting withdrawal from or termination of interstate compacts.  As the Solicitor General herself notes, several contemporaneous compacts make explicit provision for withdrawal. S.G. Brief, supra, at 14 (citing compacts adopted in 1949 and 1960).[6]  The Port Authority Compact between the same two states provided for withdrawal upon certain conditions.  New York-New Jersey Port Authority Compact arts. 3, 21, Act of Aug. 23, 1921, ch. 77, 42 Stat. 174, 176, 179 (cited in S.G. Brief, supra, at 14.)[7] And the Solicitor General’s brief shows that even during deliberations regarding the Waterfront Compact at least New York considered whether the compact should include a sunset provision.  S.G. Brief, supra, at 28 (referencing the hearings held by New York Governor Thomas Dewey). Ordinarily this would suggest that the parties made a conscious choice to refrain from authorizing unilateral withdrawal and, instead, consciously opted to require mutual agreement and/or congressional action to terminate the compact agency.  See, Alabama v. North Carolina, 560 U.S. 330, 353 (2010)(interstate compact); cf., Kimbrough v. U.S., 552 U.S. 85, 103 (2007)(non-compact federal statute). 

In Alabama v. North Carolina, the Court refused to limit a state’s express right to unilateral withdrawal by an implied duty of good faith and fair dealing, despite recognizing the contract law principle that “[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement.” Alabama v. North Carolina, supra, at 351-53 (citing the Restatement (Second) of Contract § 205 (1981)). The Court noted that unlike the Compact at issue, which contained no express limitation on withdrawal, other contemporaneous low-level radioactive waste compacts expressly imposed upon the signatories an obligation of good faith and fair dealing. Id. at 353.

More generally the “‘easy-to-say-so-if-that-is-what-was-meant‘ rule of statutory interpretation,”  Commissioner of Internal Revenue v. Beck’s Estates, 129 F.2d 243, 245 & n.2 (2d Cir. 1942)(Frank, C.J.), is often relied upon by courts in statutory and other interpretation, with judges sometimes comparing the statute in question to other statutory provisions, e.g., Kimbrough v. U.S., 552 U.S. 85, 103 (2007);[8] Pinares v. United Technologies Corp., 973 F.3d 1254, 1261-62 (11^th Cir. 2020); Animal Legal Def. Fund v. U.S. Dep’t of Agric., 789 F.3d 1206, 1217 (11th Cir. 2015);[9] and sometimes not even finding it necessary to do that, Commissioner v. Beck’s Estate, supra; Farrington v. State of Tennessee, 95 U.S. 679, 688-89 (1877)(interpreting bank charter issued by State of Tennessee).[10]

In a sense, then, the need for mutual agreement and the attendant potential for impasse may not be a “bug,” but a “feature,” of the Waterfront Commission Compact.[11]

B. Withdrawal With Benefits

New Jersey is not merely seeking to withdraw from the Waterfront Commission and independently exercise its own authority. It is seeking to withdraw AND take with it what it considers to be its share of the Commission’s assets and funding. Indeed, it intends to potentially leave New York with more than its share of liabilities. One such liability is the ongoing obligations for the Commission’s headquarters located in New York.  How should the assets of the Waterfront Commission be divided?  How should the revenue stream be split?  What are New Jersey’s responsibilities with regard to the Commission’s liabilities?  Must the Commission turn over all its enforcement databases and related records to New Jersey law enforcement authorities, despite the Commission’s concerns about the impact of doing so on the integrity of those law-enforcement resources?  If the Waterfront Commission is to continue, or even if both New York and New Jersey resume their pre-1953 independent enforcement authority, must workers and companies operating in ports of both states comply with both states’ requirements? 

