RUDOLPH CONTRERAS, United States District Judge.
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
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.
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.
The Bank Act identifies many policy concerns for the Bank to take into consideration when deciding whether to approve an application for financing support.
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
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
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 injury" occurs when "the amount of the capacity for production established, or the amount of the increase in such capacity expanded, by" a transaction "equals or exceeds 1 percent of United States production." Id. § 635(e)(4).
Section 635(e), moreover, provides that "[i]f . . . the Bank conducts a detailed economic impact analysis or similar study," it must provide notice and obtain comments on the potential economic effects of the financing support. Id. § 635(e)(7)(B)(i). Under this provision, the Bank also must consider certain factors when conducting a detailed economic analysis. See id. § 635(e)(7)(A). In addition, Congress requires the Bank to implement such regulations and procedures as may be appropriate, see id. § 635(e)(7)(G), and as it did in § 635a-2, Congress has provided that "[t]his paragraph shall not be construed to make [the administrative procedure portion of the APA, 5 U.S.C. §§ 551-59,] applicable to the Bank." Id. § 635(e)(7)(F).
In May 2012, when it reauthorized the Bank, Congress imposed two new requirements regarding the Bank's assessment of potential adverse economic impacts. First, Congress required the Bank to, within 180 days, "develop and make publicly available methodological guidelines to be used by the Bank in conducting economic impact analyses or similar studies" of any potential adverse effects its transactions might have on U.S. industry and employment. Reauthorization Act § 12(a). Second, Congress specified that "[i]n developing the guidelines, the Bank shall take into consideration any relevant guidance from the Office of Management and Budget." Id.
In an attempt to comply with its statutory mandate to "take into account" the adverse impact of its loans and loan guarantees on U.S. industry and employment, the Bank has adopted EIPs that, among other things, use screens to exempt certain transactions from in-depth economic impact analysis. See Administrative Record ("AR") at 1368-73. Of relevance here, in 2001 the Bank changed its EIPs to include a new screen that excluded from in-depth review any "transaction[] that would result in the provision of exportable services from foreign countries" (the "exportable goods screen"). See id. at 1371. By extension, this screen excluded from economic impact analysis the Bank's financing of foreign aircraft transactions, which the Bank deems to result in the production of
In 2011, the Air Transport Association of America, ALPA, and Delta challenged the Bank's loan guarantee commitments to Air India for the purchase of certain Boeing aircraft, which the Bank reviewed under its 2007 EIPs. See Air Transp. Ass'n of Am. v. Export-Import Bank ("ATA"), 878 F.Supp.2d 42 (D.D.C.2012). After the parties filed dispositive motions in that case, Judge Boasberg granted summary judgment in favor of Defendants, concluding that the "Bank acted neither arbitrarily and capriciously nor contrary to its governing statute when it approved the" Air India transactions using the exportable goods screen. Id. at 54. Delta and ALPA (but not the Air Transport Association of America) appealed, and the D.C. Circuit reversed.
In particular, the D.C. Circuit did not determine that the exportable goods screen was inconsistent with the Bank Act. See Delta Air Lines, Inc. v. Export-Import Bank ("Delta I"), 718 F.3d 974, 975 (D.C.Cir.2013) (per curiam). Instead, the circuit court simply held that the Bank "[had] not reasonably explained its justification for the categorical conclusion at issue." Id. Accordingly, the D.C. Circuit directed the district court "to remand the case to the Bank for further proceedings," without vacating the Air India commitments, and the circuit court provided the Bank with three options on remand:
Id.
The Bank responded to the Delta I remand order by preparing and publishing two documents, entitled Response One and Response Two (collectively, the "Remand Responses").
Though Congress did not require the Bank to modify the 2007 EIPs, or the way in which the Bank applied them, when it reauthorized the Bank in May 2012, the Bank undertook to revise its EIPs anyways, as it has done from time-to-time throughout its existence. As the Bank's policy group informed the Board, the Bank already had been reassessing the EIPs after becoming aware of several concerns regarding the transparency of the methodology used in connection with detailed economic impact analyses, the relevance of the assumptions applied to the methodology, and the application of economic impact analysis to services, including aircraft financing transactions. See id. at 1995. The Reauthorization Act therefore "provided the opportunity [for] the Bank to conclude its reassessment" of the EIPs. Id.
On September 27, 2012, while Delta I was pending, the Bank proposed new "Economic Impact Procedures and Methodological Guidelines" to govern its review of proposed transactions, and the Bank made the proposal available on its website and in the Federal Register.
The 2013 EIPs and Guidelines take a different approach than the 2007 EIPs in assessing certain potential transactions. Specifically, under the new guidelines, proposed transactions that will result in an increase in services are no longer categorically screened from further economic impact analysis, as they were under the 2007 EIPs and the exportable goods screen. See id. at 1442. Instead, the Bank decided to subject to further review those transactions involving service sectors for which interested parties have identified specific cases of potential impact and have provided quantified estimates of potential harm. See id. at 1442 n.7. The Bank then determined that, at the time of passing the new EIPs, "the only transactions creating an exportable service deemed to meet [these] criteria [are] aircraft" transactions. See id. The 2013 EIPs and Guidelines therefore set forth a step-by-step methodology for the Bank's review of aircraft financing transactions (the "aircraft-specific procedures"), which is divided into four stages, with the first two stages constituting "screens" designed to identify those aircraft transactions that merit detailed economic impact analyses, and the latter two stages summarizing the methodology for conducting such detailed analyses, when required. See id. at 1453-55.
On April 3, 2013, Plaintiffs filed the present lawsuit, Delta III, challenging the
Delta and ALPA submitted written comments opposing each of the proposed loan guarantees, and Hawaiian participated in the comments on the KAL and LATAM transactions. See id. at 5-149, 254-438, 547-692, 797-946, 1087-213. For each transaction, the Bank's staff prepared a memorandum and presentation for the Board; among other things, the staff memorandum briefly summarized the public comments that the Bank received regarding each transaction. See id. at 239-42, 527-33, 776-78, 1057-61, 1307-11. And because the Bank applied the 2007 EIPs and the exportable goods screen, each memorandum stated that no detailed economic impact analysis was required for the final commitments at issue. See id. at 176, 463, 707, 985, 1248.
Returning to the present litigation, Plaintiffs originally challenged the Bank's authorization of the Five Transactions under the 2007 EIPs as contrary to the APA and the Bank Act. The parties also recognized, however, that the D.C. Circuit's then-anticipated ruling on appeal from ATA was "likely to inform the question[s]" before this Court, including "whether the Bank was obligated to conduct detailed economic assessments of the potential harms caused by its financing before approving each of the foreign airline applications challenged in th[e] Complaint." Joint Mot. Stay, ECF No. 11, at 2. Accordingly, the parties asked the Court to stay this litigation until Delta I was decided, which the Court did. See Minute Order (May 17, 2013).
