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Interstate Relations

Last Updated: 2006

All national constitutions establishing a federal system divide exercisable powers between the national government and state governments, provide for concurrent powers including taxation, and incorporate provisions governing relations between sister states. These later provisions are often referred to as “horizontal federalism.” The U.S. Constitution contains sections pertaining to state entrance into interstate compacts, interstate disputes, full faith and credit, privileges and immunities, and rendition of fugitives from justice. The Constitution also devolves power upon Congress to regulate foreign, interstate, and Indian nation commerce to achieve a economic union of states in which products, labor, raw materials, and services move freely across boundary lines. States cooperate with each other by means of interstate compacts and administrative agreements, but also compete to attract business firms, tourists, and gamblers, and to maximize tax revenues.


The Constitution’s framers recognized the potential of compacts to solve regional problems that otherwise would require congressional remedial actions, and they included Section 10 in Article I, authorizing states to enter into compacts with the consent of Congress. The U.S. Supreme Court in Virginia v. Tennessee (1893) opined that only political compacts, those encroaching “upon the full and free exercise of federal authority,” require such consent.

The Constitution is silent on many subjects and does not specify the procedures by which states may enter into compacts. Until 1930, each compact was negotiated and drafted by gubernatorially appointed officers. This method continues to be utilized and has been supplemented by other negotiating bodies such as the National Association of Insurance Commissioners, which drafted the Insurance Product Regulation Compact and encourages all state legislatures and the District of Columbia city council to enact it.

Gubernatorially appointed commissioners are sensitive to the concerns of their respective governor and state legislature. A proposed compact may relate to a noncontroversial subject, such as higher education, and negotiators are able to reach an agreement within a relative short period of time. Other proposed compacts, particularly water allocation ones, involve complex issues and may require years to negotiate an acceptable draft, which will not become effective until enacted by the concerned state legislatures. State negotiators may invite representatives of federal departments and agencies to participate in the drafting of a compact, but federal participation has been limited to water compacts.

A draft compact submitted to state legislatures may generate considerable debate and political concerns and result in delayed enactment by one or both houses of the state legislature. The compact must be enacted with identical language in each party state and is subject to a gubernatorial veto.

All political and many nonpolitical compacts since 1893 have been submitted for consent to Congress, which is free to determine the duration of such consent and to grant consent in the form of permission for named states to negotiate a compact or the ratification of a compact enacted by state legislatures. Such consent is subject to a veto, and President Franklin D. Roosevelt in 1939 disallowed a bill authorizing states to negotiate and enter into Atlantic Ocean fishing compacts. In 1941, he vetoed consent for the Republican River Compact, but two years later signed a bill into law granting consent to a redrafted compact.

In 1911 Congress first granted consent-in-advance to compacts (forests and water supply), and in 1921 it included in a single statute consent for a Minnesota–South Dakota compact on criminal jurisdiction over boundary waters and consent-in-advance for other Midwestern states to enter into a similar compact.

Congress, in granting consent to most compacts, has not included a sunset provision. The Interstate Oil Compact of 1935 (now Oil and Gas) and the Atlantic States Marine Fisheries Compact of 1942 were granted consent for a specific period of time, but the sunset provisions subsequently were removed. Congress in 2001 did not act on a bill extending consent for the Northeast Dairy Compact, and its commission was forced to disband.

The grant of consent to a compact invalidates other federal statutes containing inconsistent provisions. After granting consent, however, Congress is free to enact statutes whose provisions repeal compact provisions provided that these statutes are consistent with the U.S. Constitution.

The multistate tax compact was challenged as unconstitutional by the United States Steel Corporation on the ground that the compact lacked congressional consent. The Supreme Court opined in 1978 that the compact was constitutional because it did not authorize member states to exercise powers they would be unable to exercise in the absence of the compact. Consent was granted in 1949 to the Northeastern Interstate Forest Fire Compact, the first compact to include a Canadian province. Compact members also may include the Commonwealth of Puerto Rico and the District of Columbia.

The Supreme Court in 1938 ruled that consent does not convert a compact into federal law, but reversed this decision in 1981 by opining that such consent makes a compact federal law as well as state law. This precedent reversal freed the court of the restraint of its 1874 decision holding that U.S. courts must apply the interpretation of a state law by the highest court in the concerned state, and allowed the Supreme Court to disregard the interpretation of a Pennsylvania interstate compact statute by the Pennsylvania Supreme Court.

