Opinion ID: 2775945
Heading Depth: 3
Heading Rank: 1

Heading: Applicability of Energy Reserves

Text: As a threshold matter, Purchaser contests the applicability of Energy Reserves to this case. Relying on nineteenth-century Supreme Court precedent, Purchaser argues that debt contracts are special, characterizing the NMLA as a populist debt-relief law like those the Founders intended the Contract Clause to proscribe. See, e.g., Walker v. Whitehead, 83 U.S. 314, 318 (1872) (invalidating a post-Civil-War Georgia law that would have allowed former slave owners to deduct the value of freed men and women from their debt obligations); Sturges v. Crowninshield, 17 U.S. 122, 197–98 (1819) (articulating a narrow reading of the Contract Clause in striking down a New York law that absolved debtors from personal liability—in addition to releasing them from prison—upon the surrender of all their property). But as the district court observed, the Supreme Court’s nineteenth-century treatment of debt contracts is not a principled basis on which to depart from the clearly established modern approach that balances the contractual right impaired against the public interest served. See Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 503 (1987) (“[O]ur cases construing the Clause, indicate that its primary focus was upon legislation that was designed to repudiate or adjust pre-existing debtor-creditor relationships that obligors were unable to satisfy. Even in such cases, the Court has refused to give the Clause a literal reading.” (internal citations omitted)); Exxon Corp. v. Eagerton, 462 U.S. 176, 190 (1983) (“This Court has long recognized that a statute does not violate the Contract Clause simply because it has the effect of restricting, or even barring altogether, the performance of duties created by contracts entered into prior to its enactment.”); Faitoute Iron & Steel Co. v. City of Asbury Park, 316 U.S. 502, 513 (1942) (“The No 14-1419 Borman, LLC v. 1878 Borman, LLC Page 12 dictum from Sturges v. Crowninshield is one of those inaccurate generalizations that has gained momentum from uncritical repetition.”). Purchaser alternatively contends that the Energy Reserves framework applies only to laws enacted in response to crises, pointing out that the shift to modern Contract Clause jurisprudence coincided with the Court’s opinions upholding state laws enacted to combat the effects of the Great Depression. The Supreme Court flatly rejects this argument. E.g., Energy Reserves, 459 U.S. at 412 (“Furthermore, since [Home Bldg. & Loan Ass’n v. Blaisdell, 290 U.S. 398 (1934)], the Court has indicated that the public purpose need not be addressed to an emergency or temporary situation.”). In short, Purchaser offers no persuasive justification for extending additional constitutional protection to debt contracts. We follow the Energy Reserves framework in assessing whether the NMLA comports with the Contract Clause.