Inception of the Compact

             Members of the Vermont state legislature conceived the idea of the Northeast Interstate Dairy Compact in 1987.  Because the problem of the northeastern dairy market had evolved into regional concern, they reasoned that it would be best resolved bycooperative regional action. 

The Constitution provides for interstate compacts and agreements, as contemplated by the Vermont legislature, but requires that Congress consent to such compacts before they take effect.[1]  This consent also removes any difficulties arising under the Supreme Court’s dormant Commerce Clause decisions, because that doctrine does not apply when Congress authorizes state action. [2]    A successful interstate compact, Vermont concluded, would thus resolve both the constitutional need for congressional approval and the practical challenge of coordinating interstate regulation.

          Placeholder legislation was introduced in the Vermont legislature early in 1988.  That spring, a group of Vermont legislators formally initiated the interstate compact effort by
organizing an informal meeting with their New York counterpart legislators to discuss the possibility of an interstate dairy compact. The Vermont legislators first approached their
counterparts from New York because dairy farmers from New York provided the other significant portion of the raw milk supply for the New England market.

The Vermonters found a receptive audience, as a New York legislative study had recently reached the same conclusion about the efficacy of an interstate dairy compact. Having quickly found common legal ground, the meeting of legislators, led by Vermont State Representative Bobby Starr and New York State Senator John McHugh, moved at once to establish the principles that would underlie the Compact.  The legislators concurred on three main objectives:

·        First and most important, it was determined that the Compact mechanism must simultaneously respond to the broad public interest represented by a regional regulated marketplace.

           This objective contemplated that the Compact would account for the concerns of processors, retailers and consumers, in addition to being responsive to the interest of dairy farmers.  This approach drew on the experience of Milk Control Boards, which had traditionally regulated prices from farm-gate to retail outlet.

This approach also responded directly to the regulated environment represented by the state of New York as a whole.  In contrast to Vermont, New York has tremendous urban centers, comprised of people interested in the dairy marketplace primarily as consumers, in addition to rural regions where the residents' interest is primarily as producers.  New York also has large processing and retail concerns.[3]

·        Second, the Compact would be responsive to the interests of the states as sovereign states.

              The legislators from the two states understood themselves as being representative primarily of concern that the states must not be required to cede any other measure of sovereignty in exchange for the regaining of regulatory control over the marketplace.[4]

·        Third, the Compact would mirror the federal milk marketing system as much as possible, to make use of the work already done in creating that system and to avoid creating an additional layer of regulatory complexity.

             Having so quickly found common legal ground for their initial interstate discussion, the legislators were able to move right along into a discussion of the technical  requirements for the interstate regulation of the region's dairy marketplace.  Most particularly, it was determined that the regulation could be modeled on the federal pattern of regional regulation, with suitable local adjustment.  Most critically, this meant the regulation would be built around where the regulated product was sold rather than produced, and further that the regulation would be made to apply uniformly to all finished beverage milk sold in the regulated area as well as bulk product.