Delta Air Lines, Inc. v. Export-Import Bank of U.S.

• Decision Date: 30 March 2015
• Docket Number: Civil Action No. 13–0424 RC
• Citation: 85 F.Supp.3d 387
• Court: U.S. District Court — District of Columbia
• Parties: Delta Air Lines, Inc., et al., Plaintiffs, v. Export–Import Bank of the, United States, et al., Defendants.

85 F.Supp.3d 387

Delta Air Lines, Inc., et al., Plaintiffs

v.Export–Import Bank of the, United States, et al., Defendants.

Civil Action No. 13–0424 RC

United States District Court, District of Columbia.

Signed March 30, 2015

Gregory Gerber Rapawy, Reed Smith LLP, New York, NY, W. Joss Nichols, Wan J. Kim, Michael K. Kellogg, Kellogg, Huber, Hansen, Todd & Evans, Figel P.L.L.C., Jonathan Booth Hill, Cooley, LLP, Robert Russell Bailey, Jonathan Asher Cohen, Air Line Pilots Association, International, Washington, DC, David Michael Semanchik, Air Line Pilots Association, International, Herndon, VA, for Plaintiffs.

Jean Lin, Adam Anderson Grogg, Joseph Charles Folio, III, U.S. Department Of Justice, Washington, DC, for Defendants.

Re Document Nos.: 19, 30, 31, 32

MEMORANDUM OPINION

Granting Defendants' Motion for Summary Judgment; Denying Plaintiffs' Motion for Summary Judgment; Denying Plaintiffs' Motion to Supplement the Administrative Record as Moot; and Denying Plaintiffs' Motion for Discovery

RUDOLPH CONTRERAS United States District Judge

I. INTRODUCTION

The Export–Import Bank (“Ex–Im Bank” or “Bank”) is an independent agency established in 1934 as the official export credit agency (“ECA”) of the United States to promote and facilitate U.S. exports by providing loans and loan guarantees to foreign purchasers of U.S.-manufactured goods and services. The U.S. aircraft manufacturing industry is one of many domestic industries that rely on Ex–Im Bank support to compete with foreign manufacturers that receive similar support from foreign ECAs. But while U.S. aircraft manufacturers enjoy the benefits of the Ex–Im Bank's assistance in selling their planes to foreign airline purchasers, U.S. commercial airlines, which are not eligible for financing from the Bank, object to the boost that the Bank's support provides to overseas competitors.

Delta Air Lines, Inc. (“Delta”), Hawaiian Airlines, Inc. (“Hawaiian”), and the Air Line Pilots Association, International (“ALPA”) (collectively, “Plaintiffs”) are among those that protest the Ex–Im Bank's support of foreign aircraft purchasers. Together, Plaintiffs have embarked on a multipronged litigation attack against the Ex–Im Bank and its Board of Directors (collectively, “Defendants”), in which they maintain, among other things, that the Bank has violated the Export–Import Bank Act of 1945 (“Bank Act” or “Charter”) and the Administrative Procedure Act (“APA”) through the adoption and application of certain internal economic impact procedures (“EIPs”), which the Bank uses to assess the economic effects of potential transactions within its broader process of determining whether to approve an application for Bank financing.

Specifically at issue in this action—one of three separate lawsuits brought by Plaintiffs currently pending before this Court—is the Ex–Im Bank's approval of five aircraft financing transactions between October 2012 and February 2013. The loan guarantees for these transactions initially were approved by the Bank under its 2007 EIPs, but Defendants later sought a voluntary remand in this case in order to evaluate the financing commitments under the Bank's newly adopted 2013 EIPs and Guidelines. In the end, the Bank reached the same conclusion on remand under the updated 2013 procedures as it did under the 2007 EIPs: in the Bank's view, none of the financing commitments were likely to cause serious adverse economic effects to U.S. industry and employment, and as such, the Bank was correct to issue the loan guarantees.

Plaintiffs now assert that the Bank's adoption and application of the 2007 EIPs and the 2013 EIPs and Guidelines was in excess of its statutory authority under the Bank Act, without observance of procedures required by law, and arbitrary and capricious. Defendants, on the other hand, assert that the Bank acted reasonably and within the modest contours of the Bank Act in regard to both the 2007 EIPs and the 2013 EIPs and Guidelines. Defendants and Plaintiffs each have filed a motion for summary judgment. Upon consideration of the parties' motions and the memoranda in support thereof and opposition thereto, the Court will grant Defendants' motion for summary judgment and deny Plaintiffs' motion.