On June 18, 2013, the D.C. Circuit issued its decision in Delta I, reversing ATA and ordering the district court to remand the matter to the Bank. In light of the
Summary judgment may be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C.Cir.2006). A fact is "material" if it is capable of affecting the substantive outcome of the litigation. See Liberty Lobby, 477 U.S. at 248, 106 S.Ct. 2505; Holcomb, 433 F.3d at 895. A dispute is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007); Liberty Lobby, 477 U.S. at 248, 106 S.Ct. 2505; Holcomb, 433 F.3d at 895.
Though styled as motions for summary judgment, the dispositive pleadings in this case actually seek the Court's review of administrative action. The standard set forth in Rule 56(c) therefore does not apply because of the limited role of a court in reviewing the administrative record. See Sierra Club v. Mainella, 459 F.Supp.2d 76, 89-90 (D.D.C.2006) (citing Nat'l Wilderness Inst. v. U.S. Army Corps of Eng'rs, No. CIV 01-0273, 2005 WL 691775, at *7 (D.D.C. Mar. 23, 2005)); Fund for Animals v. Babbitt, 903 F.Supp. 96, 105 (D.D.C.1995), amended on other grounds, 967 F.Supp. 6 (D.D.C.1997). "[T]he function of the district court is to determine whether or not as a matter of law the evidence in the administrative record permitted the agency to make the
The APA "sets forth the full extent of judicial authority to review executive agency action for procedural correctness." FCC v. Fox Television Stations, Inc., 556 U.S. 502, 513, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009). It requires courts to "hold unlawful and set aside agency action, findings, and conclusions" that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). This is a "narrow" standard of review as courts defer to the agency's expertise. Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). An agency is required to "examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made." Id. (internal citation and quotation omitted). The reviewing court "is not to substitute its judgment for that of the agency," id. and thus "may not supply a reasoned basis for the agency's action that the agency itself has not given." Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285-86, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974). Nevertheless, a decision that is not fully explained may be upheld "if the agency's path may reasonably be discerned." Id. at 286, 95 S.Ct. 438; see also Dilimon v. Nat'l Transp. Safety Bd., 588 F.3d 1085, 1089 (D.C.Cir. 2009) (a court must "defer to the wisdom of the agency, provided its decision is reasoned and rational").
Finally, a court's review is particularly deferential when a plaintiff challenges agency decisions that balance competing statutory mandates and involve technical, predictive judgments within the agency's special area of expertise. See Marsh v. Or Natural Res. Council, 490 U.S. 360, 377, 109 S.Ct. 1851, 104 L.Ed.2d 377 (1989) (when the agency's analysis "requires a high level of technical expertise," courts "must defer to the informed discretion of the responsible federal agencies" (citation and quotation marks omitted)); Rural Cellular Ass'n v. FCC, 588 F.3d 1095, 1105 (D.C.Cir.2009) ("The `arbitrary and capricious' standard is particularly deferential in matters implicating predictive judgments[.]" (citations omitted)). "Thus, when an agency's decision is primarily predictive, [a court's] role is limited; [courts] require only that the agency acknowledge factual uncertainties and identify the considerations it found persuasive." Rural Cellular, 588 F.3d at 1105.
Through this lawsuit, Plaintiffs allege that the Bank's Delta I Remand Responses and Delta III Remand Analyses should be excluded from the administrative record as post-hoc rationalizations, but even if considered part of the record, these remand papers should be rejected because the 2007 EIPs and the 2013 EIPs and Guidelines, as designed and adopted by the Bank, violate the APA, the Bank Act, and the Reauthorization Act for both procedural and substantive reasons. Alternatively, Plaintiffs argue that even if the 2013 EIPs and Guidelines are not facially invalid, the application of those EIPs to the Five Transactions on remand was arbitrary and capricious and in violation of the Bank Act.
Resolving the parties' motions for summary judgment requires the Court to address numerous textbook questions of administrative law and to grapple with complex economic and financial concepts as they relate to the airline industry. To do so, the Court will proceed as follows. First, the Court addresses whether it may consider Response One as part of the administrative record, or whether this remand response must be excluded as a post-hoc rationalization. Second, after concluding that Response One is properly before the Court, the Court considers the sufficiency of the Bank's justification for the exportable goods screen. And third, the Court addresses Plaintiffs' argument that the Bank erred by applying the 2007 EIPs, rather than the 2013 EIPs and Guidelines, when originally authorizing the Five Transactions.
Because the Court concludes that it may consider Response One, that the 2007 EIPs represent a reasonable interpretation of the relevant statutes, and that the Bank acted reasonably when it applied the 2007 EIPs to approve the Five Transactions, the Court finds that Defendants have done enough to overcome Plaintiffs' challenge to the Bank's authorizations for the Five Transactions. Accordingly, the Court grants summary judgment for Defendants as to Plaintiffs' Counts I, II, and III. In so doing, the Court also finds that it is both unnecessary and imprudent to address the Remand Analyses and the 2013 EIPs and Guidelines in this litigation because the Court upholds the financing authorizations regardless of the agency's decisionmaking in adopting the new EIPs and during the voluntary remand, and any alternative analysis considering such issues here would amount to little more than the Court delivering an advisory opinion to the agency about its actions, which is forbidden.
A threshold issue that will dictate the rest of the Court's analysis herein is whether Response One is reviewable as part of the administrative record.
Without doubt, a "fundamental rule of administrative law" is that a court reviewing an agency's decision "must judge the propriety of [the agency] action solely by the grounds invoked by the agency." SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1760, 91 L.Ed. 1995 (1947). Typically, the grounds reviewed will appear in the administrative record, see Cmty. for Creative Non-Violence v. Lujan, 908 F.2d 992, 997 (D.C.Cir.1990), and judicial review therefore "is to be based on the full administrative record that was before the [agency] at the time [it] made [its] decision." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). Accordingly, "it is the agency's responsibility, not this Court's, to explain its decision," State Farm, 463 U.S. at 57, 103 S.Ct. 2856, and if the agency's "grounds are inadequate or improper, the [C]ourt is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis." Chenery, 332 U.S. at 196, 67 S.Ct. 1760. It is unsurprising, then, that post-hoc rationalizations "have traditionally been found to be an inadequate basis for review" of agency decisions. Overton Park, 401 U.S. at 419, 91 S.Ct. 814; see also Edison Elec. Inst. v. OSHA, 849 F.2d 611, 617-18 (D.C.Cir.1988) ("Ordinarily,. . . neither party is entitled to supplement the record with litigation affidavits or other evidentiary material that was not before the agency." (citations omitted)).
