US Government Debt Different - Finance Department - University of ...

Charles W. Mooney, Jrformity required by the Bankruptcy Clause” in Railway Labor Executives’Association v. Gibbons. 61 Gibbons held that an act enacted pursuantto the Bankruptcy Clause power was unconstitutional because itapplied to only one named debtor and that debtor’s creditors. 62 Theact failed the uniformity requirement. As the Court explained:195Our holding today does not impair Congress’ ability under theBankruptcy Clause to define classes of debtors and to structurerelief accordingly. We have upheld bankruptcy laws that applyto a particular industry in a particular region. See 3R ActCases, 419 U.S. 102 (1974). The uniformity requirement, however,prohibits Congress from enacting a bankruptcy law that,by definition, applies only to one regional debtor [the Chicago,Rock Island and Pacific Railroad Co.]. To survive scrutiny underthe Bankruptcy Clause, a law must at least apply uniformly to adefined class of debtors. A bankruptcy law . . . confined as it isto the affairs of one named debtor can hardly be considered uniform.To hold otherwise would allow Congress to repeal the uniformityrequirement from Art. I, § 8, cl. 4, of the Constitution. 63Of course, Congress did not write an entirely new bankruptcy lawsolely for the Rock Island Railroad, it only added a few special provisions.It follows that any provisions of a bankruptcy law that wouldapply only to the U.S. government as debtor would be suspect underGibbons.One way around the problem would be for the legislation to providefor bankruptcy relief for a “defined class of debtors,” which could bethe sovereigns consisting of the U.S. government or the governmentof any state of the U.S. Or the class could include any sovereign(although the likelihood of a foreign sovereign state’s use of such alaw seems fanciful). Even so, it is likely that some provisions of thelaw necessarily would apply only to the U.S. government. In thatcase, the fact that the U.S. government is so unlike any other debtormight be sufficient to overcome a uniformity objection. Congresscould enact a new, special law for sovereign bankruptcy or amend61 455 U.S. 457, 469.62 Gibbons, 455 U.S. at 473.63 Id.