Common use of State Action Clause in Contracts

State Action. Under the Storm Recovery Securitization Law, the State of Louisiana and the Louisiana Legislature have made the State Pledge and the Council has made the Council Pledge. Under the laws of the State of Louisiana and the United States, (x) the State of Louisiana could not constitutionally repeal or amend the Storm Recovery Securitization Law or take any other action contravening the State Pledge and creating an impairment (without, as the Storm Recovery Securitization Law requires, providing full compensation by law for the full protection of the Storm Recovery Charges collected pursuant to the Financing Order and full protection of the Holders or any assignee or financing party), unless such impairment clearly is a reasonable and necessary exercise of the State of Louisiana’s sovereign powers based upon reasonable conditions and of a character reasonable and appropriate to the emergency or other significant and legitimate public purpose justifying such action, (y) under the takings clauses of the United States and Louisiana Constitutions, the State of Louisiana would be required to pay just compensation to Holders, if the State Legislature repealed or amended the Storm Recovery Securitization Law or took any other action contravening the State Pledge, if the court determines doing so constituted a permanent appropriation of a substantial property interest of the Holders of the Storm Recovery Property and deprived the Holders of their reasonable expectations arising from their investments in the Storm Recovery Bonds, and (z) under the laws of the State of Louisiana, the Council Pledge (i) creates a binding contractual obligation of the City of New Orleans for purposes of the contract clauses of the United States and Louisiana Constitutions, and (ii) provides a basis upon which the Holders could challenge successfully any action of the Council of a legislative character, including the rescission or amendment of the Financing Order or the Council seeking to have the City acquire portions of some or all of ENO’s electric distribution facilities, that such court determines violates the Council Pledge in a manner that substantially reduces, limits or impairs the value of the Storm Recovery Property or the Storm Recovery Charges, prior to the time that the Storm Recovery Bonds are paid in full and discharged, unless there is a judicial finding that the Council action clearly is exercised for a public end and is reasonably necessary to the accomplishment of that public end so as not to be arbitrary, capricious or an abuse of authority. There is no assurance, however, that, even if a court were to award just compensation it would be sufficient to pay the full amount of principal and interest on the Storm Recovery Bonds.

State Action. Under the Storm Investment Recovery Securitization Law, the State of Louisiana and the Louisiana Legislature have made the State Pledge and the Council LPSC has made the Council Commission Pledge. Under the laws of the State of Louisiana and the United States, (x) the State of Louisiana could not constitutionally repeal or amend the Storm Investment Recovery Securitization Law or take any other action contravening the State Pledge and creating an impairment (without, as the Storm Investment Recovery Securitization Law requires, providing full compensation by law for the full protection of the Storm Investment Recovery Charges to be imposed, charged and collected pursuant to the Financing Order and full protection of the Holders or any assignee or financing party), unless such impairment clearly is a reasonable and necessary exercise of the State of Louisiana’s sovereign powers based upon reasonable conditions and of a character reasonable and appropriate to the emergency or other significant and legitimate public purpose justifying such action, and (y) under the takings clauses of the United States and Louisiana Constitutions, the State of Louisiana would be required to pay just compensation to Holders, if the State Legislature repealed or amended the Storm Investment Recovery Securitization Law or took any other action contravening the State Pledge, if the court determines doing so constituted a permanent appropriation of a substantial property interest of the Holders of the Storm Investment Recovery Property and deprived the Holders of their reasonable expectations arising from their investments in the Storm Investment Recovery Bonds, and (z) and under the laws of the State of Louisiana, the Council LPSC Pledge (i) creates a binding contractual obligation of the City State of New Orleans Louisiana for purposes of the contract clauses of the United States and Louisiana Constitutions, and (ii) provides a basis upon which the Holders could challenge successfully any action of the Council LPSC of a legislative character, including the rescission or amendment of the Financing Order or the Council seeking to have the City acquire portions of some or all of ENO’s electric distribution facilitiesOrder, that such court determines violates the Council LPSC Pledge in a manner that substantially reduces, limits or impairs the value of the Storm Investment Recovery Property or the Storm Investment Recovery Charges, prior to the time that the Storm Investment Recovery Bonds are paid in full and discharged, unless there is a judicial finding that the Council LPSC action clearly is exercised for a public end and is reasonably necessary to the accomplishment of that public end so as not to be arbitrary, capricious or an abuse of authority. There is no assurance, however, that, even if a court were to award just compensation it would be sufficient to pay the full amount of principal and interest on the Storm Investment Recovery Bonds.