Draft Compact

           The Vermont and New York legislators assigned their staff the task of developing draft compact language consistent with the objectives identified at the meeting.[1]  The draft Compact was developed throughout the summer and fall of 1998, in time for its introduction at the beginning of the states new legislative sessions, in January, 1989. 

           After identifying the Compact’s legislative intent of restoring the states’ regulatory authority over an increasing chaotic market,[2] and after making clear their intent to supplement rather than interfere with federal regulation,[3] the drafters created a new entity—the Northeast Dairy Compact Commission -- comprised it of delegations from all Compact states,[4] and conveyed to the Commission regulatory authority over the regional, New England marketplace.[5]   The Compact would give the Commission general rulemaking as well as investigatory powers over the fluid milk market within the Compact region.[6]  It also would confer the specific power to establish over-order prices[7] within the region.[8]

            To ensure that the individual states retained their individual sovereignty over their intrastate markets, the Compact placed significant procedural and substantive limitations on the Commission’s powers.  A two-thirds vote of the delegations would be required to implement a pricing regulation, and, most significantly, the Commission could never impose a pricing order on any Compact state without the affirmative vote, or consent thereby, of that state’s delegation to the Commission.[9] These provisions ensured that any price regulations would be in the public interest of the region collectively and in that of each participating state.

           Procedural safeguards, or a system of checks and balances, were also provided for the market participants directly affected by the regulation.  Any price regulation would require approval by two-thirds of all affected dairy farmers in a referendum.[10]  Any milk processor affected by an order could petition the Commission for exemption, and the Commission’s denial of such a petition would be subject to review in federal court.[11]

           In conducting the legal research of the case law and literature on interstate compacts, the drafters became sensitive to an additional concern.  Courts and scholars have often held and observed that the purpose of the Constitution’s requirement for congressional consent is to ensure that the proposed compact does not “interfere with the full and free exercise of federal authority”.[12]

           Those working to create the Dairy Compact understood this to mean that Congress would properly subject it to searching scrutiny for effects on the national milk market and on milk producers and processors located outside the Compact region.  In response to this concern, the drafters ensured that the text clearly mandated that the regional market subject to regulation under the Compact remained open to all market participants.  The
text further ensured that all market participants, processors and farmers alike, would be subject to uniform, non-discriminatory regulation.[13]