They use the following flag:
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This design mixes elements from the flags of New York and New Jersey states. It's indeed a curious flag, but they only make sense if those flags never change.
I decided to use geographical references in the flag: buff color for NJ, orange for NY and blue for water borders, including Hudson River, all them arranged more or less according to the map. As a distinctive element, I've put the Statue of Liberty, located near the center of Authority's jurisdiction area, where, like Emma Lazarus wrote, it serves as a "New Colossus" for the harbor.
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A curious sidenote: here, the Statue is in buff field and, although part of New York city, the Liberty Island is an enclave inside New Jersey.
I live the resuly, but I think the white circle has not enough contrast with buff background, so I moved it to the center, also enlarging it:
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This adds a different bit of symbolism: that Statue of Liberty is more or less in the center of Authority's area.
Comments and suggestions are welcome.
If you're interest in flags with a "colossus", look at my proposal for Rhodes.