"Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress...." (Article II, Section 1)
How did this constitutional provision become the NPV loophole?
Hundreds of attempts to amend the Electoral College out of the Constitution have all failed. But California computer scientist John Koza came up with a different idea, now known as National Popular Vote. He would convince state legislatures to pass a state law agreeing to give all their electoral votes to the presidential candidate with the most popular votes nationwide.
Many who had assumed that the Electoral College could only be changed by changing the Constitution at first rejected the possibility of Koza's plan. But look at the Constitutional provision, quoted above, and you see what Koza sees as a great big legal loophole.
That's the NPV argument: states can do whatever they want with this constitutional power. While the bare letter of the law may allow for Koza's NPV plan, it's worth considering both the original intent of the constitutional provision and the potential for absurd results from NPV's interpretation of it.
The Framers and ratifiers of the Constitution intended for state legislatures to determine how best to represent their state's interests in the presidential election process. They never imagined that state lawmakers would choose to eliminate their own state's voice in choosing the President. Nor did they anticipate that state legislatures would surrender the structure of Federalism that provides some of the checks and balances that protect both the states as states and the Liberty of their people.
To the extent that NPV is right--states can award their electoral votes based on something unrelated to and outside of their own state--they might just as legally decide to select their electors based on the height of the candidates, a coin toss, or the Superbowl.