Coats, Toomey Caution Energy Secretary on Severstal Loan Request
Senators request thorough review of steel producer’s latest application for taxpayer dollars
Washington, D.C. – Today U.S. Senators Dan Coats (R-Ind.) and Pat Toomey (R-Pa.) sent a letter to Department of Energy (DOE) Secretary Steven Chu requesting a “thorough review” of a recent loan request made by steel producer, Severstal Dearborn, LLC.
Last year, Coats and Toomey sent a letter to Inspector General Gregory H. Friedman requesting a formal review of DOE’s issuance of a conditional loan commitment to Severstal for $730 million under the Advanced Technology Vehicle Manufacturing (ATVM) program. Severstal requested taxpayer dollars under the loan program to produce high strength, lightweight steel in Michigan that several companies, including Arcelor Mittal, Steel Dynamics and U.S. Steel, already manufacture in the United States.
Two months following the senators’ request for a formal review, DOE decided against finalizing its previously announced conditional loan commitment to Severstal. Recently, however, Severstal applied again under the same loan program for $320 million to fund a portion of its project.
In the letter to Secretary Chu, the senators wrote:
“We strongly agree with your assertion that the government should not use taxpayer money to subsidize projects that companies can finance on their own. DOE’s stated purpose for the loan program is to ‘accelerate the domestic commercial deployment of innovative and advanced energy technologies.’ In the case of Advanced High Strength Steel (AHSS), abundant evidence shows that several U.S. companies already manufacture comparable grades for which Severstal is seeking this loan award. These companies built their facilities using private funds. Thus, the market has demonstrated an ability to finance AHSS projects without taxpayer subsidies.
“We applaud the Administration’s decision not to finalize the first Severstal loan application. And we ask that you conduct another ‘thorough review’ of the company’s latest application. We are confident that the facts will lead you to the same conclusion this time around.”
The complete text of the letter is below or available by clicking here.
The Honorable Steven Chu
Secretary of Energy
U.S. Department of Energy
1000 Independence Avenue, SW
Washington, D.C. 20585
Dear Secretary Chu:
Earlier this year, the Department of Energy (DOE) decided against finalizing its announced conditional loan commitment to Severstal Dearborn, LLC for $730 million under the Advanced Technology Vehicle Manufacturing (ATVM) program. DOE stated that its decision not to grant the loan was made based on the merits of the application after a “thorough review.” We now understand that Severstal has reapplied under the same loan program for a portion of the same project—albeit for a lesser loan amount. We again express our serious concern.
We strongly agree with your assertion that the government should not use taxpayer money to subsidize projects that companies can finance on their own. DOE’s stated purpose for the loan program is to “accelerate the domestic commercial deployment of innovative and advanced energy technologies.” In the case of Advanced High Strength Steel (AHSS), abundant evidence shows that several U.S. companies already manufacture comparable grades for which Severstal is seeking this loan award. These companies built their facilities using private funds. Thus, the market has demonstrated an ability to finance AHSS projects without taxpayer subsidies.
We applaud the Administration’s decision not to finalize the first Severstal loan application. And we ask that you conduct another “thorough review” of the company’s latest application. We are confident that the facts will lead you to the same conclusion this time around. Thank you for your prompt attention to this matter.
Sincerely,
Dan Coats
United States Senator
Patrick Toomey
United States Senator
cc:
David G. Frantz
Acting Executive Director
Loan Programs Office
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