At the same time, however, the D.C. Circuit explained in Alpharma, Inc. v. Leavitt, 460 F.3d 1 (D.C.Cir.2006), that Overton Park also "approved the procedure of remanding so that an agency can provide an explanation for an inadequately articulated decision." Id. at 6. The prohibition against post-hoc rationalizations therefore "is not a time barrier which freezes an agency's exercise of its judgment after an initial decision has been made and bars it from further articulation of its reasoning." Id. (citation and quotation omitted); see also Amoco Oil Co. v. EPA, 501 F.2d 722, 729 n. 10 (D.C.Cir.1974) ("Rule-making is necessarily forward-looking, and by the time judicial review is secured events may have progressed sufficiently to indicate the truth or falsity of agency predictions. We do not think a court need blind itself to such events[.]"). Further, the Supreme Court has explained that if the administrative "record before the agency does not support the agency action . . . or if the reviewing court simply cannot evaluate the challenged agency action on the basis of the record before it, the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation." Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 744, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985) (emphasis added). The Court finds that, through Response One, the Bank offers the exact type of "amplified articulation" and "additional explanation" regarding the basis for the exportable goods screen that the D.C. Circuit demanded in Delta I.
Plaintiffs' primary complaint about Response One is that it was not ratified through a vote by the Bank's Board. See, e.g., Pls.' Mem. Supp. Mot. Summ. J., ECF No. 31-1, at 25. For this proposition,
To establish that a Board vote was required to make Response One legitimate, Plaintiffs rely on § 635(b)(1)(B)(ii) of the Bank Act, which directs the "Board of Directors," when "authorizing any . . . guarantee," to "take into account any serious adverse effect of such . . . guarantee on the competitive position of United States industry . . . and employment." 12 U.S.C. § 635(b)(1)(B)(ii). But the Delta I remand explicitly did not require the Bank to issue new authorizing decisions for the Air India commitments as if the D.C. Circuit had vacated the original authorizations; rather, the Bank only was ordered to provide further explanation on remand in an effort to justify the authorizations that it already had made, not to revisit and reissue those decisions anew. See Delta I, 718 F.3d at 978 (refusing to vacate transactions and ordering that the Bank must "attempt to provide a reasonable explanation" justifying the exportable goods screen, or "explain" the adverse effects of the Air India loan guarantees (emphasis added)). As such, the Court finds that § 635(b)(1)(B)(ii) is inapplicable.
The Court, moreover, finds no authority—whether in the APA, the Bank Act, or elsewhere—that requires a formal Board vote adopting Response One when it did not amount to the authorization of a financing decision but rather merely was an explanation of prior decisions. Cf. Menkes v. U.S. Dep't of Homeland Sec., 637 F.3d 319, 337 (D.C.Cir.2011) (when no action by the Commandant or the Secretary of the Department of Homeland Security was required, Coast Guard "official" was found to be a proper decisionmaker); Serono Labs., Inc. v. Shalala, 158 F.3d 1313, 1317, 1325 (D.C.Cir.1998) (when no action by the Commissioner was required, FDA director was found to be a proper decisionmaker); Cardinal Health, Inc. v. Holder, 846 F.Supp.2d 203, 218-19 (D.D.C.2012) (when no action by the Attorney General was required, DEA Administrator was found to be a proper decisionmaker).
Here, Response One was submitted to the Bank's senior staff and members of the Bank's Board for their review and comments, see Defs.' Mem. Opp'n Mot. Summ. J., ECF No. 35, Ex. A (E-mails from the Bank's General Counsel), and it was published on the Bank's website on
That being said, Plaintiffs' complaint about the lack of a Board vote was addressed by Defendants during the course of this litigation. Specifically, the Bank announced on April 10, 2014, that the Board would vote at its April 17 meeting about "whether to ratify and formally adopt the [Remand Responses and Remand Analyses]." AR at 2144 (agenda for April 17, 2014, Board meeting). Prior to the vote, the Bank's staff recommended that the Board adopt the remand papers "in recognition that [the papers] have represented and continue to represent the official position of the Bank," and that they "serve as the Bank's official responses to the litigation remands." Id. at 2145; see also id. at 2145-47 (April 9, 2014, Board Memorandum).
On April 14, 2014, Plaintiffs submitted a letter and supporting materials to members of the Board "urg[ing] the Board to reject the [remand papers]." Id. at 2152, 2155. The Bank's staff reviewed Plaintiffs' materials and informed the Board that this submission "repeat[ed] arguments that [Plaintiffs have] made multiple times," both in "the several lawsuits brought by" Plaintiffs and in "comments" that Plaintiffs "submitted . . . in connection with various aircraft transactions." Id. at 2148. Accordingly, the staff advised the Board that the materials did not "raise[] anything new that warrant[ed] changing either" the staff's recommendation that the Board ratify and adopt the remand papers or the substance of the remand papers themselves. Id. Thus, at its April 17, 2014, meeting, the Board unanimously voted to ratify and adopt the Remand Responses and the Remand Analyses. Id. at 2312. Following the vote, Defendants supplemented the administrative record in this case with the materials relevant to the Board's actions. See generally Defs.' Notice Am. Admin. R., ECF No. 41. Plaintiffs, however, object to Defendants' effort to amend the administrative record and ask the Court to reject the vote as procedurally defective. See Pls.' Suppl. Mem. Supp. Mot. Summ. J., ECF No. 43, at 5. The Court finds no basis for doing so.
Food Marketing Institute v. ICC, 587 F.2d 1285 (D.C.Cir.1978), another case on which Plaintiffs rely, also does not compel the Court to ignore Response One. That decision's warning against "[p]ost-hoc rationalizations by the agency on remand," id. at 1290, occurred after the court already had concluded that the agency's position was "defective"—not just insufficiently explained, as in Delta I—and the court therefore had "vacated" the decision—in contrast to remand without vacatur in Delta I. See id. at 1288. The agency then issued a new decision reaching the same conclusion as in the decision previously vacated, leading the D.C. Circuit to caution that
Id. at 1290 (citation omitted). This statement therefore addresses the potential problem of closed-mindedness when an agency is required to make a new decision on remand, which is different than the circumstances here, where the Delta I remand occurred in order for the agency to provide a fuller articulation of its reasoning in support of prior decisions that themselves were left undisturbed.
Finally, Plaintiffs suggest that Chenery prevents the Court from considering Response One, but the Court disagrees.
In sum, the Court concludes that Response One provides the type of "amplified articulation" that an agency is permitted to—and, here, required to by the D.C. Circuit—provide on remand; accordingly, examination of Response One's contents is perfectly appropriate.
