[Congressional Record Volume 145, Number 114 (Thursday, August 5, 1999)]
[Senate]
[Pages S10361-S10362]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




THE EMERGENCY STEEL LOAN GUARANTEE AND EMERGENCY OIL AND GAS GUARANTEED 
                            LOAN ACT OF 1999

  Mr. BYRD. Mr. President, last night, the U.S. House of 
Representatives passed the conference report to H.R. 1664, the bill 
containing the Emergency Steel Loan Guarantee and Emergency Oil and Gas 
Guaranteed Loan programs, by a vote of 246 yeas to 176 nays. H.R. 1664 
was passed by the Senate on June 18, 1999.
  The steel and oil and gas loan guarantee programs will provide 
qualified U.S. steel producers and small oil and gas producers with 
access to a $1.5 billion GATT-legal, revolving loan guarantee fund to 
back loans through the private market. A board of the highest caliber--
consisting of the Chairman of the Board of Governors of the Federal 
Reserve System, who will serve as the Chair, the Secretary of Commerce, 
and the Chairman of the Securities and Exchange Commission--will 
oversee the programs. These distinguished board members will ensure 
careful analysis of the guarantee award process, including actions 
needed by U.S. steel mills and oil and gas producers to secure a 
financial recovery along with a reasonable prospect for repayment of 
the federally guaranteed loans. The loan guarantee programs are written 
to provide the board members with the flexibility necessary to offer 
the maximum benefit to U.S. steel and oil and gas businesses and the 
maximum protection to the taxpayers.
  The passage of H.R. 1664 is a vital measure for both the U.S. steel 
industry and the oil and gas industry, and it was a personal pleasure 
for me to work with the fine Senator from New Mexico, Mr. Domenici, on 
this important legislation. I authored the steel loan guarantee 
provisions, while my good friend Senator Domenici authored the 
provisions for oil and gas. After several long nights, some tough 
negotiations, and countless consultations, H.R. 1664, a bill that 
joined our two programs, will deliver critical assistance to hard 
working Americans. H.R. 1664 is, indeed, a ``buy American bill.'' But, 
more importantly, the passage of H.R. 1664 is a vote of confidence for 
American workers and American families.
  Passage of H.R. 1664 is an important statement by this Congress in 
support of the men and women in the U.S. steel industry. These workers 
have played by the global trade rules only to find themselves cheated 
by our trading partners who ignore the rules in order to maximize their 
own profits. Illegal steel trade has created exceedingly difficult 
finanical circumstances for the U.S. steel industry, and the U.S. steel 
industry deserves the benefits provided under H.R. 1664. Those benefits 
simply will provide essential loan guarantees to address the cash flow 
emergency created by the historic surge of cheap and illegal steel. 
They are vital to the future viability of many, many steel jobs.
  The historic level of illegally dumped imported steel is a national 
crisis. The record levels of these foreign imports have caused over 
10,000 thousand U.S. steelworkers to experience layoffs, short work 
weeks, and reduced pay. American steel companies have suffered from 
reduced shipments, significant drops in orders, price depression, lower 
profits, and worse. Already, at least six U.S. steel manufacturers have 
filed for Chapter 11 bankruptcy protections, jeopardizing employees, 
families, and entire communities. This steel loan guarantee program can 
help to prevent further bankruptcies, and provide vitally important 
support for the survival of small- and medium-sized steel 
manufacturers.
  Steel communities are proud of their role throughout this nation's 
history. Through the work of men and women in places like Weirton, West 
Virginia, and Pittsburgh, Pennsylvania, the backbone of this nation was 
forged. Steel has always been a driving force in the growth and 
prosperity of our nation.
  I applaud the action by this Congress in passing H.R. 1664. It was 
the right thing to do. I urge the President to quickly sign the bill 
into law. These loan guarantee programs will operate through the 
private market to help sustain good-paying jobs, support our national 
security, and save taxpayers millions of dollars from lost tax revenues 
and increased public assistance payments.
  Mr. DOMENICI. Mr. President, I say to Senator Byrd, in both the steel 
and the oil and gas loan guarantee programs, the legislation provides 
that loan guarantees may be issued upon application of the prospective 
borrower

[[Page S10362]]

