Coats, Toomey And Rep. Issa Praise DOE Decision To Cancel Severstal Loan

Press Release

U.S. Senators Daniel Coats (R-Ind.) and Pat Toomey (R-Pa.) and U.S. Representative Darrell Issa (R-Calif.) today praised the Energy Department's decision not to move forward with a conditional $730 million loan to Severstal Dearborn, a Russian-owned mining and steel company.

The conditional loan was issued in July under the department's Advanced Technology Vehicles Manufacturing loan program for the purposes of manufacturing advanced high strength steel.

According to a 2011 release from the DOE, these taxpayer dollars would have been used to modernize existing facilities and construct new facilities to "produce the next generation of automotive advanced high-strength steel." Several American steel companies already produce this steel without federal subsidies.

"This announcement is a victory for taxpayers and steel manufacturers in Indiana," Sen. Coats said. "The Severstal loan commitment never passed the sniff test, as multiple producers are already manufacturing this high strength steel without taxpayer financing. This is another example of why the government should not be in the business of picking winners and losers."

"It is unconscionable for a federal agency to consider using taxpayer dollars to build up foreign companies, putting U.S. companies like U.S. Steel at a competitive disadvantage," Sen. Toomey said. "Having worked with my colleagues in Congress to shed light on this unfair subsidy for more than six months, I'm pleased the DOE has made the right decision to revoke this loan and protect taxpayers and American steel workers."

"While I am pleased that the Department of Energy has reconsidered it decision to fund a $730 million loan to Severstal, it's deeply disconcerting to know that this loan would have gone forward had Congress not raised concerns," Rep. Issa said. "Following the waste of taxpayer dollars in the collapse of Solyndra, the Department of Energy needs to work on being better guardians of taxpayer dollars."

Subsidizing one player in this market with a loan of this size would unfairly undercut U.S. Steel and other American steel companies who did not have the benefit of a low-interest, government-subsidized loan, and Sens. Coats and Toomey reiterated this in a November letter to the DOE's Inspector General Gregory H. Friedman. Please click here to read the senators' letter.

Rep. Issa, chairman of the House Oversight & Government Reform Committee, also sent DOE Secretary Steven Chu a letter Oct. 20 raising concerns about the loan and the decision-making process. Please click here to read Rep. Issa's letter.

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