Having settled that Response One is properly before the Court, the Court next
Turning to Plaintiffs' substantive challenge, the Court begins, as it must, with the relevant statutes. In particular, Plaintiffs maintain that the exportable goods screen does not reasonably serve the Bank Act's objectives, as proclaimed through three related provisions. First, § 635 specifies that, among other considerations, the agency "shall take into account any serious adverse effect of [a proposed] loan or guarantee on the competitive position of United States industry ... 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). Second, the Bank Act provides that the agency "may not extend [financing support] for establishing or expanding production of any commodity for export by any country other than the United States[] if ... the Bank determines that the extension of such [support] will cause substantial injury to United States producers of the same, similar, or competing commodity," id. § 635(e)(1), unless "in the judgment of the Board of Directors of the Bank, 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). And third, the Bank Act requires that the "Bank shall 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... and employment in the United States." Id. § 635a-2.
Though these provisions utilize somewhat different language, it is undisputed that, taken together, they require the Bank to consider (or, more accurately, "take into account") the potential adverse effects of its loans and loan guarantees on U.S. industry and employment. Plaintiffs insist, however, that the Bank, through the exportable goods screen, ignores this fundamental statutory mandate altogether. See Pls.' Mem. Opp'n Mot. Summ. J., ECF No. 36, at 28. Such failure, Plaintiffs contend, renders the Bank's decision to approve the Five Transactions under the 2007 EIPs arbitrary and capricious.
To determine whether the exportable goods screen is a permissible construction under the Bank Act, the Court first must determine how much deference is owed to the agency.
It is well established that "not all statutory interpretations by agencies qualify for [Chevron] deference." Pub. Citizen, Inc. v. U.S. Dep't of Health & Human Servs., 332 F.3d 654, 659 (D.C.Cir.2003) (citations omitted). Thus, the Supreme Court has explained that "[d]eference in accordance with Chevron ... is warranted only `when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority.'" Gonzales v. Oregon, 546 U.S. 243, 255-56, 126 S.Ct. 904, 163 L.Ed.2d 748 (2006) (quoting United States v. Mead Corp., 533 U.S. 218, 226-27, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001)). But as Judge Boasberg noted in ATA, there is no "clear answer" about whether Chevron deference should apply to the Bank's creation of the exportable goods screen. See ATA, 878 F.Supp.2d at 72 ("The application of [the Gonzales] standard to the EIPs... does not yield a clear answer.").
This is because, on the one hand, Congress clearly delegated to the Bank and the Board broad authority to make loan guarantees such as those at issue here, see 12 U.S.C. § 635(a)(1), (b)(1), and Congress also required the agency to "take into account" certain factors—such as potential "serious adverse effect[s]" of a transaction, id. § 635(b)(1)(B)(ii), and whether a transaction would "cause substantial injury" to U.S. industries, id. § 635(e)(1)(B)—when
On the other hand, the 2007 EIPs plainly are not the product of "either a notice-and-comment rulemaking or a formal adjudication, the usual suspects for Chevron deference." Cal. Valley Miwok Tribe v. United States, 515 F.3d 1262, 1266 (D.C.Cir.2008); see also Mount Royal Joint Venture v. Kempthorne, 477 F.3d 745, 754 (D.C.Cir.2007) ("If the agency enunciates its interpretation through notice-and-comment rule-making or formal adjudication, we give the agency's interpretation Chevron deference."). Though "`the want of' notice and comment `does not decide the case'" against Chevron deference, see Barnhart, 535 U.S. at 222, 122 S.Ct. 1265 (quoting Mead, 533 U.S. at 230-31, 121 S.Ct. 2164), it also is not certain that the 2007 EIPs carry the force of law. Instead, the EIPs might more accurately be described as non-binding internal guidelines—akin to "`interpretations contained in policy statements, agency manuals, and enforcement guidelines,'" which historically are "beyond the Chevron pale," Mead, 533 U.S. at 234, 121 S.Ct. 2164 (quoting Christensen v. Harris Cnty., 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000))—rather than the formal and binding legislative rules that usually benefit from Chevron deference. See Motion Picture Ass'n of Am., Inc. v. FCC, 309 F.3d 796, 801 (D.C.Cir.2002) ("[E]ven if an agency has acted within its delegated authority, no Chevron deference is due unless the agency's action has the `force of law.'" (quoting Mead, 533 U.S. at 227, 121 S.Ct. 2164)).
Ultimately, then, this Court finds itself at the same impasse as Judge Boasberg in ATA regarding what level of deference is owed to the Bank's interpretation of the Bank Act through the EIPs. See ATA, 878 F.Supp.2d at 72-73 (examining, but ultimately not deciding, whether Chevron applies to the exportable goods screen). And like in ATA, this Court finds that it is unnecessary to resolve the enigmatic Chevron question because "to hold that an agency decision `do[es] not fall within Chevron is not ... to place [it] outside the pale of any deference whatever.'" Fox v. Clinton, 684 F.3d 67, 76 (D.C.Cir.2012) (quoting Mead, 533 U.S. at 234, 121 S.Ct. 2164; alterations in Fox). Instead, even when an agency's interpretation of its governing statute is not entitled to Chevron deference, courts still give credit to agency interpretations to the extent such credit is due. See id. Specifically, consistent with the Supreme Court's decision in Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944), "`[t]he weight [accorded to an administrative] judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.'" Mead, 533 U.S. at 228, 121 S.Ct. 2164 (quoting Skidmore, 323 U.S. at 140, 65 S.Ct. 161; second alteration in Mead).
Before reaching the merits of the exportable goods screen itself, the Court first must address Plaintiffs' argument that any categorical screen that prevents in-depth economic analysis for certain transactions is inconsistent with the Bank Act because such a screen does not, in and of itself, afford "full consideration" to the factors mandated by Congress. See Pls.' Mem. Opp'n Mot. Summ. J., ECF No. 36, at 19; id. at 28 (arguing that the "exportable-good screen was effectively a refusal—announced in advance—to consider statutorily mandated factors in the vast majority of transactions that the Bank approved"). Indeed, in many ways, Plaintiffs' complaint appears to be primarily that the Bank should never use categorical screens and should instead subject all, or maybe just nearly all, pending transactions to in-depth economic impact analysis. The Court finds that such an argument is inconsistent with both the Bank Act and the prior court decisions addressing this issue.
