House Financial Services Chairwoman Maxine Waters (D-CA) abruptly pulled a bill in late June that would reauthorize the Export-Import Bank of The United States (Ex-Im). The move came amid defiance from her own caucus—the first time she has faced resistance from members of the committee since she became Chairwomen in January.
H.R 3407, a bipartisan bill sponsored by Waters and Patrick McHenry (R-N.C), would renew Ex-Im, provide funding for another seven years and gradually increase its $135 billion portfolio cap to $175 billion. The organization’s congressional authorization lapses in September, at which point it will be unable to engage in new business transactions.
The delay was hailed as a victory by environmental groups pushing for amendments that would limit funding of fossil fuel development and other environmentally damaging projects. “Every coal power plant the Export-Import Bank props up brings us that much closer to climate catastrophe. This bank needs fundamental reform now,” said Brett Hartl, government affairs director at the Center for Biodiversity.
Ex-Im is a wholly government-owned bank that helps facilitate US exports by providing loans at below-market rates. For example, if an airline in Germany wants to buy a 787 from Boeing, Ex-Im will finance the transaction at a far more favorable rate than would be available on the private market—political and currency risks can make commercial financing for export transactions prohibitively expensive, if not impossible, to acquire.
Ex-Im was initially established by Franklin Delano Roosevelt in 1934 and played a vital role in financing many of the landmark 20th-century projects that helped propagate America’s influence and cement its role as a global superpower. The Bank was instrumental in the construction of the Burma Road, rebuilding post-World War II Europe and providing the first credit to post-Soviet nations.
Proponents of the Bank argue that it helps create jobs and keep America competitive on the global stage by strengthening manufacturers’ ability to export to new markets and keep up with global competition. It’s critics denounce the bank as an egregious example of corporate welfare and crony capitalism (it has been dubbed the “Boeing Bank” because of the vast subsidies it grants that particular corporation).
Ex-Im has become a complexly polarizing issue, aligning progressive Democrats with free market Republicans in opposition to the bank, and centrist Democrats with conservative hawks in support. Take this speech, in which Bernie Sanders cites conservative Robert Novak in arguing against the bank’s 2002 reauthorization. Or when President Obama’s press secretary quotes Ronald Reagan to argue for the bank’s reauthorization in 2014 (Obama was against Ex-Im in 2008).
Beyond being an example corporate welfare, the bank has also been criticized as a slush fund, used by the government to finance all kinds of nefarious activities—like purchasing nuclear reactors for Phillipine dictators and funneling money to Saddam Hussein’s war machine.
But it is the Bank’s financing of a different breed of dirty endeavor that raised the ire of environmental groups and led to the delay of the latest reauthorization bill in June—its role in proliferating fossil fuel development and other environmentally damaging projects across the globe. Between 2009 and 2014, the bank averaged 5.5 billion dollars per year fossil fuel project funding, including the massive Kusile Coal Power Plant in South Africa—one of the largest in the world.
Before Waters’ move, a coalition of seventy-five environmental groups sent a letter addressed to Waters and McHenry. It outlined the environmental damage done by Ex-Im and demanded the bill be amended to end fossil fuel subsidies and comply with bedrock environmental laws that all government agencies must adhere to.
Specifically, environmental groups demanded provisions requiring Ex-Im to comply with the National Environmental Policy Act (NEPA), which mandates government agencies conduct Environmental Assessments and Environmental Impact Studies on any project that may have a significant impact on the environment. And the Endangered Species Act (ESA), which mandates government-funded projects not jeopardize the existence of any of the 650 animals on the endangered species list or their critical habitats.
Going further, the letter demands that funding of all fossil fuel related infrastructure be phased out as soon as possible. It pointed out that reauthorization without commitments to end fossil fuel subsidies conflicts with the Democratic Caucus’ support of the Paris Agreement, expressed through H.R. 9. Article 2.1© of the Paris Agreement, which calls on governments to ensure that “finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”
Bolstered by the efforts of environmental groups, House Committee on Financial Services members Alexandria Ocasio-Cortez (D-NY) and Rashid Tlaib (D- Mich) submitted amendments to curtail fossil fuel investments during a markup of the bill. Cortez’s amendment contained a ban on funding of all new fossil fuel plants. Tlaib pushed a measure to impose commitments to reduce greenhouse gas emissions, saying “this is our leverage to be able to say, let’s move toward cleaner energy,”
Waters fears that moving to the left to appease environmental groups will result in loss of Republican support and the collapse of the bill. “If there is no bipartisan agreement that comes from this committee and the work that we’re doing, there will not be any Export-Import Bank reauthorization because there are those in leadership, particularly on the Senate side, who will not entertain any efforts to have Export-Import reauthorization that comes from just one side of the aisle,” Waters said.