Straddling the Federal-State Divide: Federal Court Review of Interstate Agency Actions

• Author: Daniel E. Andersen
• Position: J.D. Candidate, The University of Iowa College of Law, 2016; M.A., Marquette University, 2013; B.A., Creighton University, 2009
• Pages: 1601-1650

Straddling the Federal–State Divide: Federal Court Review of Interstate Agency Actions Daniel E. Andersen * ABSTRACT: Until recently, scholarship on administrative federalism has focused on the vertical divide—the relationship between the federal and state governments. A growing body of literature, however, considers the benefits of horizontal federalism—the relationship between two or more states that work together to address shared issues. The interstate compact formalizes agreements among states about how they will work together. Often, a compact creates an interstate agency to carry out its objectives, thus functioning as an enabling act. This Note examines the nature of interstate compacts and the agencies they create, as exemplified by the Great Lakes–St. Lawrence River Basin Water Resources Compact. In light of interstate agencies’ sub-federal and supra-state status, they are subject to fewer legal and political constraints than either federal or state agencies. This Note argues that for that reason, when federal courts review interstate agencies’ interpretations of ambiguous language in their enabling compacts, they should not apply the typical Chevron deference afforded to federal agencies. Instead federal courts should apply a version of the Skidmore balancing test, which allows courts to assess the soundness of an agency’s decision-making procedures before determining how much deference to give that agency’s interpretation of its enabling compact. * J.D. Candidate, The University of Iowa College of Law, 2016; M.A., Marquette University, 2013; B.A., Creighton University, 2009. I want to thank Laura Andersen, Francine O’Brien Andersen, and my colleagues on the Iowa Law Review for their editorial assistance. This Note is dedicated to my sister, Betsy, always my inspiration; my brother, Jimmy, for his dedication; my mother, Francine, for her motivation; and my father Brian, for his perspiration (it’s genetic). A special thank you to my wife, Laura; my brother-in-law, Jason; and my nieces, Chloe, Morgan, and Katrina for their patience during my many long hours of writer’s block. 1602 IOWA LAW REVIEW [Vol. 101:1601 I. INTRODUCTION ........................................................................... 1603 II. JUDICIAL REVIEW OF AGENCY ACTIONS IN THE FEDERAL–STATE ADMINISTRATIVE REGIME: A FUNCTION OF VERTICAL FEDERALISM ................................................................................ 1607 A. T HREE L EGITIMIZING T HEORIES OF THE F EDERAL –S TATE A DMINISTRATIVE R EGIME ...................................................... 1609 B. E XTERNAL C ONSTRAINTS ON A GENCY A CTIONS ...................... 1611 C. J UDICIAL R EVIEW OF AN A GENCY ’ S S TATUTORY I NTERPRETATIONS : T WO S TANDARDS OF A DMINISTRATIVE D EFERENCE ........................................................................... 1615 III. INTERSTATE ADMINISTRATIVE LAW AND THE MULTI-STATE ADMINISTRATIVE REGIME: A FUNCTION OF HORIZONTAL FEDERALISM ................................................................................ 1619 A. T HE M ULTI -S TATE A DMINISTRATIVE R EGIME ......................... 1620 B. E XTERNAL C ONSTRAINTS ON I NTERSTATE A GENCY A CTIONS ... 1622 IV. KEY ISSUES CONCERNING JUDICIAL REVIEW OF AN INTERSTATE AGENCY’S INTERPRETATION OF FEDERAL LAW ............................ 1625 A. NOMINE IPSA LOQUITUR : I NTERSTATE A GENCIES A RE N EITHER F EDERAL NOR S TATE .............................................................. 1626 B. T HREE S TRUCTURAL I SSUES P ECULIAR TO I NTERSTATE A GENCIES .............................................................................. 1628 1. Interstate Agencies Do Not Necessarily Speak with the Force of Federal Law .................................... 1628 2. Interstate Agencies Are Not Subject to the Federal APA ................................................................. 1630 3. Interstate Agencies Are Subject to Fewer Checks and Balances than Federal Agencies ......................... 1631 C. T HE S TRUCTURAL I SSUES OF I NTERSTATE A GENCIES U NDERMINE THE P ROCEDURAL R EGULARITY AND C HECKS AND B ALANCES T HAT E NSURE A DMINISTRATIVE L EGITIMACY ......... 1633 D. J UDICIAL P RECEDENT I S L IMITED AND N OT D ISPOSITIVE .......... 1635 V. STRADDLING THE HORIZONTAL–VERTICAL DIVIDE: WHY THE FEDERAL COURT SHOULD REJECT C HEVRON DEFERENCE AND APPLY S KIDMORE ’S BALANCING APPROACH WHEN REVIEWING MULTI-STATE ADMINISTRATIVE INTERPRETATIONS .................... 1640 A. “U NANIMITY A MONG THE F OXES O UGHT N OT P REJUDICE THE H ENS ”—W HY THE C OURTS S HOULD A PPLY F EDERAL S TANDARDS TO D ISPUTES C ONCERNING I NTERSTATE A GENCIES .............................................................................. 