INTERSTATE COMPACT
A voluntary arrangement between two or more states that is designed to solve their common problems and that becomes part of the laws of each
state.
Interstate compacts in the United States
were first used by the American colonies to set-
tle boundary disputes. After the American Revo-
lution, states continued to use interstate
compacts to meet their various needs. Although
these compacts were necessary for peaceful
interaction between the states, they posed a
threat to the future of the United States: if states
were allowed to form powerful coalitions, they
might be tempted to break away from the rest of
the country and fracture the Union.
Under Article I, Section 10, Clause 3, of the
U.S. Constitution, “No State shall, without the
Consent of Congress . . . enter into any Agree-
ment or Compact with another State.” This
clause, the Interstate Compact Clause, was
adopted with no debate. Moreover, it received
only cursory discussion in subsequent papers
written by the Constitution’s Framers, so its
purpose and scope were not developed.
Most courts followed the lead of Justice
JOSEPH STORY (1779–1845), of the Supreme
Court, an influential legal commentator of the
nineteenth century. According to Story, the
clause was meant to protect the supremacy of
the federal government. With this general prin-
ciple as guidance, courts interpreted the clause
to give Congress the power to nullify an inter-
state compact if it frustrated federal aims.
Over the years, four steps have evolved to
guide courts in their review of interstate com-
pact cases. First, there must be an agreement
between two or more states. If no concerted
effort is actually undertaken by two or more
states, Congress has no power to review the
state actions under the Interstate Compact
Clause. In determining whether there is an
agreement, the court may ask whether the states
have officially formed a joint organization,
whether a state’s action is conditioned on action
by another state, and whether any state is free to
modify its position without consulting other
states.
If the court finds that there is an agreement,
the court will examine the agreement to deter-
mine whether it infringes on federal sovereignty.
Not all interstate compacts infringe on federal
supremacy. The question the court asks is
whether the agreement between the states inter-
feres with federal statutes or initiatives. For
example, consider the federal legislation that
outlaws certain automatic and semiautomatic
assault weapons: title XI of the Public Safety and
Recreational Firearms Use Protection Act (Pub.
L. No. 103-322, 108 Stat. 1807 [codified as
amended in scattered sections of 42 U.S.C.A.]).
The purpose of the legislation is to limit firearm
ownership. An interstate compact that legalized
the banned assault weapons, and thus expanded
firearm ownership, would infringe on the fed-
eral statute, whereas an interstate compact that
outlawed additional assault weapons, and thus
further limited firearm ownership, would not
infringe on the federal statute.
If an interstate compact is found to infringe
on federal initiatives, the court will then deter-
mine whether Congress has given its approval
for the compact. Congress may grant approval
before or after a compact is formed. Congress
may also give indirect approval to a compact.
For example, Congress may give its tacit
approval to a compact on state boundaries if it
subsequently approves the federal elections,
appointments, and tax schemes of the states.
Finally, Congress may seek to amend or
change an interstate compact after it has been
approved. Congress may amend a compact or
completely revoke its approval of a compact.
Congress may also grant its approval with con-
ditions attached.
The most common interstate compacts con-
cern agreements to share natural resources, such
as water; build regional electric power sources;
share parks and parkways; conserve fish and
wildlife; protect air quality; manage radioactive
and other hazardous wastes; control natural dis-
asters, such as floods; share educational
resources and facilities; share police and fire
departments; and grant reciprocity for driver’s
licenses. Congress has passed statutes that
require prior congressional approval for many
such compacts.
If Congress has not asserted its authority
over an interstate compact prior to its forma-
tion, the compact probably does not violate the
Interstate Compact Clause. In Northeast Ban-
corp v. Board of Governors, 472 U.S. 159, 105 S.
Ct. 2545, 86 L. Ed. 2d 112 (1985),Massachusetts
and Connecticut passed statutes that allowed
out-of-state holding companies in the New Eng-
land region to acquire in-state banks. These
statutes applied only if the state in which the
out-of-state company was based also allowed
out-of-state holding companies to acquire in-
state banks.When the FEDERAL RESERVE BOARD
(FRB) approved the interstate acquisition of
banks in Massachusetts and Connecticut, three
banking companies brought suit against the
board.
The plaintiffs argued, in part, that the
statutes constituted an interstate compact, and
that the compact required congressional
approval that had not been received. The U.S.
Supreme Court disagreed. Assuming the
statutes did create an interstate compact, they
did not require congressional approval because
they did not encroach on any asserted power of
the federal government. In fact, Congress had
authorized interstate bank acquisitions in an
amendment to the Bank Holding Company Act
of 1956 (70 Stat. 133 [as amended, 12 U.S.C.A.
§ 1841, 1842(d)). The amendment prevented
the FRB from approving interstate bank acqui-
sitions unless the states had reciprocating
statutes. Massachusetts and Connecticut had
merely accomplished what was implicitly
authorized by the amendment, and the High
Court cleared the way for final approval of the
acquisitions.
In practice, few interstate compacts are held
to violate federal imperatives. Despite the free-
dom of states to form interstate compacts, the
trend is toward increased federal participation
and control. Congress has inserted itself into the
negotiations over, administration of, and partic-
ipation in interstate compacts. This level of con-
trol may decrease as the United States seeks to
trim its budget. However, Congress will remain
constitutionally required to prevent states from
forming coalitions that wield powers challeng-