And while winding up the Waterfront Commission may appear to be only modestly challenging, what about dissolving the Port Authority of New York and New Jersey or the Delaware River Port Authority, if one of the two signatory states to those compacts decides to exercise an implied unilateral right to withdraw?  Neither compact appears to have extant provisions providing for withdrawal by one of the two participating states.[12]  As one set of authors notes, while dissolution of compacts that primarily provide for states to render services are generally not complex, “compacts that establish separate interstate agencies may involve disposition of substantial property and assets.”[13]

While many express withdrawal provisions in compacts appear to be relatively straightforward, several deal with at least some questions regarding how any withdrawal is to be accomplished in an equitable and orderly manner.  The Multi-State Tax Compact permits unilateral withdrawal, but specifies that  such withdrawal “shall affect any liability already incurred by or chargeable to a party state prior to the time of such withdrawal” nor “deprive an arbitration board of jurisdiction of case involving the withdrawing state that has already commenced at the time of withdrawal.”   Multi-State Tax, Art. X. The Interstate “Agreement on Qualifications of Educational Personnel,” allows for withdrawal from the compact, but with one year’s notice, and specifies that “withdrawal shall relieve the withdrawing state of any obligation imposed upon it by a contract to which it is a party.”  Art. VII. Moreover, “[t]he duration of contracts and the methods and conditions of withdrawal therefrom shall be those specified in their terms.” Id. 

The Central Midwest Interstate Low-Level Radioactive Waste Compact, between Kentucky and Illinois has a particularly complex withdrawal provision, permitting withdrawal after 5 years notice in most circumstances, but permitting withdrawal upon ninety-days-notice after a state is designated a “host state.”  Article VIII.  However, by withdrawing, a state “forfeits any funds already paid pursuant to this compact,” and, in certain circumstances “shall be assessed a sum the commission determines to be necessary to cover the costs borne by the commission and remaining party states as a result of that withdrawal.” Id.

A number of Compacts contain express provisions designed to ensure that withdrawal does not mean walking away from a state’s fair share of common liabilities.  E.g., Central Interstate Low-Level Radioactive Waste Compact, Art. VII(b); Interstate Agreement on High Speed Intercity Rail Passenger Network, Art. IV; Interstate Mining Compact Act, Art 1.8(b).

Were the Supreme Court to require the parties that created the Waterfront Commission, namely New York, New Jersey, and Congress, to dissolve the Commission either by agreement or federal legislation, these issues might well be resolved or at least the parties might craft judicially-applicable principles to govern the dissolution process. And any Congressional legislation placing administration of the process in the federal courts would resolve the legitimacy problem that might otherwise exist.

The Solicitor General breezily dismissed the potentially knotty issues attendant dissolution, asserting that once the issue of withdrawal is settled in New Jersey’s favor, any “issues . . . not amenable to negotiated resolution,” could be litigated in subsequent original action in which New York can “seek judicial relief.” S.G. Brief, supra, at 14 (referencing Texas v. New Mexico, 482 U.S. 124, 130 (1987)).  It is not clear that monetary damages will be appropriate for the impairment of some of New York’s interests, such as the integrity of the Commission’s enforcement databases, protecting the safety of the Commission’s law enforcement officers, and the creation of potentially conflicting regulatory requirements for companies and laborers operating in ports in both states.  In any event, the argument elides the seriousness of the potential need to resolve multiple issues as a part of a compact agency dissolution process. And note, crafting such a process without any congressional guidance would be necessitated only because the Court recognized, really created, a right of unilateral withdrawal apparently not contemplated by the Compact’s drafters.

