Requirement of Congressional Consent to Compacts

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Article I, Section 10, Clause 3:

No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

One of the most common questions to arise in Compact Clause cases is whether congressional consent is required for a particular state commitment.1 The plain language of the Compact Clause suggests congressional approval is mandatory for “any” compact with another state or foreign government,2 but the Supreme Court has not adopted a literal interpretation of the clause in all cases. In the context of interstate compacts, the Supreme Court has held that only compacts that increase states’ power and diminish federal supremacy need Congress’s consent.3 The Court has not said whether the same interpretation applies to states’ compacts with foreign governments, but the frequency with which states make international pacts suggests congressional approval often is unnecessary.4

The closest the Supreme Court has come to invalidating a compact for lack of congressional approval came in a non-controlling 1840 opinion about a state’s agreement with a foreign official.5 In Holmes v. Jennison, the Governor of Vermont ordered a resident of Quebec (then part of Great Britain) arrested and returned to Quebec to stand trial for murder even though the United States did not have an extradition treaty with Britain at the time.6 A crucial legal issue—whether the Supreme Court had jurisdiction—turned on the whether the Governor of Vermont had arrested the fugitive under an informal “agreement” with Canadian authorities within the meaning of the Compact Clause.7 The case ultimately ended with an equally divided court on the jurisdiction issue,8 with four Justices determining that the governor made an agreement that should have been submitted to Congress for consent.9 This four-Justice opinion, written by Chief Justice Roger Taney, was based on a literal interpretation of the Compact Clause that viewed congressional approval as necessary for “every agreement, written or verbal, formal or informal, positive or implied, by the mutual understanding of the parties.” 10

Chief Justice Taney’s opinion has been influential, and the Supreme Court later cited it positively,11 but the view that all pacts between states and foreign governments require Congress’s consent has not been supported in practice.12 To the contrary, states often conclude pacts with foreign officials without congressional approval, and the Supreme Court eventually developed a new line of cases that more narrowly interprets the congressional consent requirement in the context of interstate compacts.13

In 1893, the Supreme Court expressed doubt in Virginia v. Tennessee that Congress must approve every interstate compact regardless of its relevance to the Federal Government.14 The Virginia Court saw no reason congressional approval would be necessary for compacts “to which the United States can have no possible objection” or desire to interfere.15 The Court gave several examples of hypothetical agreements that would not concern the United States, such as two states contracting to send exhibits to the Chicago World’s Fair via the Erie Canal.16 Rather than require congressional approval in every case, the Virginia Court reasoned that interstate compacts only need Congress’s consent if they have the potential to “increase of political power in the states, which may encroach upon or interfere with the just supremacy of the United States.” 17

In later cases, the Supreme Court repeated Virginia's test for determining when congressional consent is necessary and clarified how it applies to modern interstate compacts.18 In U.S. Steel Corp. v. Multistate Tax Commission, for example, the Supreme Court held that a compact creating uniform rules for state taxation of multistate corporations did not require congressional consent even though it increased the states’ bargaining power in relation to the taxed companies.19 Virginia's test does not focus on whether the compact makes the states more influential in general, the U.S. Steel Corp. Court explained, but whether it could enhance the states’ power in relation to the Federal Government.20

The Supreme Court has also suggested that some engagements between states do not qualify as agreements or compacts at all.21 In Northeast Bancorp, Inc. v. Board of Governors of Federal Reserve System,22 Supreme Court rejected a Compact Clause challenge on the rationale that a system for reciprocal state legislation23 lacked four “classic indicia of a compact” in the constitutional sense.24 According to Court, those indicia are: (1) the creation of a joint organization or body; (2) conditioning one state’s action on the actions of other states; (3) restrictions on states’ ability to modify or repeal their laws unilaterally; and (4) a requirement for reciprocal constraints among all states.25 The Northeast Bancorp, Inc. Court also held that, even if it assumed a compact existed, the scheme was authorized under existing federal banking law,26 and therefore could infringe federal supremacy under the Virginia standard for congressional consent.27

After Northeast Bancorp, Inc., the Supreme Court’s interstate compact jurisprudence appears to establish a two-part inquiry for determining whether congressional consent is necessary: is the arrangement at issue a “compact or agreement” for constitutional purposes, and, if so, does it belong in that class of compacts described in Virginia that require congressional approval because it affects federal supremacy?28 Unless the answer to both questions is “yes,” consent is not mandatory.

While the Supreme Court’s interstate compact cases are the most well-developed jurisprudence on the congressional consent issue, the Court has never held that these cases apply to states’ international pacts with foreign governments.29 Some scholars argue that two types of compacts present different concerns and should not share the same standard.30 The greater weight of authority adopted in lower courts and Executive Branch statements, however, suggests Virginia applies in both scenarios.31

