The Logic of Federally Backed, Collective State Action on COVID-19 Testing

While there is an emerging consensus that a sustained program of large-scale testing – testing on steroids – is required to really lift the state and local “stay at home” restrictions established to fight the COVID-19 pandemic, there is no clarity over who has responsibility for the development and implementation of this needed testing strategy. One novel solution to end the current impasse is collective action by states, through interstate compacts or similar arrangements, backstopped by federal legislation that affords them wide-ranging authorities, tools and funding to address the problem.

The Nature of the Problem

As we move toward a nationwide test and trace strategy, there are critical challenges. Which tests have the greatest efficacy, what testing protocols should apply (who should be tested and when), and how to address the limited availability of test kits, underdeveloped test supply chains, shortages of critical related supplies such as swabs and reagents, the limited mechanisms for widespread test dissemination, and funding for all of the above.

A key discriminator is math – the need for a testing program of a scale and scope far beyond the current run rate of roughly 150,000 daily tests. The magnitude of testing demand is clear. Facilities in the food supply chain, long term care facilities, hospitals, and other businesses which seek to assure the safety of their work forces. Testing could be a condition of entry for students registering at a college in the fall.

To be sure, the nature of the problem – a global pandemic – calls for a national testing solution, or at a minimum, a combined federal-state approach. There also is no doubt that the Trump administration has an ample federal toolbox to tackle this problem, including the Defense Production Act – which was enacted to address this very type of emergency. Moreover, the Department of Health and Human Services and the Centers for Disease Control and Prevention have the expertise to develop test standards and protocols and conduct research and development.

Indeed, the Trump administration has just set forth a plan calling for robust diagnostic testing plans, timely monitoring systems and a rapid response, including quick isolation and contact tracing. While these steps all make sense, there is a clear gap between the vision and implementation – how will we achieve these goals. The administration views itself as a “supplier of last resort” on testing, with a limited role in research and development, overall guidance and technical assistance, and expedited regulatory authorizations. Significantly, it does not plan to utilize the DPA as an across-the-board tool in organizing testing.

On the other hand, numerous state governments assert that the administration seeks to have them bear responsibility for these central elements of strategy – test, monitor and response – but does not give them the tools to achieve these ends.  The states believe they lack the tools, capability and funding for widespread testing, monitoring and tracing — including supplies, available test kits and trained personnel. Clearly, they also lack the federal government’s authority under the DPA to prioritize their contracts, allocate resources, facilitize capabilities, and create supply-chain resiliency.

While there is no apparent resolution to this impasse, one thing is clear: The sooner effective en masse testing and tracing can be implemented, the sooner the president’s goal of reopening the country can be realized.

The Logic of State Collective Action

In this unusual situation, there’s a novel approach that should be considered to fill the void. Namely, states could enter into interstate compacts or similar arrangements and Congress could authorize these arrangements and afford such collective groups of states the authorities, tools, immunities and funding needed to manage the massive testing effort. In short, Congress and the administration could delegate DPA-like authorities to these interstate arrangements.

The core idea is that group of states, acting together, could create systemic solutions rather than 50 different solutions. These interstate arrangements can facilitate the creation of effective regional “capabilities” for testing – with accountable and flexible (probably virtual) organizations, a developed set of protocols and the identification of effective tests that each state can utilize, large-scale combined production – which is more efficient and cost effective, and a range of dissemination methodologies that can be tailored to specific state’s needs (from drive through options to distribution at pharmacies to other mechanisms).

On the supply side of the ledger, the interstate groups could utilize their DPA-like authority to systematically issue rated contracts to manufacturers and take steps to facilitize the development of surge manufacturing capability to address critical supply chain shortfalls. On the demand side, they could potentially organize exchanges among the state combines where needed supplies could be efficiently procured through competition and allocated – subject to a limited antitrust immunity afforded by Congress (analogous to the antitrust immunities for cooperative engagements that the federal government can provide under the DPA). This could avoid the prospects of 50 states bidding against one another in a market for scarce supplies.

While one can envisage multiple groups of states forming compacts (as have begun to develop organically for removing stay at home orders), there is a reasonable likelihood different compacts could coordinate among themselves to the benefit of all.

There is no doubt that federal legislation is needed to effectuate this approach. Under the U.S. Constitution, interstate compacts must be approved by Congress, appropriations are necessary and the DPA does not authorize the president to delegate his authorities beyond the federal domain. Moreover, Congress can and should build safeguards into these arrangements.

Normally, structuring interstate facilities like this would take years. But the situation calls for rapid collective action, and Congress, the Administration and states have already risen to expedited solutions during the pandemic.

In short, the idea of collective state action on testing with federal backstopping is without doubt a “second best” approach – not as good as a national approach with state involvement. But in current circumstances, this is a reasonable option to consider that preserves the logic of a national approach and federal-state cooperation while avoiding the disarray and limitations of individual state efforts.

A partner in Eversheds-Sutherland, a global law firm, Jeffrey P. Bialos previously served as Deputy Under Secretary of Defense for Industrial Affairs and as a member of Secure Virginia, the state’s homeland security advisory board.

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