2.  Unilateral Withdrawal Runs Counter to the Structure of the Compact

Second, while purporting to respect the structure of the Compact, the Solicitor General suggests fatally undermining it.  The clear rationale for the structure requiring the concurrence of both states in the Waterfront Commission’s efforts was that the states would concur with each other, and that the necessity of doing so to move forward at all would provide the maximum incentive for them to do so.  The drafters might have been prepared to tolerate stalemate, but not unilateral withdrawal, trusting that a stalemate might eventually be resolved in a way that preserved regulatory cooperation.[14]

The Solicitor General’s modification of the structure, by adding a right of unilateral withdrawal that would allow one state to go its own way in regulating ports lying within its borders, removes the critical incentive for the states to cooperate. It thus undermines the structure the Compact’s drafters appear to have crafted.  It may way be from the perspective of today, in which states too often settle their disputes by reprisals or litigation and in which Congress is polarized and stymied by inertia, that we cannot conceive of a time in which the signatory states would have assumed a modicum of good faith that would lead the states to resolve differences, no matter how deep, if they were forced by mutual dependence to do so.  But we should not impose our own contemporary mindset upon those who crafted the Waterfront Commission, nor the Congress that ratified the Compact, over 70 years ago.  Nor should the Court go about revising compacts in light of perceived deficiencies in state cooperation or congressional dysfunction.

3.  The Failure to Recognize the Heightened Federal Interest and Diminished State Interest

Third, the Solicitor General’s argument fails to recognize the heightened federal sovereignty over a critical instrumentality used almost exclusively for interstate and international commerce.   As the Court has noted, Congress’ Commerce Clause powers extend to (1) regulation of the use of the channels of interstate commerce. (2) regulation and protection of the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities, and (3) regulation of those activities having a substantial relation to interstate commerce.  E.g., U.S. v. Lopez, 514 U.S. 549, 558-59 (1995).  Congress’ powers to engage in the first two types of regulation, over the channels and instrumentalities of interstate and foreign commerce, has never been seriously questioned (and indeed, at times in the 1800’s, had been viewed as exclusive of state and local authority[15]).

The regulation of one of the major interstate and international port systems in the United States is not a garden variety regulatory regime in which states regulate intra-state activities that in the aggregate might impact interstate commerce.  In such circumstances, the argument for independent state and federal concurrent regulatory authority is particularly strong.  The more expansive the realm of Congress’ Commerce Clause powers, the greater the need to protect concurrent state authority that can be used in the absence of federal action. But, of course, even with respect to such garden variety regulatory regimes, federal law takes precedence over state authority.

Allowing states to retain residual authority over an enclave that is an integral part of the channels and instrumentalities used almost exclusively for international and interstate commerce is much less essential.[16]  Indeed, states’ abuse of their control of the few ports of the fledgling United States, and states’ abuse of the power the bottleneck monopoly over such ports conferred, was a major impetus for the Constitutions Convention and for conferring power over interstate and foreign commerce upon the federal government.  See, Brannon P. Denning, Confederation-Era Discrimination Against Interstate Commerce and the Legitimacy of the Dormant Commerce Clause, 94 Ky. L.J. 37, 47-48 (2005-2006). 

And indeed, the Waterfront Compact is one that surely required Congressional approval because the Compact would form a “combination tending to the increase of political power in the States, which may encroach upon or interfere with the just supremacy of the United States.”  U.S. Steel Corp. v. Multi-State Tax Comm’n, 434 U.S. 452 (1978); Virginia v. Tennessee, 148 U.S. 503, 517-19 (1893). By adopting the Waterfront Commission Compact, Congress has acted, preempting state authority (albeit with the states’ consent).  There is no justification for importing terms to construe the assertion of federal authority narrowly in favor of state regulation — in this context any plain statement rules should not favor state authority, but rather the preservation of federal authority.  Regulation of ports handling international and interstate cargos is far from the realms of traditional state regulatory authority the Court has fashioned clear statement rules to protect. See Gregory v. Ashcroft, 501 U.S. 452, 460 (1991) (qualifications for state office holders); BFP v. Resolution Trust Corporation, 511 U.S. 531, 544 (1994)(land titles); Solid Waste Agency of Northern Cook County v. Army Corps of Engineers, 531 U. S. 159, 174 (2001) (land and water use); see generally, Bond v. U.S., 572 U.S. 844, 858 (2014)(garden variety criminal assaults unrelated to commerce). Indeed, the Hobbs Act, 18 U.S.C. § 1951, adopted only a few years before the Waterfront Commission Compact, which makes it a crime to engage in robbery, extortion, or threats of physical violence that “in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce” reflects the federal interest in protecting commerce from criminal activity.