Further, the D.C. Circuit in Delta I, in reliance on the plaintiffs' litigation position there, appeared to treat this question as a foregone conclusion accepted by all parties:
Delta I, 718 F.3d at 978 (citation omitted; third emphasis added). In addition, given the volume of applications the Bank receives each year—approximately 3,800 in Fiscal Year 2012, for example, see AR at 1374-75—it would be nearly impossible for the Bank to accomplish its statutory mission of promoting U.S. exports if it were required to perform in-depth economic analysis for every transaction, or even for a significant percentage of transactions. See id. at 1374 (detailed economic impact analysis "can substantially delay the processing of a transaction and jeopardize the ability of the U.S. exporter to capture the export opportunity"); id. at 1374-75 (given the thousands of applications the Bank receives each year, "the Bank would not be able to accomplish its mission of promoting U.S. exports if it were to perform a `detailed economic impact analysis' on every transaction, or even for a significant percentage of the transactions"). Indeed, the Bank very likely would grind to a halt if such an approach were mandated by this Court, which cannot reasonably be considered consistent with the Bank Act's purpose. See, e.g., 12 U.S.C. § 635(b)(1)(B) (it is "the policy of the United States ... to
The Court, moreover, simply is not persuaded by Plaintiffs' argument that the Bank, by applying a categorical screen rather than performing individual analyses, fails to consider a factor required by the Bank Act. Instead, this Court agrees with ATA, where Judge Boasberg rejected a similar argument, explaining that
ATA, 878 F.Supp.2d at 75 (citations omitted). Similarly, the Court in ATA found that
Id. (citations omitted; third emphasis added). Likewise here, the Court finds that both the initial decision that resulted in the institution of the EIPs and their subsequent application to individual transactions qualify as consideration of "adverse effects." Accordingly, this Court, like those in ATA and Delta I, concludes that the Bank is authorized to adopt categorical screens in an attempt to limit further analysis to only those transactions that are "likely to have an adverse effect on industries... and employment in the United States."
The critical question thus becomes whether the line drawn by the Bank in adopting the exportable goods screen was "a reasonable policy choice for the agency to make," or whether the agency's decision was arbitrary and capricious or contrary to the Bank Act, as Plaintiffs claim. See Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 986, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005) (citation and quotation omitted). To answer this question, the Court feels compelled to start by noting that the Bank Act creates far more questions than it answers regarding how the Bank should implement the statutory scheme. Indeed, the obligations imposed on the agency by the Bank Act are, at best, modest and, at worst, riddled with gaps that must be filled by the Bank. For instance, how is the Bank to determine whether serious adverse effects on U.S. airlines are likely to result from the Bank's provision of financing support to a foreign airline intending to purchase a U.S.-manufactured aircraft? And, for that matter, what meaning should the Bank give to statutory terms such as "serious" in § 635(b)(1)(B)(ii) or "likely" in § 635a-2?
Competing statutory considerations also are at play. For example, without question, the Bank's fundamental mission is to support U.S. jobs by facilitating U.S. exports, which, in turn, requires the Bank's financing to be "fully competitive" with foreign ECAs' support of their own exports. See 12 U.S.C. § 635(a)(1) (the Bank is "to contribute to maintaining or increasing employment of United States workers"); id. § 635(b)(1)(B)(ii) (the Bank is 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) (Bank loans shall include rates, terms, and conditions that are "fully competitive with exports of other countries, and consistent with international agreements"). And in requiring the Bank to be "fully competitive," Congress emphasizes
Thus, the Bank has construed Congress's intent, as relayed through the Bank Act, to be that the Bank must evaluate "transactions efficiently so as not to impede the transactions, which often need to proceed expeditiously to capture the export opportunity," and must "focus its adverse impact analysis only on those instances where the potential adverse effect is substantial." AR at 1366. The Bank Act, though, does not answer how the Bank should balance these competing obligations, and the exportable goods screen is the Bank's attempt to perform that balancing. See id. at 1371; see also Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965, 971 (D.C.Cir.1999) ("When an agency must balance a number of potentially conflicting [statutory] objectives, ... judicial review is limited to determining whether the agency's decision reasonably advances at least one of those objectives and its decisionmaking process was regular." (citation omitted)). Though the Court finds this to be an eminently reasonable interpretation of what the Bank Act demands from the Bank when processing financing applications, such an understanding does not resolve whether the categorical goods screen itself represents rational agency decisionmaking.
Answering that question is complicated, but in attempting to do so, significant deference is owed to the agency. In particular, by allowing the Bank to adopt categorical screens, the Bank Act implicitly leaves to the Bank the responsibility for making difficult predictive judgments about the potential economic effects of its future loans and loan guarantees. At the same time, the gaps and ambiguities in the Bank Act also leave it to the Bank to apply its experience and technical expertise regarding the impact of its financing decisions on
The Court now turns, at last, to considering the Bank's justifications for the exportable goods screen. As a preliminary matter, Plaintiffs immediately question the level of the Bank's expertise, arguing that the Bank offers only "broad generalities" in Response One rather than meaningful evidence to establish the agency's expertise and experience in understanding the aircraft financing market. See Pls.' Mem. Opp'n Mot. Summ. J., ECF No. 36, at 31. The Court recognizes that, given the exportable goods screen's categorical exclusion, the Bank has not, until recently, subjected aircraft financing transactions to in-depth economic impact analysis. The Bank does, however, have much experience with global financial markets generally and the aircraft financing market in particular.
Of note, the Bank has evaluated financing transactions across numerous industries under various economic impact provisions for more than forty-five years, with the Bank reviewing upwards of several thousand applications for financing in any given year. See AR at 1374, 1377. In addition, both before and after the adoption of the exportable goods screen in 2001, the Bank has been directly involved in negotiations with other ECAs regarding evolving iterations of the Aircraft Sector Understanding ("ASU"), which is an agreement between multiple ECAs, including the Bank, to establish the official financing terms and conditions that ECAs can offer for wide-body aircraft transactions. See id. at 1377. Further, as Response One explains, the Bank gained much experience with the aircraft financing market leading up to the adoption of the exportable goods screen in 2001 through its financing of 440 U.S.-manufactured aircraft between 1990 and 1999, which totaled an export value of approximately $22 billion. See id. at 1376. Thus, the Bank has been active in the aircraft financing market for many years, which, along with its longstanding role in financing transactions and evaluating economic
Turning to the Bank's explanation for the exportable goods screen, the Bank understood from the hundreds of aircraft transactions it has financed that, for many years, U.S. airlines generally had access to financing at costs that were more favorable than the costs of aircraft financing provided by ECAs, such as the Ex-Im Bank. See id. at 1374. For example, the Bank understood that U.S. airlines often had access to favorable financing tools—such as leveraged leases
Additionally, in the area of aircraft financing, certain member countries of the Organization for Economic Cooperation and Development ("OECD"), including the United States, have entered into a series of agreements, the ASU, regarding ECA financing for aircraft. See id. at 1377. The ASU in place around 2001 established the most favorable terms and conditions that ECAs could offer for the sale or lease of aircraft, and those terms and conditions, in the Bank's experience, resulted in financing that was "significantly more expensive than that which could be obtained by U.S. airlines in the private market." See id. The Bank therefore understood that when it first adopted the exportable goods screen in 2001, its own financing
Plaintiffs nonetheless criticize Response One as relying on "unstated inferences" or "unsupported assertions." See Pls.' Mem. Opp'n Mot. Summ. J., ECF No. 36, at 31. Not so. As the Court just discussed, the Bank developed substantial experience regarding the international and domestic aircraft financing market over the years and leading up to the adoption of the exportable goods screen, and the specific facts learned by the Bank during this time led it to reach the well-supported and reasonable conclusion that aircraft financing applications did not require further in-depth analysis because such financing transactions were unlikely to harm U.S. airlines, which themselves had superior financing alternatives available. The Bank's predictive judgment—which the Bank Act implicitly requires by focusing on the likely adverse effects of a transaction, see 12 U.S.C. § 635a-2, and not asking the Bank to determine that a transaction never will have any harmful effect—is entitled to substantial deference.
