[8th Cir. 1977]), the court had before it the question of whether the "Brock Bill," Title II of P.L. 93-501, October 29, 1974 (predecessor to the Monetary Control Act here), preempted the Arkansas 10% constitutional usury limitation as to loans of $25,000 or more made by national banks, FDIC-insured state banks and FSLIC-insured savings and loan associations for business and agricultural purposes. The court found the bill preemptive. The court's observations there are applicable here:

The legislative history reflects findings that the financial community in the affected states has suffered because of the high price it must pay for money as opposed to the limitation on the interest it may earn. . . .

Testimony indicated that the usury ceilings were impacting heavily on the construction, small business and agricultural areas of the economies of the states, with a likelihood of severe shortage or unavailability of credit to these classes in the economy. The report states, ... the evidence before the Committee indicates that... [u]nless remedial action is taken in the very near future, these states could suffer from unemployment and business failures.

S.Rep. No. 368, 96th Cong., 1st Session,

U.S. Code Cong. & Admin. News 1980, 834.

The "Brock Bill" also had a provision, as does this legislation, allowing the state legislature to reassert the state's usury provision and, thus, override the federal legislation. The court in Stephens quoted the committee report that this provision reflected "a congressional policy of permitting a state the primary opportunity to determine its usury statutes. . . ." This same language appears in the committee report with respect to the act under consideration here.

An override provision has been a part of other acts including the Taft-Hartley Act, see 29 U.S.C.sec. 164(b); the Federal Bankruptcy Code, 11 U.S.C. sec. 522(b); and the Housing and Rent Act of 1947 as amended, 50 U.S.C.App. sec. 1881 et seq. This provision in the Taft-Hartley Act was upheld in Retail Clerks International Association v. Schermerhorn, 375 U.S. 96, 84 S.Ct. 219, 11 L.Ed.2d 179 (1963), in which the court noted any resulting conflict between state and federal law would be a "conflict sanctioned by Congress with directions to give the right of way to state laws barring the execution and enforcement of union-security agreements". . . . The act is effective

until our legislature deems it necessary to reinstate our 10% usury ceiling. So far, it has not seen fit to do so. Parenthetically, we note that our legislature adopted a resolution urging a reenactment of the "Brock Bill," a predecessor to the Monetary Control Act here. Senate Concurrent Resolution 44 (March 8, 1979).

We hold the Monetary Control Act a valid exercise of congressional authority pursuant to the Commerce Clause and that the loan in question is not usurious. Therefore, the chancellor correctly awarded summary judgment in favor of appellee. Affirmed.

PURTLE, Justice, dissenting.

It is true, as the majority states, that the Supremacy Clause, Art. 6, cl. 2 of the Constitution of the United States declares that the Constitution and the laws made in pursuance thereof are the supreme law of the land. I agree with this statement. I do not believe the Depository Institutions Deregulation sec. Monetary Control Act of 1980 was enacted pursuant to the United States Constitution....

Art. 19, sec. 13, Arkansas Constitution, states:

All contracts for a greater rate of interest
than ten percent per annum shall be void, as
to principal and interest, . . .

The contract here in question undisputedly charged a rate of interest in excess of our constitutional limit. In fact, it has been determined that the case was a test case. Had this court been aware of this fact I believe we would not have considered it. In my opinion, the Constitution of the State of Arkansas is binding upon this court until such time as it is shown that it conflicts with the United States Constitution or the laws passed by Congress in pursuance thereof. I do not believe the Depository Institutions Deregulation & Monetary Control Act of 1980 is such a law....

Until the people of Arkansas change their constitution, I will continue to uphold it unless I am convinced that there exists a clear conflict between it and the United States Constitution or a law passed by Congress in pursuance thereof. I believe the people of Arkansas have recently indicated an intention to retain their present constitutional provision relating to interest rates. . . .

Discussion Notes

1. What is the status of the Arkansas constitu

tional usury limit?

2. The congressional statute apparently per

mitted the Arkansas legislature to reinstate the constitutional usury limit. Does this make sense? Is this a valid exercise of federal commerce clause power?

Article I, Section 10, Clause 3, United States Constitution

Provides in pertinent part:

No State shall, without the Consent of Congress... enter into any Agreement or Compact with another State...

West Virginia ex rel. Dyer v. Sims 341 U.S. 22 (1951)

MR. JUSTICE FRANKFURTER delivered the opinion of the Court.

After extended negotiations eight States entered into a Compact to control pollution in the Ohio River system. See Ohio River Valley Water Sanitation Compact, 54 Stat. 752. Illinois, Indiana, Kentucky, New York, Ohio, Pennsylvania, Virginia and West Virginia recognized that they were faced with one of the problems of government that are defined by natural rather than political boundaries. Accordingly, they pledged themselves to cooperate in maintaining waters in the Ohio River basin in a sanitary condition through the administrative mechanism of the Ohio River Valley Water Sanitation Commission, consisting of three members from each State and three representing the United States.