Nor is Tarrant Regional Water District a particularly potent precedent justifying the Solicitor General’s proposed clear statement rule.  By compact, Texas and Oklahoma agreed upon respective allocations of water from a bi-state water source.  Typically, the Texas allocation would be available to Texas users and the Oklahoma allocation would be available to Oklahoma users.  But Tarrant Regional Water District, responsible for providing water to the rapidly growing population of north-central Texas, argued that the Compact’s “equal rights” provision allowed it to apply to the Oklahoma Water Resource Board for a portion of Oklahoma’s allocation.  569 U.S. at 624-28. The Court rebuffed the effort, refusing to construe “equal rights” provision in the manner urged by the Texas water district.  Id. at 631-37.

The Court noted that the control of diversion of waters within a state’s borders and allocated to the state by compact is a “core state prerogative.”  Id. at 632.  As the Court observed in the dormant Commerce Clause context, “the legal expectation that, under certain circumstances, each State may restrict water within its borders has been fostered over the years not only by our equitable apportionment decrees, . . . but also by the negotiation and enforcement of interstate compacts.”  Sporhase v. Nebraska, 458 U.S. 941, 956 (1982).[17]

Thus, Tarrant Regional Water District is more like a case in which a Compact divides an interstate resource to give each signatory state exclusive rights to a portion of the common resource for distribution to its own citizens, akin to settling property rights between states, rather than one that creates an institution to exercised joint powers over facilities regardless of state borders, like the Waterfront Commission.  In this respect, the Solicitor General fails to heed the distinction she herself makes between boundary and water-allocation compacts one the one hand and regulatory compacts on the other.  See, Brief at 19-20.[18]

4.  Congress Can Resolve the States’ Impasse and Should Be Allowed to Do So

Fourth, Congress retains full authority over the regulation of all of the ports of New York Harbor whether located in New York or New Jersey.  Indeed, in ratifying the Compact, Congress expressly reserved for itself the right to repeal the Waterfront Compact Act. Ch. 407 § 2, 67 Stat. 541, 557 (1953). 

The impasse in which New York and New Jersey currently find themselves far from inescapable — the parties are not locked into a Compact with no non-judicial forum to extinguish the agreement.  Congress participated in creating the Waterfront Commission. Congress, not the federal judiciary, is the appropriate forum to craft any regulatory regime that will replace the Waterfront Commission structure.  Congress could decide to create a federal agency to control the ports of New York Harbor.  Or Congress could seek to persuade the states to fold the functions of the Waterfront Commission into the New York/New Jersey Port Authority.  Or Congress could seek to persuade the states to otherwise revise the current compact arrangements in a manner more amendable to New Jersey, one which recognizes New Jersey’s more dominant economic stature. Or it could choose to delegate authority to the respective states either with limitations or restrictions (such a requiring each state to continue the policy of requiring port employers to certify their compliance with their federal equal employment opportunity obligations) or without.  Unlike the Court, Congress is not limited to the sole option of allowing unilateral withdrawal followed by an impromptu jury-rigged judicial dissolution process.  Congress, not the Supreme Court, is best equipped to resolve the dispute between New York and New Jersey. 

Nor should the Court relieve Congress of its constitutional responsibility to regulate interstate and foreign commerce at one of the nation’s preeminent ports merely because Congress has, in its view, failed to acquit that responsibility.  Indeed, the signatory states may have delayed in pressing for congressional intervention precisely because one state believes it has the “whip hand,” that it can determine unilaterally the regulatory regime applicable to the New York Harbor ports located within its boundaries.  And indeed, even if Congress turned a “deaf ear” to the joint entreaties of the signatory states for a resolution of the issue, the knowledge that the only way forward is through agreement would serve as a powerful incentive for New York and New Jersey to negotiate a solution.

