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Abstract: “Spillover commons” are common pool resources that cross jurisdictional boundaries. Governing spillover commons poses unique and significant challenges. If jurisdictional boundaries are drawn too narrowly, jurisdictions can externalize costs to neighbors. If the jurisdictional boundaries are drawn too broadly, too many remote stakeholders unnecessarily increase transactions costs. The jurisdictional boundaries must be just right – the “Goldilocks governance challenge.” To meet this challenge, jurisdictional boundaries should, where possible, correspond to the geographic contours of spillover commons. By making jurisdiction consistent with geography, the jurisdiction internalizes the costs of managing spillover commons while lowering transaction costs. In the United States, this necessitates governance of the inevitable cracks between state and federal jurisdiction associated with spillover commons. This Article describes that level of governance between state and federal jurisdiction as “interstitial federalism.” Governance institutions at the level of interstitial federalism are established through the constitutionally-prescribed inter-state compact process to manage spillover commons. Relying on two recent controversies involving interstate river compacts, this Article provides a critique of the current approach to interstitial federalism and proposes reforms to appropriately strengthen interstitial federalism institutions. This approach has the potential to translate into other areas of interstitial federalism, including public transportation, environmental protection, and energy sharing, as well as to inform international transboundary governance.
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