The Collaborative International Dictionary of English v.0.48:

federalize \fed"er*al*ize\, v. t. [imp. & p. p. Federalized;
   p. pr. & vb. n. Federalizing.] [Cf. F. f['e]d['e]raliser.]
   To unite in compact, as different States; to confederate for
   political purposes; to unite by or under the Federal
   Constitution. --Barlow.
   [1913 Webster]