Today a federal appeals court rejected (PDF) the Competitive Enterprise Institute's challenge to the 1998 Master Settlement Agreement, which resolved state litigation against the major tobacco companies. Among other things, CEI argued that the MSA violated the Compact Clause, which says "no State shall, without the consent of Congress...enter into any Agreement or Compact with another State." Agreeing with a federal judge, the U.S. Court of Appeals for the 5th Circuit said the MSA did not require congressional approval (as envisioned in an earlier version of the deal) because it did not affect the balance of power between the federal government and the states. The court also rejected arguments based on the First Amendment, the Commerce Clause, the Due Process Clause, antitrust law, and the Federal Cigarette Labeling and Advertising Act.

CEI says it will appeal to the Supreme Court. "The court missed an opportunity to restore an important check on state government power set forth by the Founding Fathers," says CEI General Counsel Hans Bader. "The MSA was an unconstitutional backroom deal that transferred money and power from citizens and legislators to state attorneys general. It's time to end this unlawful cartel."

I discussed CEI's suit in 2005.