The distinction between the internal operations and conduct affecting external relations of an Interstate Compact Commission is critical in determining areas permitting unilateral State action and those requiring bilateral State action

The Port Authority of New York and New Jersey [Port Authority] is an interstate compact agency and thus is not subject to New York legislation governing with respect to its internal operations' unless and until both New York and New Jersey having enacted legislation providing that such legislation is applicable to the Port Authority.

Plaintiff sued the Port Authority and Skanska USA Inc., and Skanska USA Building Inc.*alleging that he sustained injuries as a result of defendants' negligence and failure to comply with Labor Law §§ 200, 240, 241, and 241-a; 29 CFR Part 1910 and Part 1926; and a number of New York Department of Labor Regulations.

Plaintiff alleged that on July 18, 2016, while working at a construction site at One World Trade Center, New York, New York. Supreme Court's rejected the Port Authority's motion to dismiss the Petitioner's CPLR Article 78 action alleging violations of New York State's Labor Law §§240(1), 241(6) and §241-a and the Port Authority appealed. The Appellate Division unanimously affirmed the lower court's ruling.

The Appellate Division, conceding the status of the Port Authority as an interstate compact agency, explained that in Agesen v Catherwood, 26 NY2d 521, the Court of Appeals held that the Port Authority is still "subject to New York's laws involving health and safety, insofar as its activities may externally affect the public." The court noted that contrary to the Port Authority's interpretation of Malverty v Waterfront Commn. of N.Y. Harbor, 71 NY2d 977,** the Court of Appeals "did not in overrule its holding in Agesen in deciding Malverty."

In Malverty the Court of Appeals concluded that in "the absence from the text and legislative history of [Article 23 of the New York State's Correction Law] of any reference to the Waterfront Commission, coupled with the absence of an express statement that the Legislature was amending or supplementing the provisions of the "Compact" and that article 23-A would take effect upon the enactment by New Jersey of legislation of identical effect, if it had not already done so, indicates that the New York Legislature never intended article 23-A to apply to the Waterfront Commission. 

The Agesen court held that that "in the instant matter ... there is no showing of any sort that section 220 of the Labor Law was ever intended to apply to the Authority, or any justification, by way of practical construction or otherwise, for the unilateral imposition of such regulation on its internal operations." The court, however, then opined that "[t]he distinction between the internal operations and conduct affecting external relations of the Authority is crucial in charting the areas permitting unilateral and [those] requiring bilateral State action. New York and New Jersey have each undoubted power to regulate the external conduct of the Authority, and it may hardly be gainsaid that the Authority, albeit bistate, is subject to New York's laws involving health and safety, insofar as its activities may externally affect the public (see 1949 Opinions of the Attorney General, 118-121)."

In addition, the Appellate Division pointed out that courts have repeatedly held that the Port Authority is subject to New York Labor Law with respect to its external conduct, citing  O'Brien v Port Auth. of N.Y. & N.J., 29 NY3d 27; Nolan v Port Auth. of N.Y. & N.J., 162 AD3d 488; Jerez v Tishman Constr. Corp. of N.Y., 118 AD3d 617; Verdon v Port Auth. of N.Y. & N.J., 111 AD3d 580; and Sferrazza v Port Auth. of N.Y. & N.J., 8 AD3d 53.

* 2018 NY Slip Op 31104 [not selected for publication in Official Reports].

** The Waterfront Commission was established by Interstate Compact, approved by Congress, 67 US Stat 541.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_08278.htm