U.S. Supreme Court Affirms Right of New Jersey to Unilaterally End Contract with New York
New York v. New Jersey, 2023 WL 2975706; 2023 U.S. LEXIS 1663 *, -- S.Ct. – (2023)
Exercising its original jurisdiction in this suit between the States of New York and New Jersey over whether New Jersey had the unilateral right to withdraw from the Waterfront Commission Compact, the Supreme Court in a unanimous opinion authored by Justice Kavanaugh held that New Jersey could withdraw from the compact despite the opposition of New York.
Under Art. 1, Sec. 10 of the Constitution, states may enter into compacts with other states subject to Congressional approval. New York and New Jersey entered into such a compact in 1953 for regulatory and enforcement functions at the ports of New York and New Jersey. When New Jersey sought to withdraw, New York sued asserting it could not withdraw unilaterally.
The Compact requires mutual agreement to amend its provisions but does not address withdrawal or termination. Congress may alter, repeal or amend the compact; but, it does not have the exclusive right to do so.
Drawing on fundamental principles of contract law, the Court relied on the “default contract law rule” when the Compact was formed in 1953. This rule “that contracts calling for ongoing and indefinite performance may be terminated by either party”[1] supports New Jersey. State sovereignty also supports New Jersey.[2]
The Court was clear that this rule applies only to compacts between states which are silent on unilateral termination and which call for indefinite performance.[3] This rule does not apply to compacts between states which set “boundaries, apportioning water rights, or otherwise conveying property interests.”[4] The Court granted New Jersey’s Motion for Judgment on the pleadings.
