NJ Lawmakers Want State to Withdraw from NY Harbor Waterfront Commission

Colleen O'Dea | December 12, 2017 | More Issues
Court battle looms if governor agrees to withdraw New Jersey from body whose job it is to fight corruption on NJ and NY docks

NY Harbor
New Jersey lawmakers are moving to pull the state out of the Waterfront Commission of New York Harbor, which they say is a dinosaur that has outlived its usefulness and is trying to justify its existence by overstepping its authority. The result, say lawmakers, is a negative impact on the economic prosperity of the port environs.

But commission officials respond that the 64-year old organization’s mission — to fight corruption and organized crime on the docks of the busiest port on the East Coast of the United States — is as relevant today as ever and the commission is doing its job and trying to ensure fair hiring practices for dockworkers, all free to taxpayers. The commission, a little known organization with jurisdiction over about 1,500 square miles in New York and New Jersey, has a $13 million budget funded by a 2 percent payroll tax that terminal operators pay on workers’ wages. It has just two appointed commissioners —one representing New Jersey and one from New York.

New Jersey wants to leave the organization and have the State Police control corruption on the docks, at least on the New Jersey side. But even if Gov. Chris Christie agrees to sign a bill withdrawing the state from the commission, the move will likely become a court battle.

At issue is a longstanding argument between the International Longshoremen’s Association, the union representing cargo and deep-sea workers on the docks, and the commission. The ILA argues that the commission has too much control over hiring on the docks.

New Jersey legislators’ views seem to be allied with the union’s, as they have passed several bills over the past decade seeking to check the commission’s powers in one way or another. For instance, the Legislature passed with no opposition in either house a bill (S3074) that would give the governors of New Jersey and New York — partners in the compact that created the commission in 1953 — greater oversight of the body and veto power over its minutes. Gov. Christie signed that into law last August.

New York lawmakers don’t agree

New York lawmakers, however, have not agreed to take any similar actions, even after holding their own hearings. Because both states are part of the commission, both must approve any changes to it. So the oversight law New Jersey legislators passed remains dormant.

Frustrated New Jersey legislators then decided to pull the state out of the commission, seeing that as a way to end the body’s control of at least the New Jersey side of the harbor.

“The agency has outlived its usefulness and should be abolished,” said Sen. Raymond Lesniak (D-Union), a longtime sponsor of bills seeking to rein in the commission or withdraw from it.

In the last legislative session, the Senate and Assembly passed — again, with no opposition — a bipartisan bill co-sponsored by Lesniak (S2277), to pull New Jersey out of the commission, dissolve the compact and commission, and charge the NJ State Police with handling the commission’s duties related to rooting out crime. Christie was sympathetic to the purpose of the bill, but conditionally vetoed it, saying it was likely unconstitutional.

“My administration is committed to enhancing the development of trade in the port region and has encouraged vital investments in the port region’s infrastructure,” Christie wrote in his veto message. “Like any institution that has survived largely unchanged for over sixty years, there is near unanimous agreement that the Waterfront Commission is in need of modernization. While I am not unsympathetic to the merits of the bill, I am advised that federal law does not permit one state to unilaterally withdraw from a bi-state compact approved by Congress.”

History of corruption, extortion, racketeering

Lesniak said the language in this session’s version of the bill (S3502) has been tweaked and he thinks Christie is ready to sign it. Last week, the Senate passed that measure 38-0. It is currently awaiting action by the Assembly Appropriations Committee. The nonpartisan Office of Legislative Services estimated the transfer of commission duties to State Police would cost the state a net of $2.2 million, at least initially.

Water Arsenault, executive director of the commission, said that if New Jersey takes that action, the commission would likely go to court to prevent it from pulling out.

“There will be a court challenge, a court fight and the court will probably rule that unconstitutional,” he said. The commission was created by an act of Congress, and case law indicates, “one state cannot unilaterally withdraw,” he added, citing a 2014 OLS opinion that essentially said that.

Lesniak, a lawyer who is now retired, disagrees.

Most at issue is the 5-P provision of the commission’s statute, which gives it the power to accept or reject applications for new longshoremen. The basis for this power goes back to the reason the commission was created: to clean up the corruption, extortion and racketeering practices that existed on the docks. As depicted in the movie “On the Waterfront,” it was a place where corrupt union leaders would only give the day’s jobs to union members who agreed to pay a portion of their wages back to the bosses, where mob loan sharks preyed on dock workers, and where companies were forced to make payments to union officials to avoid wildcat strikes.

Commission says organized crime still exists

In the most recent annual report posted on its website, for the 2012-13 year, the commission states that organized crime and union malfeasance still exist to some extent and it touts investigations and prosecutions it undertook to rein these in.

Arsenault pointed to the October conviction in federal court of a union longshoreman and terminal operator’s foreman on fraud charges for collecting almost $500,000 annually while showing up at his job for as little as eight hours a week. He said some 400 individuals have “special deals” with various employers that are essentially no-show jobs, totaling $117 million a year.

