Though certain to pass due to the Republican majority, which had recently been solidified by the election of a Republican clerk and speaker of the House, the Report was debated for five days. The main point of contention was the meaning of the third of the Virginia Resolutions:
…this Assembly doth explicitly and peremptorily declare, that it views the powers of the federal government, as resulting from the compact to which the states are parties; … and that in case of a deliberate, palpable, and dangerous exercise of other powers not granted by said compact, the states who are parties thereto have the right … to interpose for arresting the progress of the evil…the authorities, rights, and liberties appertaining to them.
This resolution had been the principal target of the Federalist attack on the Resolutions. Particularly at issue was the sense in which the states were parties to the federal compact. The Report was ultimately amended to provide greater clarity on this issue by emphasizing that it was the people themselves, acting through the states in their sovereign capacity, who were parties to the Constitution. The amended Report passed the House of Delegates on January 7 by a margin of 60 to 40. At some point in the next two weeks, it passed the Senate by a margin of 15 to 6.
Virginia Republicans were happy with the Report. The General Assembly arranged for five thousand copies to be printed and distributed in the state, but there was not much public response to the Report, and it appears to have had relatively little impact on the presidential election of 1800 (which was, nevertheless, a major victory for the Republicans and a repudiation of Federalist policies). Parties outside Virginia seemed uninterested in the rehashing of the 1798 Resolutions, and in other states there was very little public comment. Jefferson eagerly sought copies for distribution to Republican members of Congress departing for their home states, and when they failed to arrive he entreated Monroe for at least one copy that he could reproduce. Despite Jefferson's approval of and attempt to distribute Madison's work, the national reaction was tepid. Though it had little impact on the immediate election, Madison's Report clarified the legal argument against the Acts and for states' rights in general, particularly in its advancement of the Tenth Amendment rather than the Ninth as the main bulwark against federal encroachment on state autonomy.
The general purpose of the Report was the affirmation and expansion of the principles in the Virginia Resolutions. The first major goal of the Resolutions was to bring about the repeal of the Alien and Sedition Acts by generating public opposition that would be expressed through the state legislatures. Madison sought to accomplish this by demonstrating conclusively that the Acts violated the constitution. Laying into the Acts in his Report, Madison described many breaches of constitutional limits. The Alien Act granted the President the unenumerated power of deporting friendly aliens. Contrary to the Sedition Act, the federal government had no power to protect officials from dissent or libelous attack, beyond the protection it accorded to every citizen; indeed, such special intervention against the press was "expressly forbidden by a declaratory amendment to the constitution." As well, Madison attacked Federalist carriage laws and bank laws as unconstitutional.
To remedy the defects revealed by the passage of the Alien and Sedition Acts, Madison called for citizens to have an absolute right to free speech. Madison writes that the ability to prosecute speech amounts to "a protection of those who administer the government, if they should at any time deserve the contempt or hatred of the people, against being exposed to it." Freedom of the press was necessary, because "chequered as it is with abuses, the world is indebted to the press for all the triumphs which have been gained by reason and humanity over error and oppression." The Report supported a strict interpretation of the First Amendment. While the Federalists interpreted the amendment as limiting the power of Congress over the press, but implying that such power existed, Madison argued that the First Amendment wholly prohibited Congress from any interference with the press.
More generally, the Report made the argument in favor of the sovereignty of the individual states, for which it is best known. The basic message was that the states were the ultimate parties constituting the federal compact, and that therefore the individual states were ultimate arbiters of whether the compact had been broken by the usurpation of power. This doctrine is known as the compact theory. It was the presence of this argument in the Resolutions that had allowed the Federalists to paint the Republicans as leaning toward secession; in the amended Report the line is moderated, with an emphasis that it is the states as political societies of the people (and therefore, one reads in, not the state legislatures alone) which possess this power. Either formulation would help the Republican cause by refuting the finality of any constitutional interpretation advanced by the Congress and federal judiciary, both of which were dominated by Federalists.
In defense of Virginia Republicans and the Resolutions, Madison emphasized that even if one disagreed with the compact theory, the Virginia Resolutions and the Report of 1800 themselves were simply protests, which states were surely entitled to produce. They were "expressions of opinion, unaccompanied with any other effect than what they may produce on opinion by exciting reflection." By eschewing direct action in favor of influencing popular opinion, Madison tried to make clear that the Republicans were not moving toward disunion.
The Report was regarded in the early 19th century as among the more important expressions of Republican principles. Spencer Roane described it as "the "Magna Charta" on which the republicans settled down, after the great struggle in the year 1799." Henry Clay said on the floor of the House of Representatives that it was from the Report of 1800, above other documents, that he had developed his own theories on constitutional interpretation. H. Jefferson Powell, a modern jurist, identifies three persistent themes of Republican constitutionalism which emerged from the Resolutions and the Report: (1) a textual approach to the Constitution, (2) the compact theory, and (3) that caution, not trust, should characterize our approach to those who hold political power.
In more recent years, the main practical interest in the Report has been its absolutist understanding of the First Amendment. Multiple Supreme Court decisions have cited the case as evidence of the Framers' ideas on free speech. In the 1957 "Roth v. United States" opinion by William Brennan, Madison's Report is cited as evidence that "the fundamental freedoms of speech and press have contributed greatly to the development and well-being of our free society and are indispensable to its continued growth." Other cases to cite the Report for a similar purpose include "Thornhill v. Alabama" (1940) and "Nixon v. Shrink Missouri Government PAC" (2000).