In 1994, the Supreme Court held the Port Authority Trans-Hudson Corporation, a subsidiary of the interstate-established Port Authority of New York and New Jersey, was not shielded with immunity from suit in a U.S. court under the immunity granted to states by the Eleventh Amendment to the U.S. Constitution. The court explained that the corporation was a self-financing body and that allowing it to be sued would not impose a burden on the treasury of either state.

A state party to a compact may seek an interpretation of one or more of its provisions by filing an original suit in the Supreme Court. A dispute between Kansas and Colorado arose over the Arkansas River Compact; the former brought suit against the latter, and the Court in 1995 generally upheld the position of Kansas.

Amendment of a compact not submitted to Congress for its consent requires the approval of all party states. In 1917, the Supreme Court opined Congress possesses the authority to amend a compact in the absence of a provision reserving such authority to Congress. Only a boundary compact cannot be terminated. Other compacts contain a provision typically requiring advance notice of a proposed termination.

Compacts are describable as bilateral, multilateral, sectional, and national in terms of geographical scope. A compact-created commission or a department in each member state administers twenty-five types of compacts covering most of the alphabet ranging from agriculture to water. There has been a decline in the number of regulatory compacts since 1965, when Congress commenced more frequently to enact preemption statutes removing authority totally or partially from states in specified regulatory fields.

The first federal-interstate compact—establishing a national-state partnership—became effective in 1961 when the Delaware River Basin Compact was enacted into law by Congress and the Delaware, New Jersey, New York, and Pennsylvania state legislatures. Subsequently, Congress enacted five additional federal-interstate compacts.

Compacts have been supplemented by numerous verbal and written agreements entered into by high-level state administrative officers, particularly department heads. Many interstate administrative agreements are of great importance and include ones on the same subjects as compacts. The Connecticut River Basin Atlantic Salmon Restoration Interstate Compact was enacted by the Connecticut, Massachusetts, New Hampshire, and Vermont state legislatures. A identically worded interstate administrative agreement—the Merrimack River Anadromous Fish Restoration Administrative Agreement—was signed by Massachusetts and New Hampshire officers. Congressional consent for the compact lapsed in 2001 and was not renewed by Congress until the following year. The administrative agreement is not dependent upon congressional consent for continuation.


A proposal was made at the 1787 Constitutional Convention to establish a national court system, but opposition to such a national system was strong. Two arguments convinced delegates to include a provision creating the U.S. Supreme Court. First, proponents contended it was essential to have an impartial court to interpret the provisions of the Constitution. Second, they maintained that a supreme court was needed to adjudicate interstate disputes involving boundaries and other matters. Section 2 of Article III grants the Court nonexclusive original (trial) jurisdiction, which was made exclusive by Congress in 1789, over interstate suits.

The Court exercises its jurisdiction on a discretionary basis involving determinations of whether the state initiating the suit is a genuine or a nominal party representing private interests, the controversy is justiciable because the complaining state suffered a wrong, and the dispute is appropriate as determined by its seriousness, the parties to the dispute, and the availability of a alternative judicial forum. Suits most commonly involve boundaries, taxation, and water. The Court’s decisions represent a blend of the English common law and international law.


Section 1 of Article IV of the Constitution stipulates each state must accord full faith and credit to the public acts (statutes), records (deeds, mortgages, and wills), and judicial proceedings (final court judgments) of sister states, and authorizes Congress to determine the manner in which they “shall be proved and the effect thereof.” The provision does not apply to public acts, records, or judicial proceedings of foreign nations.

Congressional statutes enacted in 1790 and 1804 prescribe the method of authenticating sister state civil acts and records. A state legislature may enact a statute containing less stringent authentication standards. Congress did not enact another full faith and credit statute until the Full Faith and Credit for Child Support Act of 1994 and the Defense of Marriage Act of 1996.

The failure of Congress to enact additional full faith and credit statutes until 1994 led to the Supreme Court issuing a series of decisions clarifying the constitutional command. Early decisions declared that a state constitution is a public act entitled to full faith and credit, the guarantee applies only to civil acts and proceedings, and the clause requires each state to recognize the decisions of sister state courts provided they have jurisdiction over the subject matter and the parties to the dispute. The Court acknowledged in 1935 that an accommodation was needed when the statutes of 2 states conflict, but in 1939 opined that a court no longer has to consider the conflicting interests of a sister state.

