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.

This clause enumerates powers that are subject to control by Congress, which may by statute authorize states to engage in these activities in certain circumstances.

The prohibition on duties of tonnage (duties laid on a ship for use of a port, rather than its cargo) without consent of Congress closes a possible loophole in the previous clause.

States may not keep troops nor warships in peacetime except as authorized by Congress. “Troops” does not include state militias, which were seen as a bulwark against insurrection within a state.  States may not independently make war except in direct response to an invasion or imminent invasion.

The most notable part of this clause gives it the name of the Compacts Clause. This prohibits states from entering any agreement or compact with other states or with a foreign government except with the consent of Congress. States are absolutely prohibited from entering a treaty, alliance, or confederation with a foreign power, but mere agreements or compacts are acceptable when they have the consent of Congress.

Ironically, the legal basis for the Constitution itself is that the Articles of Confederation permitted states to enter into compacts with each other, and the Constitution was ratified on the basis that it was such a compact. Some early agreements submitted to Congress for ratification included the settling of border disputes between states. Nowadays, compacts between the states include such routine matters as agreements over water rights, cooperation in flood control, or such minutae as recognition of each others’ driving licenses.

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