In short there is no need to presume that states can retain any pre-compact jurisdiction they might have possessed over international ports, both because such ports are not necessarily suited to state control (falling within the core congressional responsibilities over the control of interstate and foreign commerce) and because Congress has ample power to resolve the dispute.  Indeed, judicial intervention, by way of a judicially-created withdrawal right, actually undermines the incentives for the dispute being taken up by the most appropriate forum — Congress.

5.  Who Decides When the Compact No Longer Serves Its Purposes?

Fifth, as noted above, the Solicitor General argues that because the Waterfront Commission was an experimental and potentially temporary institutional arrangement, Congress should infer that the signatories and Congress contemplated that either state could unilaterally withdraw from the Waterfront Compact.  But why? 

The fact that the parties recognized that the Waterfront Commission might not be a permanent solution says nothing at all about how the parties contemplated that the experiment would be terminated.  There is no reason to believe that the states assumed that they would disagree sharply on whether the Commission experiment had failed, whether it has proved so successful in eradicating organized crime influences that it was no longer needed, or whether the experiment merited more permanent status.  There was every reason to believe that the states and the federal government would consult with one another to make such an assessment amicably. 

Again, perhaps, with almost 70 years of hindsight the views of the signatories regarding the level of cooperation between the states over almost three-quarters of a century may seem overly optimistic.  Such optimism was even be characterized as naïve. But there is no indication that these was not the state and Congressional participants’ beliefs; the Solicitor General points to no evidence that the participants did not trust in the good faith of their governmental partners.  Indeed, in the absence of any express provision to the contrary, the most appropriate assumption would be that the experiment would either end by mutual agreement between the signatory states (the same way it began) or a decision by Congress to exercise its primary authority over the ports of New York Harbor.

III.  Conclusion

Virtually no one likes dysfunction or impasse that stymies regulatory functions.  The Solicitor General’s approach appears a practical one that enables the Supreme Court to step in and allow a compact signatory to terminate compacts by unilateral withdrawal if necessary when those compacts require a state to continue to exercise their regulatory authority in certain ways.  But in this case in particular, involving one of the nation’s premier ports, such an approach involves taking away Congress’ responsibility to determine how such ports will be regulated, followed by judicial assumption of a power to oversee the dissolution of an extant compact agency.  The Solicitor General’s approach fails to recognize Congress,’ and the nations’, special interest in international ports, enclaves the lie at the core of Congress’ Commerce Clause powers.  Moreover, the Solicitor General’s approach assumes that because the parties recognized that the compact agency might fail in its mission, or succeed so spectacularly that it was no longer needed, they believed that those determinations could be made by unilateral withdrawal rather than mutual consent.  The parties may well have assumed that they could agree on if, and when, the Waterfront Commission was no longer needed; nothing the Solicitor General points to suggests otherwise.

Sometimes the best approach to a dysfunctional situation may be to do nothing at all (beyond enforcing the rules as written), and require those with primary responsibility to resolve the problem for themselves.

---

[1] As Laskin observed: “Containerized shipping would radically transform the nature of the shipping industry throughout the world. In the Port of New York, it would cause the industry to largely move across the Hudson River from New York to New Jersey, leading to its greatly curtailed political and economic role in the former and its drastically expanded political and economic role in the latter.”

[2] This was not the first effort to adopt withdrawal legislation.  Governor Christie conditionally vetoed a withdrawal bill introduced in 2014, in part because he was “advised that federal law does not permit one state to unilaterally withdraw from a bi-state compact approved by Congress.”  Chris Christie, Memorandum Regarding Senate Bill 2277 (undated) (received by State Senate May 7, 2015). 

