Legal Definitions - Compact Clause

Compact Clause

The Compact Clause is a specific provision found in Article I, Section 10, Clause 3 of the United States Constitution. It prohibits individual U.S. states from entering into formal agreements or "compacts" with other U.S. states or with foreign countries without first obtaining the explicit consent of the U.S. Congress.

The primary purpose of this clause is to prevent states from forming alliances or agreements that could undermine the authority of the federal government, interfere with national foreign policy, or create conflicts of interest among states that could destabilize the Union. It ensures that the federal government maintains its role in matters of interstate and international relations.

Here are some examples illustrating the application of the Compact Clause:

• Interstate Environmental Protection Agreement: Imagine two neighboring states, State X and State Y, share a large national park that spans their border. They want to create a joint commission to manage the park's resources, enforce environmental regulations, and coordinate conservation efforts across both states. To establish this formal, legally binding agreement and create a new interstate entity with shared powers, State X and State Y would need to seek and obtain approval from the U.S. Congress. Without congressional consent, their agreement could be challenged as an unconstitutional compact under the Compact Clause.

• Regional Port Authority: Suppose three coastal states decide to form a unified port authority to streamline shipping regulations, share revenue from port operations, and jointly fund infrastructure improvements for a major port that serves all three. This would involve creating a new governmental body with powers affecting multiple states, potentially including the ability to issue bonds or levy fees. Because this agreement creates a new entity with significant powers across state lines, it would constitute a "compact" requiring congressional approval to ensure it aligns with federal interests and does not infringe upon federal regulatory authority over interstate and international commerce.

• State-Level Energy Supply Deal with a Foreign Nation: Consider a hypothetical scenario where a U.S. state, facing an energy shortage, attempts to negotiate a direct, long-term agreement with a neighboring foreign country to purchase a substantial amount of electricity or natural gas. Under this agreement, the state might offer specific tax incentives or land use rights to the foreign utility company. Such a direct agreement between a U.S. state and a foreign nation would be explicitly prohibited by the Compact Clause unless Congress were to approve it. This is because foreign policy, including international trade and energy agreements, falls under the purview of the federal government, and individual states cannot act as independent entities in these matters.