Senate to hold confirmation hearing on Ex-Im Bank board nominees

by

WASHINGTON — For some in the space industry, the confirmation hearing they will be paying close attention to on the morning of Nov. 1 will not be the one by the Senate Commerce Committee to consider the nomination of Jim Bridenstine to be NASA administrator.

Instead, their focus will be across the street, at a confirmation hearing by the Senate Banking Committee for five nominees to the board of the Export-Import Bank of the United States, whose lack of a quorum has kept the bank from approving large deals that include financing for commercial satellites and launches.

The nominee expected to receive the most scrutiny is Scott Garrett, a former Republican congressman from New Jersey nominated in April to be president of the bank. Garrett’s past opposition to the bank, including, as a House member, voting against legislation in the fall of 2015 to reauthorize the bank after its authorization to do business lapsed in the middle of the year, has generated strong criticism of his nomination from industry.

“By voting against the reforms in the 2015 reauthorization bill, which was passed by a bipartisan, super-majority in both chambers, he has made it clear that he is not interested in any reform of the bank,” David Melcher, president of the Aerospace Industries Association (AIA), said in an Oct. 25 letter to the chairman of the Senate Banking Committee, Sen. Mike Crapo (R-Idaho), and its ranking member, Sen. Sherrod Brown (D-Ohio).

The AIA has come out against Garrett’s nomination, with Melcher arguing in his letter that Garrett “has a long history of actions and statements designed to destroy the agency.” The industry organization has also run ads opposing the nomination.

Garrett, though, says he has had a change of heart. In the text of his opening statement, released by the committee Oct. 31 in advance of the hearing, he said supported the continued operation of the bank he has been nominated to lead.

“Let me be crystal clear on this point: if I am confirmed, the Export-Import bank will continue to fully operate, point blank,” he said in the statement, a point he emphasized several times in the document.

Garrett, in his statement, said he would work with Congress to ensure that the bank operates as intended. “If confirmed by this body, I will carry out this mission to the very best of my ability,” he wrote.

The other four nominees for the Ex-Im board — Spencer Bachus, Judith Delzoppo Pryor, Kimberly Reed and Claudia Slacik — have not attracted similar criticism, and have the endorsement of industry groups like AIA.

Melcher, in his letter, said that confirming the other four nominees would give the Ex-Im board a quorum for the first time since the bank was reauthorized in December 2015. That would allow it to approve financing deals larger than $10 million, which it is unable to do today without a board quorum.

“Continuing to leave the agency handicapped without a quorum ensures foreign competitors with better access to financing will win contracts instead of U.S. manufacturers,” Melcher wrote.

In the years leading up to the bank’s lapse in authorization in 2015, Ex-Im had been playing a growing role in financing satellite and launch deals. Such deals included the first sales of Boeing’s all-electric Boeing 702SP, to Asia Broadcast Satellite (ABS) and Satmex (later acquired by Eutelsat.) That financing deal included a launch on a SpaceX Falcon 9.

The effect of the lapse in Ex-Im’s authorization, and later lack of a quorum, has been difficult to quantitatively measure. In September 2015, an Orbital ATK executive said the company lost the competition for the Azerspace-2 satellite for the government of Azerbaijan because it could no longer offer Ex-Im financing. That satellite order went to Space Systems Loral, which was able to offer export credit financing from the government of Canada through its Canadian owner, MDA Corp.

Boeing lost an order from ABS for the ABS-8 satellite awarded prior to the lapse in Ex-Im’s authorization because it could not secure financing. ABS later said that the cancellation of the order worked in its favor, since the satellite would not have been competitive against alternatives like ViaSat-3.

Other satellite operators, however, have continued to place orders with American manufacturers even in the absence of Ex-Im support. Israeli operator Spacecom ordered the Amos-17 satellite from Boeing last year with no plans to use Ex-Im financing.

In 2015, a Boeing executive said the company had been told by startup operator Kacific not to bid on its Kacific-1 satellite unless it could offer Ex-Im financing. In February, Kacific announced it was teaming with Sky Perfect JSAT to purchase a joint “condosat” from Boeing. Kacific executives said they had raised enough money to go ahead with the order without the need for Ex-Im financing.