(section 101(g) for the Steel Loan Guarantee Program and section 201 
(f) for the Oil and Gas Loan Guarantee Program). Ordinarily, the 
applicant for a loan guarantee is the prospective lender. Am I correct 
in assuming that that would be the case under these programs, and that 
the true intent of the language in the legislation is that the 
prospective lender is the applicant?
  Mr. BYRD. Yes, the Senator from New Mexico is correct in that 
assumption. It will be the lender that obtains the direct benefits of a 
loan guarantee, and it is the prospective lender that will be required 
to submit necessary application materials for the guaranty. The 
prospective borrower will, of course, also have to submit information 
and other material as part of the application for a loan guarantee, but 
under each program it is the lender with whom the Loan Guarantee Board 
will have its legal relationship. Therefore, it is the prospective 
lender that will be required to apply for assistance under these 
programs.
  Mr. DOMENICI. It is possible that under each of these programs there 
may be many, many eligible firms--more under the Oil and Gas Loan 
Guarantee Program, but potentially a high number under the Steel Loan 
Guarantee Program, as well--particularly as there is no ``floor'' or 
minimum amount of loan that may be guaranteed. Would the Loan Guarantee 
Boards have the discretion to establish priorities and criteria for the 
consideration of applications and award of guarantees, so that projects 
could be considered in an orderly manner, and there could be a proper 
mix of loan risks, to maximize the effectiveness of the programs within 
the amount appropriated for program costs?
  Mr. BYRD. The Loan Guarantee Boards would absolutely have that 
discretion. The clear intent of this legislation is to effectuate the 
guarantee of up to $1.5 billion of loans under the two programs. There 
is no requirement for first-come, first-served among applicants. The 
Boards may impose additional reasonable requirements for participation 
in the programs. It is, indeed, our intent to look to the judgment and 
expertise of the administering agencies, the experience and competence 
of professional advisors, and the wisdom and common sense of the Loan 
Guarantee Boards themselves to make these programs run effectively. It 
is not our intent to hamstring the Boards in determining their 
priorities and procedures; rather, we expect the Boards to implement 
these programs as to ensure the fulfillment of the Congressional 
purpose.
  Mr. DOMENICI. I note that the legislation requires the Loan Guarantee 
Boards to establish procedures, rules and regulations, but appropriates 
money to the Department of Commerce to administer the programs. Am I 
correct in assuming that this is because the Boards themselves are not 
expected to actually administer the programs, but only to adopt rules 
and procedures, and approve guarantees and amendments? And am I correct 
in further assuming that, subject to the direction of the Loan 
Guarantee Boards, the Department of Commerce is expected to prepare 
proposed rules and procedures for the Boards' consideration; on behalf 
of the Boards, publish regulations in the Federal Register; process 
applications for guarantees; and undertake the day-to-day 
administration of the programs?
  Mr. BYRD. Yes, those are correct assumptions. While the Boards will 
have the ultimate decision-making responsibilities, and will take the 
actions directed by the legislation, as a practical matter they are not 
expected to handle the day-to-day work of administering loan guarantee 
programs. That will be handled through the Department of Commerce, 
using its own staff, contracting for the consultants and other 
services, or through agreements with another agency or agencies.
  Mr. DOMENICI. Many qualified steel companies are currently in 
bankruptcy, or have existing debt with covenants in those investments 
that provide for seniority for such existing debentures. In determining 
loan security, is it not the intent of this legislation to give the 
Board the discretion to use its professional judgment to determine the 
nature, kind, quality and amount of security required for a loan 
guarantee?
  Mr. BYRD. That is correct. The Board has the flexibility to use a 
combination of factors, including prospective earning power, in 
determining loan security terms and conditions.
  Mr. DOMENICI. I note that the legislation in section 101 (j), 
appropriates $5 million to the Department of Commerce, for necessary 
expenses to administer the Steel Loan Guarantee Program. Similarly, in 
section 201 (i), $2.5 million is appropriated to the Department for 
necessary expenses to administer the Oil and Gas Loan Guarantee 
Program. In each case, the legislation provides that the appropriation, 
``may be transferred to the Office of the Assistant Secretary for Trade 
Development of the International Trade Administration.'' The operative 
word here is ``may.'' Do I correctly assume that the Secretary of 
Commerce has the discretion to determine where funds provided for under 
these programs can be most effectively administered?

  Mr. BYRD. That is an accurate assumption. The Secretary is authorized 
under the legislation to assign administration of the programs as he 
sees fit, to accomplish their effective administration.
  Mr. DOMENICI. I ask whether the full faith and credit of the United 
States will stand behind the guarantees to be executed by the Loan 
Guarantee Boards. This is of course an important matter for prospective 
lenders, determining perhaps at what interest rates a guaranteed loan 
would be made, or indeed whether a loan would be made at all. Am I 
correct in my assumption that although the bill does not specifically 
say so in so many words, the full faith and credit of the United States 
will in fact stand behind the loan guarantees?
  Mr. BYRD. My good friend from New Mexico is correct. Under this 
legislation, the full faith and credit of the United States will, in 
fact, stand behind each loan guarantee executed by the Loan Guarantee 
Board, the same as if the legislation specifically said so. Lenders may 
participate in this program with confidence, and should therefore offer 
the borrowers the very best terms--including low interest--on the 
guaranteed loans.
  Mr. DOMENICI. This is indeed important legislation, but I ask whether 
regulations promulgated to implement the legislation would be a ``major 
rule'' as that term is used in the Congressional Review Act (5 U.S.C. 
804). Generally, any rule that has a $100 million effect on the economy 
in a single year is considered to be a major rule, and cannot go into 
effect until 60 days after the rule is submitted to Congress for review 
and possible disapproval. But, if the loan guarantee regulations are 
considered a major rule, delaying their effect would appear to be 
inconsistent with the language and intent of the legislation. Once 
regulations promulgated under this legislation are written, cleared by 
OMB, filed with Congress, and published in the Federal Register, I 
assume they would go into effect right away. Is this correct?
  Mr. BYRD. Yes, that assumption is accurate. Any rule issued to 
implement this program could be considered a ``major rule'' under the 
Congressional Review Act, and subject to the delayed effective date. 
However, the legislation itself recognizes the urgency of the programs: 
section 101(l) provides that the Steel Loan Guarantee Board ``shall 
issue such final procedures, rules, and regulations as may be necessary 
to carry out this section not later than 60 days after the date of 
enactment of this Act.'' Identical language appears for the Oil and Gas 
Loan Guarantee Board, in section 201(k). Due to this urgency, we expect 
the Administration to apply the provisions of the Congressional Review 
Act which allow even a major rule to go into effect without delay, 
consistent with the public interest.

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