Phoebe Sorial, the commission’s general counsel, said that since the withdrawal will not lead to the dissolution of the commission, enactment of the legislation would lead to duplicative actions. Both commission investigators and the State Police would be performing background checks on prospective longshoremen and on companies working at the port, for instance, and the two sets of investigators could conceivably use different standards, which could lead to workers or companies registered to work in one state, but not the other. And both would collect payroll taxes to fund their operations, which would put an additional financial burden on employers.

Also troubling, the report states, are “apparent ethnic/race and gender inequalities among the various types of registrants and licensees.” Among the inequalities it cited: 5 percent of licensed pier superintendents were black, and 15 percent were other minorities; African-American deep-sea longshore workers earned an average 20 percent less than their white counterparts; 10 percent of deep-sea longshoremen were women and they earned 35 percent less than men.

There seems to be no love lost between the commission and the ILA. They have been in court numerous times over various issues. Most recently, over the summer, a federal judge ordered union leaders to testify about a brief strike of some 4,000 dock workers in January 2016 that shut down the port for several hours one day. The judge also dismissed a suit the ILA had brought against the commission, contending it had overstepped its authority in subpoenaing union leaders to testify about the strike. Union leaders had called it a wildcat strike, with dock workers walking off the job because of their anger at the commission’s interference in hiring practices, but the commission launched an investigation into who had ordered the strike.

‘Interfering’ in collective bargaining

The union has twice sued the commission in federal court within the last seven years, alleging it has overstepped its authority by interfering in collective bargaining; the court dismissed both suits, Arsenault said.

As evidence of the ILA’s feelings about the commission, its website summarized Christie’s signing of the bill giving the governors of the two states more authority over the body in this way: “Governor Chris Christie of New Jersey has a message to the Waterfront Commission: You stink at what you do and you need to get your act together.”

In a letter to Arsenault announcing his bill-signing, Christie said the law “ensures the Commission continues to effectively carry out its important investigation and licensing responsibilities with appropriate independence, and is more accountable to the public.” At the same time, he criticized the commission for not acting as he suggested in 2015 to “improve port commerce” and “modernize” its practices. Instead, he said, “the Commission has continued to expand its jurisdiction and allowed brief but damaging labor shortages in the Port.”

Data from the Port Authority of New York and New Jersey, which is essentially a landlord over the docks, show increases in most measures of port activity over the last three years. The total amount of ocean-borne bulk and general cargo tonnage moved in 2016 was 79.8 million metric tons, up from 73.6 million the year before and 71.5 million in 2013, the low point over the last decade. The number of motor vehicles handled rose to nearly 663,000 last year, up from about 641,000 in 2014, though less than the 745,000 handled in 2013. The number of port containers — 3.6 million — was down slightly last year, but that was from a decade high of 3.66 million in 2015.

Still, Lesniak, whose district includes the Port of Elizabeth, said the commission’s actions have hurt business in the area. “They have had a negative impact on our ability to attract businesses into our ports,” he said. “They tried to extend their reach into licensing warehouse operations. Elizabeth couldn’t attract tenants because of that.”

A case of micromanagement?

He said New York Harbor is the only port with a waterfront commission overseeing day to day management and this “micromanagement” is interfering with business and puts the port at a “competitive disadvantage.”

“To say we are an economic drain on the port is ridiculous,” Arsenault said. Costs are higher in the port for other reasons, including the proliferation of no-show and low-show jobs, a large underfunded union pension liability, and an “overabundance” of labor.

“It takes more men to move a box in the Port of New York than in any other port and it costs more money to move a box in the Port of New York than in any other port,” he said.

The commission itself got caught up in corruption. A 2009 report by the New York State Inspector General found rampant misconduct and hiring irregularities, among other problems, at the port. This led to a house-cleaning, including the removal of New Jersey Commissioner Michael Madonna by then-Gov. Jon Corzine.

Since then, Arsenault said the commission has been operating leanly and according to its mission “to combat organized crime from sinking its hooks even deeper into an industry that is inherently susceptible to its influence.”

Murphy: ‘gonna figure out the damn’ commission

Testifying before the Assembly Law and Public Safety Committee last month against the lower house version of the bill (A2179) to have New Jersey pull out of the commission, Arsenault summed up his argument for the continuing need for the commission’s work.

“Anyone who cares about diversity, the ability of employers to recruit, hire, train and discipline their own workforce, the security and mobility of the existing longshore workers, the reduction of organized crime influence and the economic well-being of the port could not, in good conscience, vote in favor of the proposed bills,” he said.

All nine committee members of both parties voted to advance the bill.

Although less than a month remains in this legislative session, the measure is expected to pass the full Assembly and advance to Christie’s desk. Even if it doesn’t — or if the governor does not sign it — the commission is likely to continue to have a target on its back in the coming administration.

The ILA strongly backed Democrat Phil Murphy and in a speech before union members, a video of which is posted on the union website, Murphy ends his talk to them with this promise, “We’re gonna figure out the damn Waterfront Commission once and for all.”