Sens. Toomey, Coats press Energy Dept. to nix auto steel loan

Sens. Dan Coats (R-Ind.) and Pat Toomey (R-Pa.) are reviving their campaign against a Michigan company’s bid for an Energy Department loan to support manufacture of high-strength automotive steel.

The Department of Energy (DOE) in January nixed a planned $730 million loan for Severstal Dearborn LLC — a subsidiary of Russian steel giant OAO Severstal — to retool and expand facilities in Dearborn, Mich.

But the company has reportedly reapplied for a smaller, $320 million loan. Coats and Toomey, whose states are home to some of Severstal’s competitors, say in a new letter to Energy Secretary Steven Chu that DOE should reject this proposal too.

“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,” the senators wrote in the June 26 letter to Chu.

Severstal's push for a DOE loan has also come under attack from House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.).

Here’s the whole June 26 letter from Coats and Toomey:

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.  hus, 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