[3] The New Jersey State Police has a wide-ranging portfolio, not focused on labor practices and corruption at the ports of New York Harbor.  The State Police perform “all functions associated with the statewide enforcement of laws, the prevention of crime, the pursuit and apprehension of offenders, and the gathering of legal evidence to ensure conviction of such offenders.”  It is the sole provider of police services in certain municipalities, has protection responsibilities for New Jersey and visiting government officials, as well as emergency management responsibilities, inter alia. New Jersey State Police, Core Functions (last visited 10/21/2022).

[4] The Solicitor General suggests that this is a long-standing Department of Justice position, citing the Solicitor General’s 1950 amicus brief in another interstate compact case, State ex rel. Dyer v. Sims, 341 U.S. 22 (1951).  Brief for the United States as Amicus Curiae, 1950 WL 78371, at 23-24. There the Solicitor General cited Newton v. Commissioners, 100 U. S. 548, (holding that a state legislature could revoke a statute moving a county seat); Illinois Central Railroad v. Illinois, 146 U. S. 387 (holding that tide-washed public trust land could not be transferred in perpetuity to a railroad company).  The Solicitor General also adverted to the law of treaties between nation states, acknowledging the confusion over the circumstances under which there was a right to unilateral withdrawal by one signatory to a treaty.  None of these cases or doctrines seem particularly apt to unilateral withdrawal from the Waterfront Compact, and the current Solicitor General does not appear rely on them in New York v. New Jersey.  In Dyer, the Court ultimately decided that West Virginia was bound by its delegation of authority to a compact entity.  There is no indication that at the time the Court, Congress, New York, or New Jersey shared the Solicitor General’s views on unilateral withdrawal.

[5] Laskin offers several general suggestions designed to add some flexibility to compacts that might become outdated over time, recommending including in compact agreements sunset clauses, “sunrise” clauses, opt-out clauses (which would allow a member state to participate in the compact without signing off on every provision of the compact), and mandatory alternative dispute resolution provisions.  In addition, Laskin suggest that compacts could be structured to issue compact recommendations rather than requirements.

With respect to the Waterfront Commission, Laskin suggests that the New York and New Jersey Governors commissioning a joint select committee to study the structure of the Compact and the Waterfront Commission and make recommendations for legislative action. Such recommendation might include “absorb[ing] the Waterfront Commission’s functions into the Port Authority of New York and New Jersey,” a compact agency between the same two states which already “exercises regulatory authority over shipping activities in the Port of New York.” 

[6] Washington Metropolitan Area Transit Regulation Compact (Transit Compact), Tit. I, art. IX(1)-(2), Act of Sept. 15, 1960, Pub. L. No. 86-794, 74 Stat. 1031, 1032, 1035; Gulf States Marine Fisheries Compact arts. X, XIII, Act of May 19, 1949, ch. 128, 63 Stat. 70, 72-73.  The text of many compacts and the dates states entered the compacts can be found at the Council for State Governments’ National Center for Interstate Compacts.   

[7] Article XXI’s withdrawal provision, the sole withdrawal provision, is what Laskin would describe as a “sunrise” provisions, allowing state unilateral withdrawal if a plan for development of the Port of New York/New Jersey was not adopted in a two-year period.

Either state may by its legislature withdraw from this agreement in the event that a plan for the comprehensive development of the port shall not have been adopted by both states on or prior to July first, nineteen hundred and twenty-three; and when such withdrawal shall have been communicated to the governor of the other state by the state so withdrawing, this agreement shall be thereby abrogated.

The Port Authority Compact appears to have no other provision authorizing unilateral withdrawal, and thus there appears to be no extant unilateral withdrawal right.

[8] In Kimbrough, the Court observed: “Drawing meaning from silence is particularly inappropriate here, for Congress has shown that it knows how to direct sentencing practices in express terms.” 555 U.S. at 103.

