The Federalism Project

American Enterprise Institute

  Compacts, Cartels, and Congressional Consent

Michael S. Greve

The Compact Clause (Art. I, Sec. 10 U.S. Constitution) requires congressional approval for “any agreement or compact” among the states. In the teeth of this wording, the Supreme Court held, in U.S. Steel v. MTC (1978), that the Clause applies only to state compacts that “encroach” upon federal supremacy. Courts have followed this precedent in sustaining the 1998 Multistate Agreement on tobacco litigation (“MSA”) against Compact Clause challenges.

Compacts, Cartels, and Congressional Consent argues that U.S. Steel was wrongly decided. Congressional “negatives,” including the Compact Clause, invert the default rule for constitutionally suspect classes of state laws. Whereas ordinary state laws are permitted to go into (and remain in) effect unless and until Congress or the courts exercise their authority under the Supremacy Clause, congressional negatives render state laws inoperative unless and until Congress takes affirmative action. By limiting the operation of the Compact Clause to state agreements that encroach on federal supremacy—which are unlawful in any event—the Supreme Court has re-inverted the constitutional presumption and emptied the Compact Clause of all content.

This Article explains the forgotten constitutional logic and wisdom of the Compact Clause and argues for a Compact Clause jurisprudence that will safeguard constitutional purposes (in particular, the protection of equality and comity among the states). It shows that both the 1967 Multistate Tax Compact considered in U.S. Steel and the 1998 tobacco settlement are clearly unconstitutional without congressional consent. It concludes that a re-invigorated Compact Clause is consistent with principled, constitutional federalism doctrines. 


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