Historically, the clause became the basis for suits relating to the question of whether a state must recognize a divorce granted to one of its citizens by a sister state court where grounds for divorce were not limited to adultery. This question seldom is raised today because most state legislatures have broadened the grounds for the granting of a divorce, thereby removing a reason for a party seeking a divorce to travel to a state with less stringent grounds. Full faith and credit, however, increasingly has become important with respect to the interstate enforcement of child support orders issued by state courts. The National Conference of Uniform State Law Commissioners drafted in 1950 the Uniform Reciprocal Enforcement of Support Act, which was amended in 1958 and 1968, and all states have enacted a version of the act. As noted, Congress enacted a statute in 1994 facilitating the out-of-state collection of child support payments by the custodial parent.


Section 2 of Article IV of the Constitution contains the Privileges and Immunities Clause designed to promote interstate citizenship by ensuring that sojourners are treated in the same manner as the state’s citizens. An identically worded section in the Fourteenth Amendment forbids each state to abridge the privileges and immunities of citizens of the United States. Neither section defines the terms. In common with the full faith and credit provision, the privileges and immunities provision involves a conflict of laws. Each state legislature in defining privileges and immunities is subject to only one restraint; the definition may not reduce those guaranteed by the Fourteenth Amendment. Congress has not clarified the terms. Distinctions had been made in state law between citizens and residents, but the Supreme Court in 1975 ruled the terms are interchangeable.

The clause does not contain an absolute guarantee and has been emasculated to a large extent by Supreme Court decisions. In 1839, the Court opined in Bank of Augusta v. Earle that a corporation cannot migrate from the state of its creation to another state and hence is not entitled to privileges and immunities. The Court in 1928 extended this ruling to associations. A state is free to discriminate against foreign (chartered in another state) and alien (chartered in a foreign country) corporations in terms of fees and taxes, and may prohibit them from conducting business in the state without violating the Article IV Privileges and Immunities Clause. Such discrimination, however, may violate the Interstate Commerce and Due Process of Law Clauses of the Constitution.

The Court also has held that the clause is inapplicable to beneficial services—state institutions and resources—and a state legislature may charge out-of-state students at its state university a higher tuition fee compared to in-state students and may impose higher fishing and hunting fees on nonresidents. The state legislature also may exclude the latter from political and certain other privileges such as voting and admission to the state bar. In 1978, the court opined that a New York law requiring members of the state police to be U.S. citizens was constitutional.


A person accused of committing a crime can be tried and punished only in the state in which the crime was committed. Such a person while on bail may flee the state to avoid a trial and possible confinement in a prison. Similarly, a convict on bail pending sentencing also may flee, and a convict may escape from a prison. Section 2 of Article IV of the Constitution establishes the general process by which a fugitive from justice is returned from a sister state. Only the governor of a state may demand the return a fugitive.

Congress enacted the Rendition Act of 1793, extending the process to the District of Columbia and territories and stipulating that the demand is made upon the governor of the asylum state who is responsible for arresting the fugitive and returning him or her to the demanding state. It is immaterial whether the involved crime is a crime in the asylum state, but the fugitive has the right to a hearing before the governor and an appeal to the courts if the governor orders the fugitive rendered against his or her will. The demanding state is responsible for all expenses incurred in returning the fugitive, and a state legislature may enact a rendition statute not conflicting with the congressional act. Only Mississippi has not enacted the Uniform Criminal Extradition Act (1936) drafted by the National Conference of Commissioners on Uniform Laws.

The Supreme Court in 1861 for the first time interpreted the constitutional provision and the 1793 statute in Kentucky v. Dennison, and ruled the governor of the asylum state has only a moral obligation to return a fugitive demanded by a sister state governor. This decision remained in effect for 126 years, during which several governors refused to return fugitives on the ground that the governor of the requesting state at an earlier date had not honored the demand to render a fugitive on various grounds, including the contention that he or she would not receive a fair trial in the requesting state. In 1987, the Court in Puerto Rico v. Branstad reversed its precedent, and the duty of the asylum state governor to return a fugitive became a mandatory one.

Should a fugitive from justice commit a crime in an asylum state, he or she will be subject to a trial, and if tried and convicted must serve a prison sentence prior to his or her return to the requesting state. A congressional statute makes it a federal criminal offense for a person to travel to a sister state or to a foreign nation for the purpose of avoiding prosecution or imprisonment. If apprehended for violating this statute, the person is transported to the U.S. District Court in whose jurisdiction the felony was committed and may be turned over to the control of an appropriate state officer.