[9] In Animal Legal Defense Fund, the Eleventh Circuit observed: “Whereas Congress did not explicitly address renewal in the Animal Welfare Act, Congress has demonstrated an ability to address renewal when it intends to do so.  . . . ‘Where Congress knows how to say something but chooses not to, its silence is controlling.’”  789 F.3d at 1217.

[10] Of course, the principle could be used in reverse — the signatories could have expressly precluded withdrawal.  But they did include a provision that might reasonably be viewed as an equivalent.  In a two-state compact, a provision that precludes any amendment or modification of the Compact without mutual consent, like article XVI(1) of the Waterfront Compact, might reasonably be thought to preclude one state from dissolving altogether the Compact, and the compact agency administering it.  The Solicitor General disputes such an interpretation, and the Solicitor General’s argument might be more cogent for compacts that contain provisions addressing both modification/revision of a Compact and withdrawal.  S.G. Brief, supra, at 12-13 (noting that several compacts that contain both amendment and termination provisions set forth different procedures for amendment and termination).  However, the Waterfront Compact has the former, but not the latter.

[11] Apparently the phrase originated as an excuse offered by computer engineers for programming errors. See here and here. But perhaps something that might appear to be a “bug” is a consciously-designed feature.

[12] The Delaware River Port Authority Compact can be found here. 

[13] See generally, CAROLINE N. BROUN, ET AL, THE EVOLVING USE AND THE CHANGING ROLE OF INTERSTATE COMPACTS 131 (ABA 2006).

[14] Notably, what appears to be a cumbersome structure makes regulatory capture by special interest like shipping companies and longshoremen unions more difficult.  Instead of merely needing to exercise dominant influence in only one state legislature, such special interests must exercise such dominance over at least two legislatures.

[15] See, e.g., Foster v. Master and Wardens of the Port of New Orleans, 94 U.S. 246, 247 (1876)(denying state jurisdiction); Henderson v. Mayor of the City of New York, 92 U.S. 259, 272-73 (1875)(denying state and local jurisdiction); Louisiana Public Service Commission v. Texas & N.O.R. Co., 284 U.S. 125, 130-31 (1931)(assertion of federal jurisdiction).

[16] A welter of federal agencies play a variety of roles in regulating activities taking place in or related to ports. Richard A. Lidinsky, Jr. & Deborah A. Colson, The Federal Regulation of Port Activities, 7 Md. J. Internat’l Law 38 (1981).  Granted, many ports are not governed by compact agencies.  Port authorities or port governance structures take a variety of forms with more or less insulation from the elected branches of state or local governments.  Rexford B. Sherman, Seaport Governance in the United States and Canada (American Assoc. of Port Authorities).

[17] This rule is an exception to the general principle that a state may not “hoard” its natural resources.  City of Philadelphia v. New Jersey, 437 U.S. 617, 629 (1978); Hughes v. Oklahoma, 441 U.S. 322, 335-36 (1979).

[18] Bowen v. Public Agencies Opposed to Soc. Sec. Entrapment, 477 U.S. 41, 52-53 (1986) is even less apt.  There a state participant in a cooperative federalism grant-in-aid program challenged, as an unconstitutional “taking,” Congress’s withdrawal of the right it initially gave states to leave the program.  In that case the Court construed the federal statute to preserve federal sovereignty, at the expense of the states.  And, of course, Congress did not have to rely on an implicit right to amend the relevant statute, Congress had expressly reserved the right to do so.  Moreover, the initial clause permitting withdrawal was not “a term over which the State had any bargaining power or for which the State provided independent consideration.”  Id. at 55.  In essence, the Court construed the statute to preserve federal control over its own budgetary obligations. See, id. at 47-48.  A unilateral withdrawal option is not necessary to protect New Jersey’s control over its state budget.  Bowen v. Public Agencies Opposed provides little support for a state’s assertion of an implied right to withdraw from a compact, after having failed to include an express provision for withdrawal in the original compact.