By: Wesley B. Friedman, Esq.
The New Jersey Supreme Court recently issued an important ruling in Delaware River Joint Toll Bridge Commission v. George Harms Construction Co., Inc., which clarifies the authority of bi-state entities under interstate compacts. This decision is particularly relevant for businesses and legal professionals involved with such entities.
The case involved the Delaware River Joint Toll Bridge Commission (the “Commission”), a bi-state entity created through an interstate compact between New Jersey and Pennsylvania[1]. The legal issue centered on whether the Commission had the authority to require the use of PLAs as part of its public bidding process for the Scudder Falls Bridge replacement project.
The New Jersey Supreme Court ultimately reversed the Appellate Division’s earlier ruling, which concluded that the Commission lacked authority to utilize PLAs. The Supreme Court emphasized that the broad language of the Compact, which grants the Commission the ability to “exercise all powers… reasonably necessary or incidental” to the construction and maintenance of bridges, allows for the utilization of PLAs by the Commission. The Court concluded that this language was deliberately broad, allowing significant discretion by the Commission in determining how to fulfill its responsibilities, even though the specific term “Project Labor Agreement” is not mentioned in the Compact.[2]
An important aspect of the ruling involves the Ballinger test, a legal standard established in Ballinger v. Delaware River Port Authority. The Ballinger test requires that for a bi-state entity to exercise certain powers, there must be "complementary or parallel" legislation or common law in both states that created the entity. In this case, the Appellate Division applied the Ballinger test and concluded that since New Jersey and Pennsylvania did not have sufficiently similar laws regarding PLAs, the Commission lacked the authority to require them.
However, the New Jersey Supreme Court rejected this application of Ballinger, ruling that the plain language of the Compact itself was sufficient to grant the Commission authority over the use of PLAs, regardless of the states’ individual laws. The Court emphasized that when a compact explicitly grants broad powers to a bi-state entity, those powers should be interpreted broadly without the need to find parallel state legislation.
While the broader significance of this ruling lies in its interpretation of bi-state authority, it remains relevant for companies that work with PLAs. The case demonstrates that even though PLAs are incidental in this context, bi-state entities like the Commission may still have the authority to require them in their contracts. This could influence how PLAs are utilized in future projects involving similar entities.
If you have questions about this decision or its implications for your business, our team is available to assist you in navigating these legal developments.
[1] The Compact Clause of the U.S. Constitution requires states to obtain the consent of Congress before entering into any agreement or compact with another state or with a foreign power. The Delaware River Joint Toll Bridge Commission operates under such a congressionally approved interstate compact.
[2] Project Labor Agreements (PLAs) did not exist when the Compact was created in 1934, which is why they are not explicitly mentioned. The Court recognized that the Commission’s authority extends to modern practices that were not contemplated at the time of the Compact’s creation.
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