Stranger in the Land of Federalism: A Defense of the Compact Clause.

Author:Finkel, Jacob
 
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Table of Contents Introduction I. The Compact Clause: Stranger in the Land of Federalism A. Compact Jurisprudence 1. Virginia v. Tennessee 2. United States Steel Corp. v. Multistate Tax Commission B. Future Compacts II. Why Defend the Compact Clause? A. Benefits of Eliminating the Compact Clause B. Harms of Elimination: Horizontal Federalism 1. Compacts meet "Federalism 3.0" 2. Horizontal harms in practice C. Harms of Elimination: Vertical Federalism 1. Congressional inversion 2. Vertical harms in practice III. Reinvigorating the Compact Clause A. Functional Tests B. Categorical Tests C. Negative Field Preemption 1. Negative field preemption in concept 2. Negative field preemption in practice Conclusion Introduction

It might surprise attentive high school students nationwide that the Ivenerahle Schoolhouse Rock! narrative for a bill becoming a law (1)--bicameral legislative passage followed by executive presentment--has a lesser-known understudy, one that looks like a state law, acts like a federal law, and yet is neither. This substitute is the interstate compact. (2) An oddly amalgamated creature, the interstate compact roams uniquely through our constitutional system. It represents a vestige of the sovereign treatymaking powers abandoned by the thirteen colonies in their formation of the Union--providing states with the unique capability to act in concert without federal involvement. Compacts were originally governed by Article I, Section 10 of the U.S. Constitution, which provides: "No state shall, without the consent of Congress, ... enter into any Agreement or Compact with another State, or with a foreign Power...," (3) However, the U.S. Supreme Court's 1978 decision in United States Steel Corp. v. Multistate Tax Commission eviscerated the Compact Clause's influence in constitutional law--perhaps without fully meaning to. (4) Today, compacts often take effect without any oversight from Congress. (5)

This should concern us because compacts are everywhere. If you are a Californian pulled over for speeding in Oregon, your California driver's license may have points deducted thanks to the Driver License Compact between forty-five states. (6) If you have ever flown to New York City, or taken a subway ride in Washington, D.C., you have experienced an interstate compact in action--those transit systems are both products of innovative compacts between neighboring states. (7) Indeed, countless little-noticed compacts are the sine qua non backbone of interstate initiatives integral to our daily lives.

Compacts are increasingly important in an age of polarization, as they form between the lines of state and federal power--a space Rhett Larson has aptly dubbed "interstitial federalism." (8) Federal government action, or inaction, now routinely encounters state-based resistance, often in the form of a proposed compact, which can lack meaningful oversight without enforcement of the congressional approval requirement. For instance, Democratic governors have sought to forge compacts mitigating President Trump's withdrawal from the Paris Accords and the lack of congressional action on gun safety in the wake of the Parkland massacre. (9) Republicans did the same under President Obama, when they sought to enforce stronger federal immigration laws locally. (10) Meanwhile, forty-six states have established their own independent system to administer a multibillion-dollar annual revenue stream from a settlement with tobacco companies despite Congress's failure to endorse such a solution, producing a nationwide increase in cigarette prices. (11)

Yet compacts themselves are insufficiently studied and understood. Recent federalism scholarship has suggested that they are useful instruments, (12) but does not fully engage with their history and limitations, while the sparse record of recent compact scholarship is still siloed in an antiquated view of federalism with an incomplete relationship to on-the-ground realities. (13) Worse, states considering compact formation struggle to understand what they are permitted to do. (14) As one scholar has concluded, "the imperfect state of compact law has not been widely lamented; in fact it even has not been generally recognized." (15)

Three factors contribute to this lack of attention. First, the national significance of compacts is relatively new. The compact form has grown more sophisticated with extraordinary speed in the past century--in part thanks to Felix Frankfurter, who first commended compacts to scholarly attention in 1925 (16)--shifting from a method for resolving mostly local disputes into a substitute for national action. (17) Second, this growing complexity of form, combined with a lax doctrine, has recently mixed with growing political polarization to make compacts that serve as true alternatives to congressional action an appealing proposition. We can expect an increasing number of them to be created for this purpose. (18) Finally, while a few modern scholars have argued ably in favor of, and in opposition to, the Compact Clause's enforcement, and have proposed rationales for how and why it took its written form, (19) most observers have taken their cue from Justice Story, who effectively threw up his hands, declaring that "the whole matter [of the Compact Clause is] open to the most latitudinarian construction." (20) Thus, there has been little attention paid to whether part of the Founders' rationale for including the Clause may still hold relevance across either the vertical or horizontal axes of modern federalism.