The Interstate Agreement on Detainers (1970); a interstate compact enacted by 47 states and the District of Columbia, establishes a process similar to interstate rendition for prisoners in a state who have been charged with committing one or more crimes in another state (or states). Based upon the adage “Justice delayed is justice denied,” the agreement provides for a speedy trial by authorizing the transportation of the prisoner to the temporary custody of a sister state for a trial and his or her return after conclusion of the trial.


States have engaged in economic protectionism since the adoption of the Articles of Confederation and Perpetual Union by erecting obstacles to the free flow of commerce. Such barriers were a principal reason advanced for the replacement of the Articles by the U.S. Constitution. Although the latter seeks to establish a economic union, interstate trade barriers continue to be erected.

A common barrier is based upon the police power of a state allowing it to regulate persons and property in order to promote public health, safety, welfare, morals, and convenience. This power is utilized for legitimate purposes in most instances, but occasionally has been employed to create a barrier, as illustrated by a requirement that only eggs laid within the state may be labeled fresh eggs.

A state legislature may use its licensing and taxing powers to hinder the free movement of interstate trade by refusing to issue or delaying the issuance of a license to a foreign or alien corporation, or by imposing higher taxes on them compared to domestic corporations. States as proprietors may erect barriers in the form of statutes granting preferences to their citizens and domestic corporations with respect to public employment and state contracts for goods and services.

Interstate reciprocity statutes and administrative agreements, congressional preemption statutes, and judicial decisions may be employed to remove impediments to interstate commerce. There would be less need for courts to adjudicate suits alleging that a state created a trade barrier if Congress exercised more fully its delegated powers, particularly in the area of taxation of multistate and multinational corporations.


Railroads and public utility companies offered manufacturers incentives in the nineteenth century to locate new plants in areas the companies serviced. State competition for industrial firms did not become common until the immediate post–World War II period. Understandably, state and local elected leaders desire to maximize employment opportunities for their citizens and tax revenues, and offer incentives—grants, low-interest loans, tax abatements, tax credits, and so on—to encourage business firms to expand within the state or local government and to attract foreign and alien corporations to construct and operate facilities. Critics of incentives maintain they discriminate against domestic companies not planning to expand, benefit firms that in many instances would expand without incentives, deprive the governments of revenue needed for more important programs, and may fail in encouraging existing companies to expand or in attracting new companies because the state or local government suffers serious locational disadvantages.

The development of the railroad and subsequently the motor vehicle engendered interstate competition for tourists, and in the latter decades of the twentieth century a increasing number of states and local governments competed for gamblers as revenue sources. Competition for tourists has not generated a major controversy, but the attempt to attract gamblers is opposed by a number of religious and other groups fearful of the corrupting influence of gambling and the crime associated with it. A more recent development is competition for major league sports franchises and the allegation frequently is made a franchise owner may play one large city off against another in order to obtain expansion and modernization of a stadium or construction of a new one.

States export taxes to increase revenues by imposing higher rates on alien and foreign corporations operating in the state; special taxes on hotels, motels, restaurant meals, and visiting professional athletes; and severance taxes on natural resources such as coal, natural gas, oil, and timber, and by using special income tax apportionment formulas for multistate and multinational corporations.

If challenged, a court may invalidate a tax if it imposes a serious burden on interstate commerce. Congress could regulate this type of tax revenue competition, but did not enact the first such statute until 1959 and has enacted only a few additional statutes to invalidate state taxation statutes discriminating against interstate commerce.

Cooperative, conflictive, and competitive interstate relations will continue to be features of the U.S. federal system, with Congress and federal courts playing important interstate roles.

SEE ALSO: CitizenshipCommerce among the StatesEleventh AmendmentFederal CourtsFourteenth Amendment; Full Faith and Credit Clause: Article IV, Section 1Governors and FederalismInterstate CompactsInterstate RelationsInterstate RenditionsLocal GovernmentPolitical PartiesPolice PowerPreemptionPrivileges and Immunities Clause: Article IVRoosevelt, Franklin D.State CourtsState Legislatures


Frederick L. Zimmerman and Mitchell Wendell, The Law and Use of Interstate Compacts (Lexington, KY: Council of State Governments, 1976); Joseph F. Zimmerman, Interstate Cooperation: Compacts and Administrative Agreements (Westport, CT: Praeger, 2002); Joseph F. Zimmerman, Interstate Economic Relations (Albany: State University of New York Press, 2004); and Joseph F. Zimmerman, Interstate Relations: The Neglected Dimension of Federalism (Westport, CT: Praeger, 1996).