Air Transp. Ass'n of Am. v. Export–Import Bank of U.S.

• Decision Date: 18 July 2012
• Docket Number: Civil Action No. 11–2024 (JEB).
• Citation: 878 F.Supp.2d 42
• Parties: AIR TRANSPORT ASSOCIATION OF AMERICA, et al., Plaintiffs, v. EXPORT–IMPORT BANK OF THE UNITED STATES, et al., Defendants.
• Court: U.S. District Court — District of Columbia

878 F.Supp.2d 42

AIR TRANSPORT ASSOCIATION OF AMERICA, et al., Plaintiffs,

v.EXPORT–IMPORT BANK OF THE UNITED STATES, et al., Defendants.

Civil Action No. 11–2024 (JEB).

United States District Court, District of Columbia.

July 18, 2012.

Michael K. Kellogg, W. Joss Nichols, Wan J. Kim, Kellogg, Huber, Hansen, Todd & Evans, Figel P.L.L.C., Washington, DC, for Plaintiffs.

David Michael Glass, Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

JAMES E. BOASBERG, District Judge.

The Export–Import Bank of the United States has long been in the business of issuing loan guarantees to support foreign airlines' purchases of aircraft from domestic manufacturers. While the Bank's involvement in the air-travel industry undoubtedly serves the interests of U.S. aircraft manufactures, those interests do not necessarily align with the interests of U.S. airlines and their employees. The manufacturers appreciate the help in selling their planes to foreign buyers, but the airlines resent the boost this provides to their competitors. When in 2011 the Bank approved a series of guarantees to support Air India's purchase of planes from Boeing, organizations representing some of those domestic airlines and their employees brought this suit. These Plaintiffs claim that the manner in which the Bank processes loan-guarantee applications from foreign airlines is inconsistent with its obligations under the Export–Import Bank Act. In particular, they maintain that the Bank violated both the Bank Act and the Administrative Procedure Act when it approved the 2011 Air India guarantees.

Back in January, the Court rejected Plaintiffs' Motion for Preliminary Injunction because they had failed to demonstrate that they would suffer irreparable harm during the pendency of this suit. Both sides have now filed dispositive motions. In resolving them, the Court must tackle important and difficult questions about constitutional standing, the role of the courts vis-à-vis the Export–Import Bank, and the nature of the Bank's obligations under the Bank Act. In the end, it finds that Plaintiffs have established standing and that the Bank's loan-guarantee determinations are, at least in a limited sense, subject to judicial review. But after winning these battles, Plaintiffs lose the war. When all is said and done, the Bank's decision to approve the Air India Commitments was neither arbitrary and capricious nor contrary to law. Summary judgment will thus be entered in Defendants' favor.

I. BackgroundA. The Export–Import Bank

The Export–Import Bank of the United States is an independent federal agency and corporation that has its origins in a 1934 Executive Order issued by then-President Franklin Roosevelt. See Exec. Order No. 6581 (Feb. 2, 1934). The Bank assumed its current form with the passage of the Export–Import Bank Act of 1945 (Bank Act), ch. 341, 59 Stat. 526, which, as amended and codified at 12 U.S.C. § 635 et seq., remains the Bank's governing charter. That statute provides that “[t]he objects and purposes of the Bank shall be to aid in financing and to facilitate exports of goods and services, imports, and the exchange of commodities and services between the United States ... and any foreign country ..., and in so doing to contribute to the employment of United States workers.” 12 U.S.C. § 635(a)(1). Consistent with these goals, the Bank is empowered “to provide guarantees, insurance, and extensions of credit.” Id. § 635(b)(1)(A). Loans and guarantees issued by the Bank carry the full faith and credit of the United States government. Id. § 635k.

In order to carry out its business, the Bank is required to maintain a Board of Directors, which must consist of the Bank's President, its Vice President, and three additional persons. See id. § 635a(c). A company seeking Bank financing may apply to the Board for approval of either a preliminary or a final commitment. See Defs.' Mot., Exh. H (Third Decl. of Robert Morin), ¶¶ 26, 29. If a majority of the Board's members so votes, an application for a preliminary commitment is approved. See Bylaws of the Export–Import Bank of the United States, art. I, § 5 (effective Aug. 20, 1998), available at http:// www. exim. gov/ about/ bylaws/index.cfm. Obtaining a preliminary commitment allows a company to engage in long-term planning, and preliminary commitments may be converted into final commitments by another majority vote of the Board. Third Morin Decl., ¶¶ 31, 33. New commitments of more than $100 million require an additional step: they can be finalized only after Congress has been given the opportunity to review and comment on the transaction. 12 U.S.C. § 635(b)(3); see also Third Morin Decl., ¶ 34.