In response, this Note proposes a twenty-first-century architecture for compact governance, uniting doctrines of modern federalism with Compact Clause jurisprudence. This new framework, which I term "negative field preemption," aims to revitalize the Compact Clause and to allow useful compacts to grow uninhibited, while preventing harmful compacts from evading congressional oversight. Part I introduces compacts and the judicial history of the Compact Clause, surveying proposed compacts that threaten to supplant Congress's role as policymaker. Part II evaluates why we should be concerned by such compacts in both the horizontal and vertical dimensions of federalism. This entails harnessing the latest scholarship on horizontal federalism, applying it at length to the Compact Clause, and then returning to the Constitutional Convention to analyze why first the Articles of Confederation and then the Constitution restricted intra-union agreements, and, more importantly, why those reasons should still matter today. It concludes that the Union can best be safeguarded by preserving the Founders' vision, not simply because it is their vision in an ipse dixit sense, but because they foresaw dangers for which they wisely prescribed the Compact Clause as a cure. Part III surveys previous proposals for reform and propounds the novel concept of negative field preemption as a method for returning the Compact Clause to responsible functionality.

  1. The Compact Clause: Stranger in the Land of Federalism

    Our interstate compacts are a unique creation within the common law tradition. In the early years of British control in North America, they emerged as a tool for resolving uncertainties between the new colonies over their borders. (21) Beginning in 1656 with a compact between Connecticut (merely twenty years after its founding) and New Netherlands on their shared border, compacts have been with us from the start. (22)

    In his dictionary, Samuel Johnson defined a "compact" as "[a] contract; an accord; an agreement; a mutual and settled appointment between two, or more, to do or to forbear something." (23) More enlightening is the earliest draft of the Articles of Confederation--propounded a week and a day after the issuance of the Declaration of Independence (24)--which included a provision specifically protecting the states' right to craft mutual agreements between themselves with the assent of Congress (25) However, during the seven years in which the Articles of Confederation governed, we know that the states routinely refused to submit these agreements to Congress for approval. (26) Therefore, as the Constitutional Convention drew near, it was unclear whether the provision might survive a transition away from the Articles.

    James Madison had been watching the weakness of a Confederation beset by "political unrest, fiscal ruin, and sectional rivalry" with concern. (27) He read voluminously on previous attempts at federal power, (28) and found that the flaw undoing many historical unions was the encroachment of local concerns upon national interests. (29) The Articles of Confederation he dismissed as "the evil of imperia in imperio" (states within the state). (30) He concluded that it was necessary in every united society to have a means "by which the general authority may be defended against encroachments of the subordinate authorities, and by which the latter may be restrained from encroachments on each other," adding that "[t]he want of some such provision seems to have been mortal to the antient Confederacies, and to be the disease of the modern." (31)

    Upon encountering opposition at the Convention to his far-reaching plans, Madison forcefully addressed the gathering at a key juncture on June 19, 1787, and assailed the weaknesses of the existing Articles. (32) Federal authority, he complained, had been perilously encroached upon. (33) Madison then illustrated the dangers the Articles had failed to prevent: "[N]o two or more States can form among themselves any treaties &c without the consent of Cong[ress] yet Virgi[ni]a & Mary[lan]d in one instance--Pennsylvania] & N[ew] Jersey in another, have entered into compacts, without previous application or subsequent apology." (34) Only a federal government with the power to regulate such state activity, Madison was suggesting, could survive--as previous confederacies had failed to do. (35)

    Soon after Madison's speech...

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