Response One also explains that the Bank regularly sought input from industry stakeholders, representatives, and government agencies to help the Bank determine whether its actions were consistent with its fundamental mission of supporting U.S. jobs and exports without causing likely, serious adverse effects on the U.S. economy. See AR at 1367, 1375. The Bank believed that such individuals and entities could be relied on to notify the Bank if they became concerned that certain policies or actions threatened to harm a specific domestic industry or sector. See id. at 1375. Thus, industry representatives' and stakeholders' concerns—or, more aptly, the lack thereof—were one tool that the Bank used to evaluate (and reevaluate if necessary) the soundness of its categorical judgments. See id. ("In the Bank's experience," trade groups, industry stakeholders, and other government agencies "could be relied upon to notify the Bank if they were concerned that the Bank's policies. . . threatened to cause any harm . . . to a specific industry or sector."). The Court finds no error in the Bank's decision to rely on such sophisticated and highly interested actors, such as Plaintiffs, for feedback regarding the agency's decisionmaking and predictive judgments over the course of time.
On this point, the Bank reports that when the exportable goods screen first was adopted in 2001, the Bank had not heard any concerns from U.S. airlines regarding adverse economic impact from a Bank financing decision in the last seventeen years (since Pan American World Airways ("Pan Am") complained in 1984), see id.— or, for that matter, in the decade following the screen's adoption as well. See id. at 1376. The Bank relied on this lack of complaints from industry stakeholders, including Delta and Hawaiian, as further evidence confirming the accuracy of its assessment that U.S. airlines were not experiencing a material financing disadvantage in aircraft transactions as compared to the foreign airlines that received ECA financing.
For instance, Response One explains that the terrorist attacks of September 11, 2001, resulted in a sudden and protracted reduction in demand for airline passenger services. See AR at 1378. As a result of that decrease in demand, as well as other financial pressures at the time, U.S. airlines began a decade-long process of consolidation through mergers and bankruptcies. See id. Thus, with limited exceptions, U.S. airlines generally did not purchase new passenger aircraft during this period, such that any financing advantage that the Ex-Im Bank purportedly was providing to foreign airlines during this period remained purely theoretical. See id. And, at the same time, the Bank's keen awareness of the aircraft financing market continued to indicate that U.S. airlines still typically had access to financing that was "no less favorable than financing provided by ECAs[.]" See id. Under such circumstances, the Court finds that the Bank had no reason to adjust its procedures.
Starting in 2005, moreover, the various countries and constituencies that were involved with ECA aircraft financing, including multiple U.S. airlines, began negotiating a new ASU. See id. When the new ASU was agreed to in June 2007, the European airlines, many of which had previously alleged that ECA financing was, in fact, more favorable than the financing they could obtain in the private market, agreed that the new ASU no longer posed any ECA financing advantage. See id. At the same time, none of the U.S. airlines expressed any economic impact concerns about the new ASU. See id. Thus, with this new ASU in place and with no other significant changes to the aircraft financing market, the Bank again had no reason to believe that a different approach was required through 2007. See, e.g., id. ("All of the other relevant factors that led to the adoption of the `exportable goods' screen in 2001 remained true in 2007.").
Response One further explains that the worldwide financial crisis that first emerged in 2008, as well as the European sovereign debt and banking crises that emerged soon after, also had a major impact on global financial markets, including those for aircraft purchases. See id. at 1378-79. During this period, there continued to be little demand for acquiring new passenger aircraft by U.S. airlines, while there was significant growth in the demand for wide-body aircraft in the emerging
For these reasons, the Court is not persuaded by Plaintiffs' argument that Response One relied on outdated information to explain why the Bank continued to use the exportable goods screen through 2007 and beyond, as the Bank has thoroughly explained the factors that it took into consideration and why it did not make any change to its procedures sooner. Given this period of market volatility, the minimal demand for new passenger aircraft by U.S. airlines, the continued lack of industry complaints, and the Bank's understanding that U.S. airlines still generally had access to more favorable financing, the Court finds that the Bank was reasonable to conclude that a different approach was not required.
Next, Plaintiffs argue that by 2010, one U.S. airline—Delta—had complained about the financing the Bank was providing to foreign airlines, which, according to Plaintiffs, should have led the Bank to eliminate the exportable goods screen—particularly given the Bank's reliance in Response One on the fact that it had heard no complaints from industry stakeholders prior to 2010. See Pls.' Mem. Opp'n Mot. Summ. J., ECF No. 36, at 32-33. The Court, however, finds that the Bank has justified its decision to maintain the exportable goods screen in the face of this industry complaint for at least two reasons: first, the Bank found little merit in the U.S. airline's complaint that financing provided by the Bank to a European airline, Ryanair, was more favorable than the financing available to the U.S. airline; and second, the Bank understood that, in 2010, negotiations among the ECAs for a new ASU would address any perceived cost advantage because the clear aim of the revised ASU was to ensure the equivalency of ECA and commercial bank financing.
Turning to the first point, in early 2010 the Bank received a complaint from one U.S. airline asserting that financing provided by the Bank to Ryanair, a discount European carrier, was more favorable than the financing available to the U.S. airline. See AR at 1379. Plaintiffs argue that this complaint should have led the Bank to eliminate, or at least reconsider, the exportable goods screen. See Pls.' Mem. Opp'n Mot. Summ. J., ECF No. 36, at 32-33. The Bank, however, has provided a well-reasoned explanation for why this complaint was unfounded: after receiving the complaint, the Bank determined that Ryanair had a better credit rating and was using a superior quality of collateral, namely new aircraft, as compared to the credit rating of the complaining U.S. airline and the relatively older aircraft that the U.S. airline was using as collateral. See AR at 1379. These two factors created a material difference in the cost of financing for Ryanair versus that for the complaining U.S. airline, thus discrediting Plaintiffs' analysis as comparing "apples-to-oranges."