1642 2016] STRADDLING THE FEDERAL–STATE DIVIDE 1603 B. C OURTS S HOULD N OT A PPLY CHEVRON D EFERENCE B ECAUSE THE A BSENCE OF CHEVRON ’ S U NDERLYING J USTIFICATIONS E NDANGERS THE C ONSTITUTIONAL L EGITIMACY OF A FFORDING A H IGH D EGREE OF D EFERENCE TO I NTERSTATE A GENCY A CTION ..................... 1643 C. T HE C OURT S HOULD A PPLY SKIDMORE ’ S F LEXIBLE B ALANCING T EST B ECAUSE I T P ROVIDES P ROCEDURAL P ROTECTIONS AND M AINTAINS P OLITICAL -P ROCESS L EGITIMACY ......................... 1645 VI. CONCLUSION .............................................................................. 1650 I. INTRODUCTION The City of Waukesha, Wisconsin is in the market for new water. 1 Once famous for its mineral springs, Waukesha now draws water from a depleted sandstone aquifer contaminated by levels of radium that are dangerously in excess of state and federal limits. 2 Under a federal deadline for supplying residents with “radium-safe water,” Waukesha has set its sights on the waters of Lake Michigan, one of the world’s largest sources of fresh water located just 15 miles to the east. 3 Despite Waukesha’s proximity to Lake Michigan, the city faces significant legal hurdles in accessing the lake’s water. 4 Waukesha is located just outside the Great Lakes Water Basin. 5 For that reason, under the provisions of the Great Lakes–St. Lawrence River Basin Water Resources Compact (“GLWC”) of 2008, the city must apply for an out-of-basin diversion from an interstate agency made up of representatives from the eight states bordering the Great Lakes. 6 1. Sarah Gardner, Waukesha Fights for a Share of Lake Michigan’s Water , MARKETPLACE (Feb. 4, 2015, 5:00 AM), http://www.marketplace.org/2015/02/04/sustainability/water-high-price-cheap/waukesha-fights-share-lake-michigans-water. 2. Id. ; see also Don Behm, Great Lakes Organization Starts Review of Wisconsin City’s Request for Water from Lake Michigan , DULUTH NEWS TRIB. (Jan. 7, 2016, 6:25 PM), http://www.duluthnews tribune.com/news/3919510-great-lakes-organization-starts-review-wisconsin-citys-request-water-lake-michigan. 3. Don Behm, DNR to Advance Waukesha Water Diversion Bid to Great Lakes Governors , MILWAUKEE–WIS. J. SENTINEL (Dec. 8, 2015), http://www.jsonline.com/news/waukesha/dnr-to-advance-waukesha-water-diversion-bid-to-great-lakes-governors-b99630401z1-360964451.html; see also Gardner, supra note 1. Lake Michigan is one of five lakes in the Great Lakes water system, which accounts for more than one-fifth of the planet’s surface freshwater. JARED TEUTSCH, ALL. FOR THE GREAT LAKES, ON TRACK? ENSURING THE RESILIENCE OF THE GREAT LAKES COMPACT 1 (2013), http://www.greatlakes.org/document.doc?id=1410 (“The Great Lakes . . . contain 84 percent of North America’s surface freshwater and 21 percent of the surface freshwater worldwide.”). 4. See Gardner, supra note 1. 5. See Behm, supra note 3. 6. Great Lakes–St. Lawrence River Basin Water Resources Compact (“GLWC”), Pub. L. No. 110–342, §§ 1, 2.2–.3, 122 Stat. 3739, 3739, 3744 (2008). The GLWC is an interstate compact governing the Great Lakes water system. TEUTSCH, supra note 3, at 1–2. Ratified by the 1604 IOWA LAW REVIEW [Vol. 101:1601 The GLWC is a restrictive interstate compact prohibiting most diversions of water from the Great Lakes Water Basin to locations where water flows to another waterway. 7 An interstate compact is a congressionally approved agreement among states to address a common concern. 8 Frequently, it will create a multi-state agency to achieve its objectives. 9 In May 2010, Waukesha began the application process to secure a water diversion, 10 becoming the first community located entirely outside of the basin to apply for a diversion under the GLWC. 11 For the diversion application to be successful, it must receive the unanimous consent of the members of the interstate agency charged with administering the GLWC—the eight Great Lakes states, the GLWC became federal law in October 2008 when Congress approved it and President George W. Bush signed it into law. See id. at i. The eight states include: Minnesota, Wisconsin, Michigan, New York, Pennsylvania, Ohio, Indiana, and Illinois. Id. at ii; see also GLWC § 1, 122 Stat. at 3739; Great Lakes–St. Lawrence River Basin Water Resources Council Members and Alternates , GREAT LAKES–ST. LAWRENCE RIVER BASIN WATER RESOURCES COUNCIL, http://glslcompactcouncil.org/Membership.aspx (last visited Mar. 5, 2016). 7. See Great Lakes Water Use and Diversions , TIP MITT WATERSHED COUNCIL, http://www. watershedcouncil.org/great-lakes-water-use-and-diversions.html (last visited Mar. 5, 2016). For a good historical review of the federal treaties and interstate compacts predating the GLWC, see generally Sonya F. Palay, Note, Muddy Waters: Congressional Consent and the Great Lakes–St. Lawrence River Basin Water Resources Compact , 36 HASTINGS CONST. L.Q. 717 (2009). The GLWC seeks to protect the Great Lakes by prohibiting undue diversions, preventing future conflicts, and promoting consistent regional “standards for water use and conservation within the basin.” Great Lakes Water Resources Compact and Agreement, ALLIANCE FOR GREAT LAKES, http://greatlakes.org/compact (last visited Mar. 5, 2016); see also GLWC §§ 2.1, 4.5, 4.7, 122...