In deciding whether to approve an application for a financial commitment, the Board must consider both the financial wisdom of the loan or guarantee, as well as its impact on U.S. industry and employment. See generally12 U.S.C. § 635 et seq. For example, the statute provides that the Bank shall only make loans that, “in the judgment of the Board of Directors, offer reasonable assurance of repayment.” Id. § 635(b)(1)(B); see also id. § 635j(a). And, more relevant to the instant dispute, it specifies that the Bank must “take into account any serious adverse effect of such loan or guarantee on the competitive position of United States industry ... and employment ... and shall give particular emphasis to the objective of strengthening the competitive position of United States exporters and thereby of expanding total United States exports.” Id. § 635(b)(1)(B).

These are not the only limitations the Bank Act places on the Bank's operations, nor are they the only provisions at issue in this suit. In analyzing Plaintiffs' claims the Court will individually discuss each portion of the statute on which those claims rely, but, at this juncture, it is sufficient to say that various provisions of the statute require the Bank to consider the ways in which its transactions affect domestic industry and employment.

The Bank's “means for complying with these statutory obligations are its ‘Economic Impact Procedures' ” (EIPs). ATA & Delta's Am. Compl., ¶ 64; ALPA's Compl., ¶ 60; see Export–Import Bank of the United States Economic Impact Procedures (Apr.2007), available at http:// www. exim. gov/ products/ policies/ econ_ impact_ proc 4– 07. pdf. The EIPs are comprised of a series of five “screens” that aim to identify the “potential economic impact” of prospective commitments. See EIPs at 1; ATA & Delta's Am. Compl., ¶ 65; ALPA's Compl., ¶ 61. The “Ex–Im Bank reviews all transactions it receives” for such impact by applying these screens. EIPs at 1. Only those transactions that are not exempted by any of the five screens are put “through a more extensive process” to further explore their potential economic impact. Id. In other words, if a transaction is exempted by a screen, it need not undergo further economic-impact scrutiny. See id. At issue in this case is the first of those screens, which qualifies a transaction for further scrutiny only “if the exports involved in [that] transaction will result in the production of an exportable good.” Id. It was the application of this screen that exempted the Air India Commitments and led to Plaintiffs' claim of injury.

B. The Air India Commitments

Loans and loan guarantees that support domestic aircraft manufacturing comprise a substantial portion of the Bank's transactions. See ATA & Delta's Am. Compl., ¶ 29; ALPA's Compl., ¶ 28. Such guarantees allow foreign airlines to obtain credit at lower interest rates, which in turn provides them with an incentive to purchase American planes instead of planes manufactured abroad. See ATA & Delta's Am. Compl., ¶¶ 25, 53–54; ALPA's Compl., ¶¶ 24, 51–52. This benefits American manufacturers by providing additional buyers for their wares. To give a sense of the scale of the Bank's involvement in financing foreign airlines' purchase of domestic aircraft, between 2005 and 2010 the Bank “financed or guaranteed the financing for purchases by foreign airlines of 634 aircraft, adding up to more than $34.5 billion.” ATA & Delta's Am. Compl., ¶ 29; ALPA's Compl., ¶ 28.

Plaintiffs contend that these transactions have caused them competitive injury. See ATA & Delta's Am. Compl., ¶¶ 52–61, 77–101; ALPA's Compl., ¶¶ 50–58, 73–97. As direct competitors of Air India, ATA's members, including Delta, claim that the benefits the Bank's practices have conferred on foreign airlines have put them at a competitive disadvantage and caused them direct financial harm. See ATA & Delta's Am. Compl., ¶¶ 52–61, 77–101. The financial injuries incurred by the airlines, furthermore, have also been felt by the airlines' employees, including the pilots that the Air Line Pilots Association (ALPA) represents. See ATA & Delta's Am. Compl., ¶¶ 67–76; ALPA's Compl., ¶¶ 64–72. Plaintiffs contend that “[t]he Ex–Im Bank's subsidies to foreign carriers have forced U.S. airlines to cut between 4,100 and 7,500 jobs.” ATA & Delta's Am. Compl., ¶ 69; see ALPA's Compl., ¶ 66.

At particular issue in this suit are $3.4 billion in preliminary and final commitments approved by the Board on September 30, 2011. See ATA & Delta's First Am. Compl., ¶ 30; Administrative Record (A.R.) at 29–30. The $1.3 billion in final commitments were conversions of preliminary commitments originally approved in 2006 and intended to support Air India's purchase of Boeing 787 aircraft. See A.R. at 31. The remaining $2.1 billion in preliminary commitments will support the airline's acquisition of Boeing 787 and 777–300ER planes. See id. These are “widebody,” “medium-sized aircraft (200 to 300 seats) with a range (7,500 nautical miles to 8,500 nautical miles) that previously has only been available with much larger aircraft.” Id. at 67.C. The Current Action

Plaintiff ATA is a trade organization, headquartered in Washington, D.C., that represents United States airlines. See ATA &...