Second, at around the same time, the complaining U.S. airline also had expressed concerns in the context of the new
Overall, then, when the Bank received a complaint in 2010, it considered the U.S. airline's claims and concluded that the complaint was unfounded and did not require revisiting the exportable goods screen. Further, the mere fact that a U.S. airline, for the first time in nearly two decades, disagreed with the Bank's longstanding judgment about the economic impact of financing aircraft transactions did not, by itself, give the Bank reason to discontinue using the exportable goods screen.
Finally, Plaintiffs argue that the Bank should measure the potential advantage
Initially, Plaintiffs' argument appears to assume that the existence of Ex-Im Bank financing, by itself, induces foreign airlines to purchase new aircraft and thus increase competition with U.S. airlines. Such a conclusion, however, is inconsistent with the fact that the pricing advantage offered by Bank financing, if any, most likely is immaterial in the larger context of the costs for purchasing, operating, and maintaining wide-body passenger aircraft. See AR at 1420-21. As the Bank explains, a single Boeing 787 aircraft costs approximately $116 million to purchase and approximately $40-$70 million to operate annually, see id. at 1419 n. 26, 1420, which translates to more than $1 billion over the course of its expected 25-year lifetime. See id. at 1421. When compared to the hypothetical interest savings per year from Bank support—approximately $482,000 in the case of the Air India transactions, for instance—the Bank's experience has revealed
This ties into another problem with Plaintiffs' alternative comparison: it overlooks the fact that in the market for large commercial aircraft, there are only two manufacturers in the world—Boeing and Airbus—and purchases of Airbus aircraft are supported by three European ECAs (France, Germany, and the United Kingdom). See id. at 1390, 1420-21. As a result, once a foreign airline decides to purchase a new plane to meet a specific need, the airline has a binary choice: purchase a U.S.-manufactured Boeing airplane (potentially financed by the Ex-Im Bank), or purchase a foreign-manufactured Airbus airplane (potentially financed by a European ECA). See id. at 1420 ("Given the competition from Airbus on every sale, supported by the three European ECAs, Ex-Im Bank financing affects only the sourcing of an aircraft, not the decision or ability of a foreign airline to purchase an aircraft." (emphasis in original)). And if Ex-Im Bank financing is removed from the equation, the Bank's experience has revealed that foreign airlines simply will purchase from Airbus instead of Boeing due to the presence of foreign ECA financing. Id. at 1402. As the Bank explains,
Id. Thus, Plaintiffs' approach is misguided because, by focusing on the benefit a foreign airline might receive from commercial market financing, it ignores the fact that, in the absence of Bank financing, the foreign airline still will compete with U.S. airlines to the same degree by purchasing Airbus aircraft with foreign ECA financing.
The Bank instead focuses on the cost of ECA financing available to the foreign airline in order to make certain that the Bank's financing is competitive with that from foreign ECAs such that export opportunities are funneled (through Boeing) to the U.S. economy and not lost to Airbus. Cf. Boeing's Amicus Curiae Br., Delta IV, No. 14-cv-0042, ECF No. 19, at 21-22 (in 2012, European ECAs "supported an estimated 147 Airbus airplanes valued at over $10 billion. These agencies are not burdened by the onerous requirements that Plaintiffs demand here." (citation omitted)). Plaintiffs' comparison, on the other hand, ignores the reality that, except when Bank financing is likely to cause serious harm domestically (which the Bank has shown is not the case here), the Bank Act's goal is to ensure that competition between Boeing and Airbus occurs based on the price and quality of the aircraft, not the availability of ECA financing. See, e.g., 12 U.S.C. § 635(a)(2) (specifying procedures that the Bank must follow in order for it "to be competitive in all of its financing programs with countries whose exports compete with United States exports" (emphasis added)); AR at 1402 ("[a] key determinant is whether foreign ECA support would be available for financing the sales of a foreign competitor to the proposed U.S. exporter"); see also Boeing's Amicus Curiae Br., Delta IV, No. 14-cv-0042, ECF No. 19, at 25 ("Plaintiffs' approach ignores the fact that commercial financing is not the true alternative for foreign airlines denied Bank support; rather, such airlines will simply take advantage of the financing offered by any of the three European [ECAs] to purchase Airbus planes instead."). Accordingly, the Court finds that the Bank's comparison is reasonable under the statute.
A final assumption by Plaintiffs is that if a foreign airline uses Ex-Im Bank financing, it must mean that the Bank's financing was cheaper than that which the foreign airline could have obtained in the private market. The accuracy of this assumption, however, largely is negated by the 2011 ASU, which included mechanisms intended to align ECA financing costs with those available in the private market in order that a foreign airline using ECA
First, the Court already has addressed the Ryanair transaction, and in short, nothing about Plaintiffs' analysis discredits the Bank's understanding of the aircraft financing industry or the effectiveness of the 2011 ASU, as the Bank has demonstrated why Plaintiffs' analysis of the Ryanair transaction is flawed and not compelling.
Second, Plaintiffs' argument ties into a larger theme that is prevalent throughout this litigation: many of Plaintiffs' complaints about the Bank are, at base, an attempt to provoke a battle of the experts. But such a battle is frowned upon within the context of an APA challenge to agency decisionmaking. See Marsh, 490 U.S. at 378, 109 S.Ct. 1851 ("When specialists express conflicting views, an agency must have discretion to rely on the reasonable opinions of its own qualified experts even if, as an original matter, a court might find contrary views more persuasive."); Mississippi v. EPA, 744 F.3d 1334, 1348 (D.C.Cir.2013) ("We repeat: it is not our job to referee battles among experts; ours is only to evaluate the rationality of EPA's decision[.]"); Envtl. Def. v. U.S. Army Corps of Eng'rs, 515 F.Supp.2d 69, 82 (D.D.C.2007) (agency's "reasoning is disputed, but the dispute presents a battle of experts—a battle conducted in an arena that is off limits to APA judicial review"). This is not to say that the Court has dismissed, or ought to dismiss, outright Plaintiffs' own expertise and counterfactual arguments; the Court, however, must give the appropriate deference to the Bank's experience and judgment, especially when each side's experts might reach different conclusions. Doing otherwise would entangle the Court in the forbidden expert battle and not give the agency the deference that Congress has afforded to it by law.
