## Facts

- Montana, Wyoming, and North Dakota entered an interstate compact governing allocation and use of waters in the Yellowstone River Basin.
- Each state enacted the compact, and Congress consented to it by federal statute.
- The compact created the Yellowstone River Compact Commission to implement the compact’s terms.
- Article X barred diversions of Yellowstone River Basin water outside the basin without unanimous consent of the compacting states.
- Intake Water Company appropriated 80,650 acre-feet per year of Yellowstone River water and planned diversion works and a reservoir in Montana for use outside the basin.
- Intake sued the Commission and state officials, alleging that Article X, as implemented in state law, imposed an unconstitutional burden on interstate commerce by conditioning out-of-basin diversions on unanimous state consent.
- A three-judge federal district court dismissed for failure to state a claim under Rule 12(b)(6), reasoning that congressional consent made the compact federal law and thus not subject to attack as a state restraint on interstate commerce.

## Issues

1. Whether a congressionally approved interstate compact becomes federal law for purposes of constitutional review under the Commerce Clause.
2. Whether Article X’s unanimous-consent requirement for out-of-basin diversions can be invalidated as an impermissible burden on interstate commerce when the provision is part of a congressionally approved compact.
3. Whether dismissal under Rule 12(b)(6) was proper where the complaint framed the compact provision as an unconstitutional state law restriction on commerce.

## Decision

- The Ninth Circuit affirmed the dismissal.
- The court held that Congress’s consent transformed the compact into federal law.
- Because the challenged provision was federal in character, it could not be invalidated on the theory that it was a unilateral state measure burdening interstate commerce.
- The court did not conduct dormant Commerce Clause balancing because Intake’s claim depended on treating the compact provision as state law.

## Legal Principles

- A congressionally approved interstate compact has the status of federal law.
- Provisions of a congressionally approved compact are not subject to dormant Commerce Clause invalidation on the premise that they are state-imposed restraints on interstate commerce.
- When a complaint’s Commerce Clause theory depends on mischaracterizing a congressionally approved compact as state legislation, it fails to state a claim.

## Conclusion

The court upheld dismissal of a Commerce Clause challenge to a compact provision restricting out-of-basin diversions because congressional consent made the interstate compact federal law, placing its terms beyond attack as state burdens on interstate commerce.


Intake Water Co. v. Yellowstone River Compact Comm’n, 769 F.2d 568 (9th Cir. 1985)