New York v. New Jersey

Rule of Law:

Under default principles of contract law, a state may unilaterally withdraw from an interstate compact that is silent on withdrawal and contemplates continuing performance for an indefinite time. This rule does not apply to compacts that establish permanent rights or obligations, such as those setting state boundaries or apportioning water rights.

Facts:

• In 1953, New York and New Jersey entered into the Waterfront Commission Compact to address organized crime and corruption at the Port of New York and New Jersey.
• The Compact established a bistate agency, the Waterfront Commission of New York Harbor, to which the states delegated their sovereign regulatory and law-enforcement authority at the Port.
• The text of the Compact does not contain any provision that expressly allows or prohibits a state from unilaterally withdrawing from the agreement.
• Over the subsequent decades, economic activity at the Port shifted significantly, with over 80% of work hours and cargo eventually moving through the New Jersey side.
• New Jersey's government came to believe that the Commission was outdated, impeded job growth through overregulation, and was ill-equipped for modern security challenges.
• In 2018, the New Jersey Legislature enacted a law to withdraw the state from the Compact and transfer the Commission's duties on its side of the Port to the New Jersey State Police.

Procedural Posture:

• After New Jersey passed a law to withdraw from the Compact in 2018, the Waterfront Commission sued New Jersey in the U.S. District Court for the District of New Jersey (a federal trial court) to enjoin the withdrawal.
• The District Court ruled in favor of the Commission, holding that New Jersey could not unilaterally withdraw.
• New Jersey, as the appellant, appealed to the U.S. Court of Appeals for the Third Circuit.
• The Third Circuit reversed the trial court's decision on the grounds that state sovereign immunity barred the Commission's lawsuit against New Jersey.
• Following this decision, New York filed a motion for leave to file a bill of complaint directly with the U.S. Supreme Court, invoking the Court's original jurisdiction over disputes between states.
• The Supreme Court temporarily enjoined New Jersey from withdrawing from the Compact and granted New York’s motion, allowing the parties to file cross-motions for judgment on the pleadings.