Federal District Judge Says ‘No Deal’ to NJ Pulling Out of Waterfront Commission

Colleen O'Dea | June 12, 2018 | More Issues
Temporary injunction keeps New Jersey from withdrawing from Waterfront Commission of New York Harbor — at least for now

NY NJ harbor
New Jersey’s attempt to withdraw from the bistate commission that polices the Hudson River waterfront, long a priority for lawmakers, is in serious doubt.

A federal district judge has stopped temporarily, at least, the state from implementing a law former Gov. Chris Christie signed on his last full day in office to pull New Jersey out of the Waterfront Commission of New York Harbor. That body, created 65 years ago to combat widespread crime and corruption in the Port of New York, went to court to prevent New Jersey’s withdrawal, saying it would decimate the commission’s ability to do its job.

U.S. District Judge Susan D. Wigenton earlier this month granted the commission’s request for a preliminary injunction, discounting all of New Jersey’s arguments in support of withdrawing.

“It is in the public interest for the Commission to continue its investigatory and regulatory work,” Wigenton wrote in her ruling that prevents the state from taking any action to facilitate a withdrawal, which includes transferring law enforcement authority over the waterfront to the New Jersey State Police.

Sweeney declines to comment

Gov. Phil Murphy, named in the suit, and the state Senate and Assembly and their leaders, who joined it, have until July 1 to decide whether to appeal Wigenton’s ruling to the 3rd Circuit Court of Appeals. Sen. President Stephen Sweeney (D-Gloucester) declined to comment through a spokesman, who referred questions to the attorney general’s office.

“We are reviewing our legal options,” said AG spokeswoman Sharon Lauchaire, adding that the office does not comment specifically about ongoing litigation.

“While technically they still have a right to appeal, she (the judge) seems to have answered all their arguments,” said Michael Cardozo, an attorney with the New York law firm Proskauer who represented the commission. “We’ve heard nothing from the state since the ruling.”

Walter Arsenault, the commission’s executive director, lauded Wigenton’s decision as a “significant victory” for the commission and the port.

“We are very pleased with the Court’s decision, which sends a clear and unmistakable message that New Jersey has acted illegally in seeking to unilaterally withdraw from a congressionally approved interstate compact,” Arsenault said in a statement, adding that the ruling “safeguards the Waterfront Commission’s ability to continue its critical mission of combatting corruption and ensuring fair hiring practices in the Port.”

Close-up on the commission

The commission is a little-known organization with jurisdiction over about 1,500 square miles in New York and New Jersey, including parts of Bergen, Hudson, Essex, and Union counties. Its $13 million budget uses no taxpayer money, but is funded by a 2 percent payroll tax that terminal operators pay on workers’ wages. It was created by an agreement with New York to combat the extortion, racketeering, and other types of corruption that were plaguing the New York Harbor ports in the early 1950s. As depicted in the movie “On the Waterfront,” it was a place where corrupt union leaders would only give jobs to union members who agreed to pay a portion of their wages back to the bosses, mob loan sharks preyed on dock workers, and companies were forced to make payments to union officials to avoid wildcat strikes. Congress approved the compact and President Dwight D. Eisenhower signed it into law in 1953.

Saying the commission is no longer needed and is overstepping its authority and hampering economic development near the port, New Jersey lawmakers have passed several measures over more than a decade trying to rein in the commission and to withdraw from it altogether. Christie had vetoed a 2014 effort, but signed their latest bill shortly before leaving office last January.

The commission responded by delivering to Murphy within his first few hours in office their lawsuit to stop the state’s exit. It contends that New Jersey cannot unilaterally pull out of the agreement but that it must get the consent of New York or Congress before it can dissolve the compact. New York has not agreed with any of New Jersey’s recent efforts to curb the commission’s power.

No definitive ruling

While not ruling definitively on the suit, Wigenton sided with the commission in granting the injunction. She wrote that while the compact that created the commission “does not explicitly address how a state may withdraw from or end it … Allowing one state to dictate the manner and terms of the Commission’s dissolution, and the subsequent distribution of the agency’s assets, runs counter to the requirement that any change to the Compact occur through concurring legislation.”

Further, Wigenton agreed with the commission that allowing New Jersey to pull out would “’cripple the Commission’ and leave it unable to carry out its duties as mandated under the Compact. The Commission would lose a majority of its funding because 90 percent of its operating budget is derived from assessments from Port employers based in New Jersey. Without these assessments, the Commission alleges it would not be able to meet its financial obligations and would have to lay off its employees.”

In an appraisal of the fiscal impact of the law prepared last year, the nonpartisan Office of Legislative Services estimated that the transfer of commission duties to state police would cost the state a net of $2.2 million, at least initially.

Wigenton noted that the state argued that the commission has “over-regulated the business at the port” and become “an impediment to future job growth.” But Wigenton ruled that “the imminent harm to the Commission’s functions and operations outweighs Defendants’ impetus to foster potential economic growth.”

Record high for cargo handling

Data from the Port Authority of New York and New Jersey, which is essentially a landlord over the docks, show that the amount of cargo handled in the port last year set a record high. In 2017, the Port of New York and New Jersey, the busiest on the East Coast and third busiest in the country, handled 6.7 million TEUs — the equivalent of a 20-foot long cargo container — compared with the previous high of 6.4 million TEUs in 2015. So far this year, the number of TEUs handled is 7 percent higher than at the same time last year. The numbers of vehicles imported into the port and cruise passengers sailing out of the port also increased in 2017.

Wigenton’s ruling is also a blow to the International Longshoremen’s Association, the union representing cargo and deep-sea workers on the docks. For years, the ILA has argued that the commission has too much control over hiring on the docks and sought to prevent it from having the power to accept or reject applications from those seeking to become longshoremen, known as the 5-P provision of the commission’s statute.

The commission’s position is that its job fighting corruption and working to ensure fair hiring practices for dockworkers remains necessary. Its lawsuit contends that the union is unhappy with how it oversees the 5-P provision and that it was after the ILA lost a suit challenging commission rules that the union began lobbying for New Jersey to take action to curb the commission’s power. The state law that would pull New Jersey out of the commission also would eliminate the 5-P rules.

In her ruling, Wigenton noted that in 2014, the ILA’s former local president and other union officials, some of whom federal officials called associates of the Genovese crime family, pled guilty to extorting Christmas bonus payments from their own union members. Less than four months before one of those officials — former ILA local president Thomas Leonardis — was arrested, “he testified before New Jersey’s legislature, urging that the Commission was ‘archaic,’” Wigenton wrote.

Murphy inherited the law withdrawing New Jersey from the commission, and he did not make any statements about the commission during his campaign. But he may be sympathetic to complaints about the bistate body. The ILA strongly backed Murphy, and in a speech before union members, a video of which is posted on the union’s YouTube site, Murphy ends his talk to them with this promise, “We’re gonna figure out the damn Waterfront Commission once and for all.”