In sum, the Court finds that the Bank's adoption and continued use of the exportable goods screen in the 2007 EIPs and beyond constituted rational agency decisionmaking. Specifically, the Bank used its experience and expertise to make a reasonable predictive judgment that balanced the Bank Act's two competing directives—to consider the likelihood of substantial economic impact on domestic industry and to process financing transactions in an efficient and competitive manner that funnels critical export opportunities to the U.S. Indeed, the screen enabled the Bank to resolve financing applications with the promptness that commercial airlines demand, while also allowing the Bank to focus its limited resources on conducting in-depth economic analysis only on those transactions that it reasonably deemed to be the most likely to cause a serious adverse effect, as the Bank Act permits. As such, the exportable goods screen represented an appropriate, reasonable, and efficient response to the realities of the domestic and international markets for aircraft financing. Though Plaintiffs and their experts may disagree with the Bank's analysis and interpretive decisions, deference is owed to the Bank's creation of internal procedures that fill in the many gaps left by Congress in the Bank Act. Accordingly, because the Court finds that the exportable goods screen constitutes reasonable agency decisionmaking and falls within the parameters of the Bank Act, the Court finds in favor of Defendants on this issue.
The Court next turns to an important procedural question raised by Plaintiffs:
Of note, Plaintiffs do not cite any authority that might have required the Bank to apply procedures that were not officially in effect at the time of a financing decision, nor do Plaintiffs cite any authority that might have required the procedures to become effective at an earlier date. Cf. AR at 778 ("The Etihad transaction was considered according to existing policies and procedures. . . . As a matter of policy, Ex-Im Bank processes its transactions in accordance with the due diligence, analytical, and legal requirements that exist at such time." (emphasis added)); id. at 1061 (KAL); id. at 1311 (LATAM). Indeed, the Reauthorization Act imposed only one deadline regarding adverse economic impact: the Bank had to develop and make publicly available its guidelines within 180 days of the passage of the Act, which the Bank did. See Reauthorization Act § 12(a).
Further, although the Board adopted the 2013 EIPs and Guidelines in a public meeting on November 19, 2012, see AR at 2016, which was before three of the Five Transactions were approved, "an agency may defer the effective date of a regulation just as a court may defer the effective date of a decree enjoining a nuisance, provided there is justification." ASG Indus., Inc. v. Consumer Prod. Safety Comm'n, 593 F.2d 1323, 1335 (D.C.Cir. 1979). Here, Defendants explain that the effective date of the 2013 EIPs and Guidelines was delayed for several months in order to provide a transition period in which parties seeking the Bank's financing, as well as the Bank's staff, could prepare for and adapt to the new procedures. See Defs.' Mem. Supp. Mot. Summ. J., ECF No. 30-1, at 34. Importantly, Stage I of the aircraft-specific procedures in the 2013 EIPs and Guidelines required an expert analysis of the long-term supply and demand dynamic within the airline industry in order to determine whether structural oversupply exists. See AR at 1453. This analysis was required to be conducted before the 2013 EIPs and Guidelines could be applied because only when oversupply exists does the next stage of the review process require aircraft transactions to undergo further, case-specific analysis. Id.
The 2013 EIPs and Guidelines, moreover, required this oversupply analysis to be conducted by "an independent, external source recognized as an expert (and neutral party) in the airline field," id., and the Bank therefore needed time to retain the outside expert, see id. at 1422, and then additional time was needed for the expert to perform the analysis. In the end, the oversupply analysis was completed on March 19, 2013, just a few days before the effective date of April 1. See id. at 2120-39. Based on this explanation, and without any compelling argument to the contrary, the Court is satisfied that the Board's decision to set April 1, 2013, as the effective date for the new procedures was "justif[ied]" and reasonable under the circumstances. ASG Indus., 593 F.2d at 1335. As such, the Bank also was reasonable to apply the
To summarize, the Court has reached three conclusions today: first, the Court may consider Response One as a legitimate articulation of the Bank's justifications for the 2007 EIPs; second, the 2007 EIPs satisfy the requirements of the APA, the Bank Act, and the Reauthorization Act; and third, the Bank acted reasonably in applying the 2007 EIPs, rather than the 2013 EIPs and Guidelines, when it originally authorized the Five Transactions. As a result of these three conclusions, the Court finds that Defendants have successfully defended the Bank's authorizations for the Five Transactions in the face of Plaintiffs' lawsuit, as the Court finds no errors in the agency's actions in making those commitments. Accordingly, the Court grants summary judgment in favor of Defendants as to Plaintiffs' Counts I, II, and III, which allege that the Bank's approval of the Five Transactions violated the APA, the Bank Act, and the Reauthorization Act.
Further, the Court finds that consideration of the Remand Analyses and the 2013 EIPs and Guidelines in this litigation would be necessary only if the Court were to have concluded that the Bank should have applied the new EIPs to the Five Transactions at the time of the original financing authorizations. The Court, moreover, agrees with Defendants' assertion that the Remand Analyses were prepared only "to confirm the reasonableness of the Board's prior decisions" to approve the Five Transactions under the 2007 EIPs, see Defs.' Mem. Opp'n Mot. Summ. J., ECF No. 35, at 12, and the Remand Analyses therefore do not, and never were intended to, represent new authorizing decisions for those transactions. See also Defs.' Reply Supp. Mot. Summ. J., ECF No. 37, at 7 (explaining that "no authority required the Board to vote to adopt papers prepared in response to litigation as if the Board were approving new transactions"). Instead, the Remand Analyses represented the Bank staff's analysis and recommendation to the Board that the Board did not need to reconsider its original authorizations for the Five Transactions because those financial commitments would have been approved under the 2013 EIPs and Guidelines as well. See AR at 2145-47 (memorandum from the Bank's staff recommending that the Board adopt the Remand Analyses). Consequently, the Board's unanimous vote to ratify and adopt the Remand Analyses in April 2014 only represented the Board's agreement with the staff's recommendation as to the consequences of applying the new EIPs to the Five Transactions, not a vote by the Board to authorize the financing commitments for a second time under the 2013 EIPs and Guidelines. See id. at 2312.
Thus, because the Remand Analyses represented the agency's alternative evaluation on remand and not any reconsideration or reauthorization of the Five Transactions, addressing the Remand Analyses and the 2013 EIPs and Guidelines now would amount to little more than an advisory opinion to the agency regarding its new procedures. As proof, even if the Court were to conclude that Defendants erred at some point along the way in regard to the 2013 EIPs and Guidelines, there still would be no basis for vacating the Five Transactions because the Court already found that the agency properly authorized those transactions under the substantively valid 2007 EIPs. See, e.g., FCC v. Pacifica Found., 438 U.S. 726, 735, 98 S.Ct. 3026, 57 L.Ed.2d 1073 (1978) (". . .
For the foregoing reasons, the Court grants Defendants' motion for summary judgment and denies Plaintiffs' motions.
S.Rep. No. 99-274, at 8 (1986) (emphasis added).
