Interstate Compacts: What was Old is New Again

With each state belonging to an average of two dozen interstate compacts, these tools are not new to state policymakers. In fact, the original 13 colonies were using compacts even before the U.S. Constitution was ratified.
“Interstate compacts in the United States actually predate the Constitution,” Rick Masters, who serves as special counsel to The Council of State Governments’ National Center for Interstate Compacts, said during a recent webinar. “The earliest compacts were signed to resolve boundary disputes between the original 13 colonies.”
So why is an instrument that has been employed more than 200 times during the past 250 or so years currently drawing so much attention in state capitols around the country?
“Compacts by their very nature allow states to manage problems through state-based solutions,” Masters said. “Compacts provide a means for states to maintain collective sovereignty short of a federally mandated solution. For that reason, they are very appealing for state officials seeking ways to address policy challenges that cross state lines.”
The March 6 webinar—the first in a planned series of webinars focusing on interstate compacts—gave participants the background, history and modern use of interstate compacts.
Compacts, which are referenced in Article I, Section X, Clause III of the U.S. Constitution, function as contracts between states. As such, they are governed by the tenets of contract law, meaning an offer to enter the agreement is expressed by the first state to join the compact and accepted by each subsequent jurisdiction that joins. A state voluntarily elects to join a compact in the same way that any piece of legislation is passed and adopted.
While border compacts still represent the simplest form of the mechanism, the creation of the Port Authority of New York and New Jersey through an interstate compact in 1922 signaled a shift in the use of interstate compacts.
“The Port Authority of New York and New Jersey represents one of the earliest compacts to establish a multi-state administrative agency,” Masters said. To this day, the compact regulates an extensive amount of transportation between the two states.
While the formation of the port authority ushered in a new era for interstate compacts, states really began creating administrative compacts beginning in about 1955.
“Administrative compacts provide a vehicle to promote and ensure effective cross-border regulation in areas that have traditionally been left to the discretion of the states,” Masters said.
To further illustrate this point, Masters cited the growing number of health care professions exploring the possibility of licensing compacts.
“The regulation of professional licensure has traditionally been left to the states,” he said. “Compacts simply make possible multi-state licensure, while maintaining traditional state authority.”
Administrative compacts are typically the most intricate of all compacts and have the most extensive administrative structure. These compacts normally call for the creation of an interstate agency to oversee an ongoing policy area. These agencies, typically known as commissions, often serve as quasi-governmental agencies and have the authority to pass rules, form committees, establish organizational policy, seek grants and ensure compliance with the compact. Many modern administrative compacts create a national office and hire staff to carry out the day-to-day operations of the compact.
Masters also discussed congressional consent, alternative forms of multi-state cooperation, the benefits of interstate compacts and the development process undertaken by CSG when starting a new compact project during the webinar.

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