The present controversy arose because of conflicting views between officials of West Virginia re

garding the responsibility of West Virginia under the Compact.

The Legislature of that State ratified and approved the Compact on March 11, 1939. W. Va. Acts 1939, c. 38. Congress gave its consent on July 11, 1940, 54 Stat. 752, and upon adoption by all the signatory States the Compact was formally executed by the Governor of West Virginia on June 30, 1948. At its 1949 session the West Virginia Legislature appropriated $12,250 as the State's contribution to the expenses of the Commission for the fiscal year beginning July 1, 1949. W. Va. Acts 1949, c. 9, Item 93. Respondent Sims, the auditor of the State, refused to issue a warrant upon its treasury for payment of this appropriation. To compel him to issue it, the West Virginia Commissioners to the Compact Commission and the members of the West Virginia State Water Commission instituted this original mandamus proceeding in the Supreme Court of Appeals of West Virginia. The court denied relief on the merits, 134 W. Va., 58 S.E. 2d 766, and we brought the case here, 340 U.S. 807, because questions of obviously important public interest are raised.

The West Virginia court found that the "sole question" before it was the validity of the Act of 1939 approving West Virginia's adherence to the Compact. It found that Act invalid in that (1) the Compact was deemed to delegate West Virginia's police power to other States and to the Federal Government, and (2) it was deemed to bind future legislatures to make appropriations for the continued activities of the Sanitation Commission and thus to violate Art. X, sec. 4 of the West Virginia Constitution.

But a compact is after all a legal document. Though the circumstances of its drafting are likely to assure great care and deliberation, all avoidance of disputes as to scope and meaning is not within human gift. Just as this Court has power to settle disputes between States where there is no compact, it must have final power to pass upon the meaning and validity of compacts. It requires no elaborate argument to reject the suggestion that an agreement solemnly entered into between States by those who alone have political authority to speak for a State can be unilaterally nullified, or given final meaning by an organ of one of the contracting States. A State cannot be its own ultimate judge in a controversy with a sister State. To determine the nature and scope of obligations as between States, whether they arise through the legislative means of compact or the "federal common law" governing interstate controversies (Hinderlider v. La Plata Co., 304 U.S. 92, 110), is the function and duty of the Supreme Court of the Nation. Of course every deference will be shown to what the highest court of a State deems to be the law and policy of its State, particularly when recondite or unique features of local law are urged. Deference is one thing; submission to a State's own determination of whether it has undertaken an obligation, what that obligation is, and whether it conflicts with a disability of the State to undertake it is quite another.

The Supreme Court of Appeals of the State of West Virginia is, for exclusively State purposes, the ultimate tribunal in construing the meaning of her Constitution. Two prior decisions of this Court make clear, however, that we are free to examine determinations of law by State courts in the limited field where a compact brings in issue the rights of other States and the United States.

The issue in the Hinderlider case was whether the Colorado Legislature had authority, under the State Constitution, to enter into a compact which affected the water rights of her citizens. The issue before us is whether the West Virginia Legislature had authority, under her Constitution, to enter into a compact which involves delegation of power to an interstate agency and an agreement to appropriate funds for the administrative expenses of the agency.

That a legislature may delegate to an administrative body the power to make rules and decide particular cases is one of the axioms of modern government. The West Virginia court does not challenge the general proposition but objects to the delegation here involved because it is to a body outside the State and because its Legislature may not be free, at any time,. to withdraw the power delegated. We are not here concerned, and so need not deal, with specific lan

guage in a State constitution requiring that the State settle its problems with other States without delegating power to an interstate agency. What is involved is the conventional grant of legislative power. We find nothing in that to indicate that West Virginia may not solve a problem such as the control of river pollution by compact and by the delegation, if such it be, necessary to effectuate such solution by compact. If this Court, in the exercise of its original jurisdiction, were to enter a decree requiring West Virginia to abate pollution of interstate streams, that decree would bind the State. The West Virginia Legislature would have no part in determining the State's obligation. The State legislature could not alter it; it could not disregard it, as West Virginia on another occasion so creditably recognized. The obligation would be fixed by this Court on the basis of a master's report. Here, the State has bound itself to control pollution by the more effective means of an agreement with other States. The Compact involves a reasonable and carefully limited delegation of power to an interstate agency. Nothing in its Constitution suggests that, in dealing with the problem dealt with by the Compact, West Virginia must wait for the answer to be dictated by this Court after harassing and unsatisfactory litigation.

