New York v. New Jersey

Background

New York and New Jersey formed a bistate agency in 1953 to fight corruption and oversee employment licensing and law enforcement at the Port of New York and New Jersey. Over decades the Port’s activity shifted largely to New Jersey’s side, and New Jersey came to view the Commission as outdated and overregulatory. In 2018 New Jersey passed a law providing notice of withdrawal and saying the State Police would assume enforcement duties. New York sued to stop the withdrawal, the lower courts split on procedure, and this Court reviewed whether New Jersey could leave despite New York’s opposition and the Compact’s silence on withdrawal.

Reasoning

The Court asked whether the Compact’s silence about leaving means a State cannot withdraw. Treating the Compact like a contract, the Court applied background contract rules in effect when the agreement was made: agreements calling for ongoing, indefinite performance are generally terminable at the will of either party. The Court also relied on state-sovereignty ideas, noting States do not lightly surrender authority to protect people and property. Because the Compact delegates ongoing sovereign functions and was not intended to operate forever, those background rules and sovereignty concerns indicate a State may withdraw. The Court limited its holding to compacts that are silent on withdrawal and that exclusively call for ongoing, indefinite performance, and it said the rule does not apply to compacts that fix boundaries, apportion water, or convey property interests.

Real world impact

The Court allowed New Jersey to leave the Waterfront Commission, a practical win for New Jersey and a precedent for similar compacts. States and interstate agencies that run ongoing cooperative programs should note this decision. Going forward, States can avoid uncertainty by drafting clear withdrawal clauses, and the ruling does not change compacts involving boundaries or property interests.