II. BACKGROUND

A. Statutory Framework: The Ex–Im Bank And The Bank Act

The Ex–Im Bank 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 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. The Bank Act declares that “[t]he Bank's objective in authorizing loans, guarantees, insurance, and credits shall be to contribute to maintaining or increasing employment of United States workers.” 12 U.S.C. § 635(a)(1). “In connection with and in furtherance of its objects and purposes, the Bank is authorized and empowered to do a general banking business,” including “to guarantee, insure, coinsure, and reinsure against political and credit risks of loss.” Id . Loans and loan guarantees issued by the Ex–Im Bank carry the full faith and credit of the United States government, id . § 635k, and Congress has reauthorized the Bank on more than twenty occasions since 1947.¹

The Bank Act identifies many policy concerns for the Bank to take into consideration when deciding whether to approve an application for financing support.² In particular, the statute requires the Bank to “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)(ii). The statute also declares that it is “the policy of the United States that loans made by the Bank in all its programs shall bear interest ... at rates and on terms and conditions which are fully competitive with exports of other countries, and consistent with international agreements.” Id . § 635(b)(1)(B). In addition, the Bank must work with other ECAs to “minimize competition in government-supported export financing.” Id . § 635(b)(1)(A).

In requiring the Ex–Im Bank to be competitive, Congress has emphasized that the Bank must process financing applications efficiently and with flexibility, so as not to cause a U.S. exporter to lose an export opportunity. See id . § 635(b)(1)(B) (the Bank's loans should “neutralize the effect of ... foreign credit on international sales competition”); see also S.Rep. No. 99–274, at 8 (1986) (recognizing “the need for [the Bank] to respond to exporters' requests for support in a timely ... fashion”); id . (noting that the adverse economic impact provision of the Bank Act “should be implemented in a way that does not reduce the Bank's competitiveness and flexibility in assisting U.S. exporters nor ignore the positive aspects of the export sale”).

The Bank Act also contains several provisions requiring the Bank and its Board of Directors (“Board”) to take into account potential serious adverse effects on U.S. industry and employment when considering a proposed transaction. Thus, beginning in 1968, Congress has declared that it is the “policy of the United States” that

in authorizing any loan or guarantee, the Board of Directors shall take into account any serious adverse effect of such loan or guarantee on the competitive position of United States industry, the availability of materials which are in short supply in the United States, and employment in the United States, 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.

12 U.S.C. § 635(b)(1)(B)(ii) ; see Pub.L. No. 90–267, § 1(b), 82 Stat. 47, 47 (1968). In 1978, Congress amended the Bank Act to include the provision now codified at 12 U.S.C. § 635a–2, which calls on the Bank to

implement such regulations and procedures as may be appropriate to insure that full consideration is given to the extent to which any loan or financial guarantee is likely to have an adverse effect on industries, including agriculture, and employment in the United States, either by reducing demand for goods produced in the United States or by increasing imports to the United States.

Id. ; see Pub.L. No. 95–630, § 1911, 92 Stat. 3641, 3726 (1978). This provision later was amended to require the Bank to “address in writing the views of [those] who may be substantially adversely affected by the loan or guarantee,” Pub.L. No. 99–472, § 12, 100 Stat. 1200 (1986), but Congress also specifically provided that “[t]his requirement does not subject the Bank to the provisions of subchapter II of chapter 5 of title 5,” id ., which is the administrative procedure portion of the APA. See 5 U.S.C. §§ 551 –59.

In 1986, Congress incorporated § 608 of the Foreign Operations Appropriations Act of 1978, Pub.L. No. 95–481, § 608, 92 Stat. 1591 (1978), into the Bank Act under substantially similar terms. See Pub.L. No. 99–472, § 11, 100 Stat. 1200, 1203–04 (1986). The Bank Act thus provides, among other things, that the Bank may not extend a financial guarantee for the “production of any commodity for export by any country other than the United States” if the Board determines that “(i) the commodity is likely to be in surplus on world markets at the time the resulting commodity will first be sold; or (ii) the resulting production capacity is expected to compete with United States production of the same, similar, or competing commodity.” 12 U.S.C. § 635(e)(1). Such a limitation does not apply, however, when the Board determines that the “short-and long-term benefits to industry and employment in the United States are likely to outweigh the short- and long-term injury to United States producers and employment of the same, similar, or competing commodity.” Id . § 635(e)(3). Congress has specified that “substantial...