The U.S. Export Import Bank (Ex-Im) faces an uncertain future, with its current authorization set to expire at the end of June and strong opposition to renewing the agency on Capitol Hill.

A number of Republican lawmakers argue that the bank is taking business away from private institutions in an effort to help big business. Some U.S. airlines, meanwhile, have been pushing for reforms in the next reauthorization bill. Ex-Im faced expiration of its authorization last year, but in September Congress passed a short-term renewal of the agency’s authority through June 30, pushing off long-term decisions until this year.

Boeing Commercial Airplanes president and CEO Raymond Conner recently told U.S. Chamber of Commerce president and CEO Thomas Donohue in a one-on-one session that a lapse in the Ex-Im Bank’s authorization “would affect our competitive position really significantly, and frankly it would impact about 1.4 million jobs across the U.S. that are associated with the commercial aerospace industry through our 15,000-plus [company] supply chain. It would really impact us all.”

The debate has heightened as Ex-Im also has stepped up its financial backing of the business aviation industry. Once a small part of the bank’s activities–accounting for less than $100 million per year–business aviation financial backing is approaching $2 billion. U.S. general and business aviation exports at the same time have grown, to a value of $5.4 billion last year.

General Aviation Manufacturers Association president and CEO Pete Bunce has called the financing vital for U.S. competitiveness. “It should be a no-brainer,” he said of the Ex-Im Bank reauthorization. “All we are asking for is the ability to compete on a level playing field.”

Legislative Action

Senate Democrats introduced legislation in March to reauthorize the agency through 2022 and lift its spending cap by $20 billion over that period. Also in March, a bipartisan group of senators introduced a more modest reauthorization bill that would run through 2019, scale back funding authority by $5 billion each year to $135 billion, call for more stringent oversight of bank practices and require bigger loan loss reserves.

In the House, various measures have been introduced, including a bipartisan bill to extend the bank’s authority through Fiscal Year 2019, also bolster loan-loss reserves, and thin funding authority to $130 billion annually. That bill puts more controls on the bank’s activities, making it a lender “of last resort” and spreading more risk to private-sector lenders. That bill has a total of 59 co-sponsors.

Even with such support, reauthorization has its detractors, with some Tea Party members calling the bank “corporate welfare.” Rep. Justin Amash (R-Mich.) re-introduced a bill at the end of March to abolish the bank within three years.

The Senate Banking Committee has scheduled hearings on Ex-Im early this month, and chairman Richard Shelby (R-Ala.) in the past has supported boosting Ex-Im’s lending authority. Even so, backers of reauthorization believe it will be difficult to get a bill through normal committee channels since some Republicans on both the Banking Committee and the House Financial Services Committee oppose the bank’s renewal. Instead they believe a reauthorization measure likely will have to be added as an amendment to a must-pass bill.

Legal Battles Cleared

While the debate continues on Capitol Hill, the bank received a key victory in the courts. On March 30 the U.S. District Court for the District of Columbia ruled against three lawsuits filed by airlines seeking curbs on financial backing of aircraft sales to foreign airlines.

The cases involved complaints filed by Delta Air Lines, Hawaiian Airlines and the Air Line Pilots Association. The airlines argued that the Ex-Im Bank violates the Export-Import Bank Act and other laws by using certain processes to evaluate the economic effects of potential transactions during its review of loan applications.

“Together, [the] plaintiffs have embarked on a multipronged litigation attack against the Ex-Im Bank and its board of directors,” the court said, but found that the bank’s processes reasonably meet its statutory obligations and that the court has no basis for “disturbing” the bank’s judgment.

“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,” the court noted. “But while U.S. aircraft manufacturers enjoy the benefits of the Ex-Im Bank’s assistance in selling their airplanes to foreign airline purchasers, U.S. airlines, which are not eligible for financing from the bank, object to the boost that the bank’s support provides to overseas competitors.”

The airlines have been involved in litigation against the bank for several years. They challenged Ex-Im loan guarantees to Air India to purchase certain Boeing aircraft.

Delta, Hawaiian and ALPA argued that the financing would hurt the domestic airline industry. The Ex-Im Bank is expected to screen the transitions to determine whether they would result in a product that could be exported from a foreign country, they said. They also argued that the bank has a history of providing foreign airlines financing at cheap rates to the detriment of the U.S. airline industry. The lawsuit cited an outstanding balance to foreign airline loans that totaled $106.6 billion, saying the U.S. taxpayer must pick up the bill if a borrower does not repay the debt.

But in recent years the courts have sided with the bank, finding the approvals of the transactions were “neither arbitrary and capricious nor contrary to law” or dismissing cases on the grounds that they were not reviewable.

The court points to statutes that require the bank to improve the competitive position of U.S. exporters by expanding U.S. exports. The court also points to laws requiring the bank to approve financing at rates and on terms that are competitive with exports of other countries and consistent with international agreements. “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,” the court said.

The court noted the looming reauthorization debate over Ex-Im and said, “Congress will have another opportunity to clearly communicate to all interested parties what role it wants the bank to play in financing aircraft transactions.”