Interstate Compacts are Formal Agreements Between States
Understanding the legal nature of an interstate compact begins with this basic point: interstate compacts are formal agreements between states that are both (1) statutory law, and (2) contracts between states. They are enacted by state legislatures adopting reciprocal laws that substantively mirror one another, which gives a compact its contractual nature. There is (1) an offer (the presentation of a reciprocal law to two or more state legislatures), (2) acceptance (the actual enactment of the law by two or more state legislatures), and (3) consideration (the settlement of a dispute or creation of a joint regulatory scheme). See Buenger, et al., supra, at 42–48. The exception to this is where states retain authority to unilaterally alter a reciprocal agreement, the agreement will generally not rise to the level of a compact enforceable as a contract between the states. Ne. Bancorp v. Bd. of Governors of Fed. Reserve Sys., 472 U.S. 159, 175 (1985).
An interstate compact and federal statutory and regulatory law are the only mechanisms to bindingly resolve interstate policy issues. Of those, an interstate compact is the only formal mechanisms by which individual states can reach beyond their borders and collectively regulate the conduct of multiple states and the citizens of those states. Compacts are one of the only exceptions to the general rule that a sitting state legislature cannot irrevocably bind future state legislatures. Buenger, et al., supra, at 48. Compacts are aptly described as instruments that regulate matters that are sub-federal, supra-state in nature. Buenger, et al., supra, at xxi.
Even the presence of an unusual application of an interstate compact does not make it invalid; the combined legislative powers of Congress and of the several states permit a wide range of permutations and combinations for governmental action. See Seattle Master Builders v. Nw. Power Planning Council, 786 F.2d 1359 (9th Cir. 1986). The subject matter of an interstate compact is not, therefore, limited by any specific constitutional restrictions; rather as with any “contract,” the subject matter is largely left to the discretion of the parties, in this case the member states and Congress in the exercise of its consent authority. See Doe v. Pa. Bd. of Prob. & Parole, 513 F.3d 95, 110 (3rd Cir. 2008) (“Here the Interstate Compact reflects the collective wisdom not only of the Pennsylvania General Assembly and the New Jersey Legislature, but also that of the other signatory states and the United States Congress as to how best to deal with the interstate movements of adult offenders.”) Id.
The binding nature of interstate compacts comes from their contractual character on the basis of which there is judicial recognition that compacts must supersede conflicting state laws in order to be effective under applicable constitutional law. These subjects are discussed below.