The State court also held that the Compact is in conflict with Art. X, sec. 4, of the State Constitution and for that reason is not binding on West Virginia. This section provides:

No debt shall be contracted by this State, except to meet casual deficits in the revenue, to redeem a previous liability of the State, to suppress insurrection, repel invasion, or defend the State in time of war; but the payment of any liability, other than that for the ordinary expenses of the State, shall be equally distributed over a period of at least twenty years.

The Compact was evidently drawn with great care to meet the problem of debt limitation in light of this section and similar restrictive provisions in the constitutions of other States. Although, under Art. X of the Compact, the States agree to appropriate funds for administrative expenses, the annual budget must be approved by the Governors of the signatory States. In addition, Article V provides: "The Commission shall not incur any obligations of any kind prior to the making of appropriations adequate to meet the same; nor shall the Commission pledge the credit of any of the signatory States, except by and with the authority of the legislature thereof." In view of these provisions, we conclude that the obligation of the State under

the Compact is not in conflict with Art. X, sec. 4 of the State Constitution.

Reversed and remanded.

MR. JUSTICE BLACK concurs in the result.

MR. JUSTICE REED, concurring. I concur in the judgment of the Court but disagree with the assertion of power by this Court to interpret the meaning of the West Virginia Constitution. This Court must accept the State court's interpretation of its own Constitution unless it is prepared to say that the interpretation is a palpable evasion to avoid a federal rule.1

There is no problem concerning the binding effect upon this Court of state court interpretation of state law, under the Compact Clause such as there is under the clause against impairing the Obligation of Contracts.2 Under the latter clause, this Court, in order to determine whether the subsequent state law, constitutional or statutory, impairs the federal prohibition against impairment of contracts, has asserted power to construe for itself the disputed agreement, to decide whether it is a contract, and to interpret the subsequent state statute to decide whether it impairs that contract. Even then we accept state court conclusions unless "manifestly wrong."4 Examination here, under the Contract Clause, is to enforce the federal provision against impairment and is made only to decide whether under the Contract Clause there is a contract and whether it is impaired.5 This Court thus adjudges whether state action has violated the Federal Contract Clause. It does not decide the meaning of a state statute as applied to a state appropriation.

Under the Compact Clause, however, the federal questions are the execution, validity and meaning of federally approved state compacts. The interpretation of the meaning of the compact controls over a state's application of its own law through the Supremacy Clause and not by any implied federal power to construe state law.

West Virginia adjudges her execution of the

'Union Pac. R. Co. v. Public Service Comm'n, 248 U.S. 67. 2U.S. Constitution, Art. I, & 10.

3 Appleby v. City of New York, 271 U.S. 364, 380; King Mfg. Co. v. Augusta, 277 U.S. 100, 114; Coombes v. Getz, 285 U.S. 434, 441.

"Hale v. State Board, 302 U.S. 95, 101. 5Coolidge v. Long, 282 U.S. 582, 597.

Delaware River Joint Toll Bridge Comm'n v. Colburn, 310 U.S. 419,428, where it is said, "Hence we address ourselves to the language of the Compact." And see the last paragraph of that opinion.

compact is invalid as a delegation of state police power and as a creation of debt beyond her constitutional powers. Since the Constitution provided the compact for adjusting interstate relations, compacts may be enforced despite otherwise valid state restrictions on state action.

This, I think, was the basis of our holding in Hinderlider v. La Plata Co., 304 U.S. 92. The Supreme Court of Colorado held that compact invalid because it was an executive abandonment by Colorado of a citizen's previously acquired water rights, pp. 104 and 108. But we concluded:

Whether the apportionment of the water of an interstate stream be made by compact between the upper and lower States with the consent of Congress or by a decree of this Court, the apportionment is binding upon the citizens of each State and all water claimants, even where the State had granted the water rights before it entered into the compact.

P. 106.

For that conclusion reliance was placed upon Rhode Island v. Massachusetts, 12 Pet. 657, 725, where this Court, speaking of compacts, said:

By this surrender of the power, which before the adoption of the constitution was vested in every state, of settling these contested boundaries, as in the plenitude of their sovereignty they might; they could settle them neither by war, or in peace, by treaty, compact or agreement, without the permission of the new legislative power which the states brought into existence by their respective and several grants in conventions of the people. If congress consented, then the states were in this respect restored to their original inherent sovereignty; such consent being the sole limitation imposed by the constitution, when given, left the states as they were before... whereby their compacts became of binding force, and finally settled the boundary between them: operating with the same effect as a treaty between sovereign powers.

I would uphold the validity of the compact and reverse the judgment of West Virginia refusing mandamus, with direction to that court to enter a judgment not inconsistent with an opinion based upon the Supremacy Clause.