For those interested, the video of the debate is now available:
In addition to arguments over law and constitutional theory, there was also an exchange about the relative merits of our respective home cities back in Russia: Moscow and St. Petersburg.
I would like to thank Shikha Dalmia and the Reason Foundation for setting up this debate, the Federalist Society for making the video, and Ilya Shapiro for his thoughtful contribution to the discussion.
Finally, I should acknowledge one small misstatement I made in the debate: the Territory Clause of the Constitution is actually in Article IV, not Article VII (I misremembered the number, not having expected this provision to come up). However, the substance of the Clause is exactly as I said: it gives Congress power to govern federal territories where, as a result, it has all the authority that within a state could only be wielded by state or local governments. In federal territories, unlike states, the federal government is the only government.