1: See e.g., Ne. Bancorp, Inc. v. Bd. of Governors of Fed. Rsrv. Sys., 472 U.S. 159, 175 (1985); U.S. Steel Corp. v. Multistate Tax Comm’n, 434 U.S. 452, 469–70 (1978); New Hampshire v. Maine, 426 U.S. 363, 370 (1976); Virginia v. Tennessee, 148 U.S. 503, 518–19 (1893).
2: See U.S. Steel Corp, 434 U.S. at 459 ( “Read literally, the Compact Clause would require the States to obtain congressional approval before entering into any agreement among themselves, irrespective of form, subject, duration, or interest to the United States.” ).
3: See Ne. Bancorp, Inc., 472 U.S. at 175; U.S. Steel Corp., 434 U.S. at 469–70; New Hampshire v. Maine, 426 U.S. at 370; Virginia v. Tennessee, 148 U.S. at 518–19. See also St. Louis & S.F. Ry. v. James, 161 U.S. 545, 562 (1896) (holding that state legislation authorizing a railroad organized under the laws of one state to extend services into a second state, subject to the second state’s regulations, did not require congressional approval).
4: See infra note 12.
5: Holmes v. Jennison, 39 U.S. (14 Pet.) 540 (1840) (affirmed by an equally divided court).
6: See id. at 561 (Taney, C.J.).
7: The Supreme Court had jurisdiction if the lower court’s decision was final and implicated a question of whether Vermont’s actions were “repugnant to the constitution[.]” An Act to Establish the Judicial Courts United States, 1 Stat. 73, 85 (1789). The constitutional repugnancy element hinged on whether the Governor of Vermont made an “agreement” under the Compact Clause. See Holmes, 39 U.S. at 562–86 (Taney, C.J.).
8: When the Supreme Court is made up of an even number of justices and is equally divided on the merits of a case, the lower court’s decision is affirmed. See Durant v. Essex Co., 74 U.S. 107 (1868).
9: See Holmes, 39 U.S. at 573–74 (Taney, C.J.).
10: Id. at 572.
11: See United States v. Rauscher, 119 U.S. 407, 414 (1886) ( “[T]here can be little doubt of the soundness of the opinion of Chief Justice [Taney], that the power exercised by the governor of Vermont is a part of the foreign intercourse of this country, which has undoubtedly been conferred upon the federal government[.]” ); U.S. Steel Corp. v. Multistate Tax Comm’n, 434 U.S. 452, 465 n. 15 (1978) (discussing the consistency of Chief Justice Taney’s opinion with later Compact Clause jurisprudence). The Supreme Court of Vermont relied, in part, on Chief Justice Taney’s opinion in later proceedings when it concluded that the governor lacked the constitutional authority to transfer the fugitive to Canadian officials. See Ex parte Holmes, 12 Vt. 631, 635–42 (1840).
12: See Memorandum from William H. Taft, IV, Legal Adviser, Dep’t of State, to Senator Byron L. Dorgan (Nov. 20, 2001) [Taft Memorandum], in Digest of United States Practice in International Law 2001, at 182 (Sally J. Cummins & David P. Stewart eds., 2001) [2001 Digest] ( “In general, the notion articulated by Chief Justice Taney that all U.S. state agreements constitute compacts that require congressional consent has not been widely supported.” ); Duncan B. Hollis, Unpacking the Compact Clause, 88 Tex. L. Rev. 741, 747–60 (2010) (cataloging and describing state agreements with foreign governments that did not receive congressional approval); Ryan M. Scoville, The International Commitments of the Fifty States, UCLA L. Rev. (forthcoming 2022) (updating research on the proliferation of states’ agreements with foreign governments).
13: See supra notes 1 & 12.
14: See 148 U.S. 503, 518–19 (1893).
15: See id. at 518.
16: See id.
17: See id. at 519.
18: See Ne. Bancorp, Inc. v. Bd. of Governors of Fed. Rsrv. Sys., 472 U.S. 159, 175 (1985); U.S. Steel Corp. v. Multistate Tax Comm’n, 434 U.S. 452, 469–70 (1978); New Hampshire v. Maine, 426 U.S. 363, 370 (1976).
19: See U.S. Steel Corp., 434 U.S. at 472–73.
20: See id. at 473.
21: See Ne. Bancorp, Inc., 472 U.S. at 175.
22: 472 U.S. 159.
23: Northeast Bancorp, Inc. concerned a system of reciprocal state legislation in which Massachusetts and Connecticut passed state laws that only allowed banks in their states to be acquired by New England-based holding companies. See id. at 164.
24: See id.
25: See id.
26: See Bank Holding Company Act, 18 U.S.C. §§ 1841–52.
27: Ne. Bancorp, Inc., 472 U.S. at 176.
28: Accord, e.g., Taft Memorandum, supra note 12, in 2001 Digest, supra note 12, at 185; Hollis, supra note 12, at 765.
29: See, e.g., Taft Memorandum, supra note 12, in 2001 Digest, supra note 12, at 184 ( “[I]t is not a settled question that the Virginia standard applies to state compacts with foreign powers[.]” ).
30: See, e.g., Edward T. Swaine, Does Federalism Constrain the Treaty Power?, 103 Colum. L. Rev. 403, 506 (2003); Hollis, supra note 12, at 769–804.
31: See, e.g., United States v. California, 444 F. Supp. 3d 1181, 1196 n.13 (E.D. Cal. 2020); McHenry Cnty. v. Brady, 37 N.D. 59, 59 (1917); In re Manuel P., 215 Cal. App. 3d 48, 68–69 (Ct. App. 1989); Taft Memorandum, supra note 12, in 2001 Digest, supra note 12, at 184–85; Restatement (Third) of the Foreign Relations Law of the United States §302 cmt. f (1987); Louis Henkin, Foreign Affairs and the U.S. Constitution 152 (2d ed. 1997).