[Congressional Record Volume 147, Number 97 (Thursday, July 12, 2001)]
[Senate]
[Pages S7652-S7653]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 EMERGENCY STEEL LOAN GUARANTEE PROGRAM

  Mr. BYRD. Mr. President, roughly 2 years ago, we passed legislation 
to create the Emergency Steel Loan Guarantee Program, Public Law 106-
51. The President signed the legislation on August 17, 1999. At that 
time, we were alarmed by a growing crisis in the steel industry. 
Therefore, Congress found that the U.S. steel industry had been 
severely harmed by a record surge of more than 40 million tons of steel 
imports in 1998. In addition, we found that the surge had resulted in 
the loss of more than 10,000 steelworker jobs in 1998 and was the 
proximate cause of bankruptcy for three steel companies; that the 
imports had damaged the financial viability of the American steel 
industry and had affected the willingness of private lenders to make 
loans to the industry; that all of these developments were having 
serious negative effects on communities across the country; and that: a 
strong steel industry is necessary to the adequate defense preparedness 
of the United States in order to have sufficient steel available to 
build the ships, tanks, planes, and armaments necessary for the 
national defense.
  In response to this growing crisis, I offered an amendment during an 
appropriations conference to create a loan guarantee fund for domestic 
steel companies that have experienced layoffs, production losses, or 
financial losses since the beginning of the steel import crisis. The 
program was intended to provide guarantees of up to 85 percent of the 
principal amount of loans to qualified domestic steel companies for 
whom credit is not otherwise available at reasonable rates, provided 
there is reasonable assurance of repayment. The legislation provided 
budget authority of $140 million to support $1 billion in guaranteed 
loans.
  Since we took that action, the import crisis has deepened. During the 
last 6 months, the number of steelworkers who have lost their jobs as a 
result of the crisis has reached 23,500. The number of companies filing 
for bankruptcy has reached 18. Current import levels remain well above 
pre-crisis levels. Moreover, prices for finished steel products have 
fallen below the levels that prevailed during the depths of the 1998 
crisis.
  The U.S. industry has been driven into this state of crisis by 
foreign producers who are generally less efficient and less productive, 
and who in many cases could not compete in the U.S. market or even 
survive without Government support. Since 1980, steel producers outside 
of North America have received well over $100 billion in direct 
Government subsidies. This does not include the costs incurred by 
communist governments in the former Soviet Union, Eastern Europe, and 
China in establishing steel industries that would not have existed 
without government involvement. Enormous market distortions abroad have 
led to the creation and retention for over a quarter of a century of 
massive foreign overcapacity--an estimated 275 million tons of excess 
crude steel capacity, or more than twice the annual steel consumption 
of the United States. The U.S. steel industry, on the other hand, 
restructured itself in the 1980s and early 1990s, emerging by the mid-
1990s as the most productive in the world in terms of man-hours 
expended per ton of steel produced.
  Unfortunately, the emergency steel loan guarantee program has not 
been able to fulfill its mission. By February 28, 2000, the governing 
board of the program had received 13 loan guarantee applications. Of 
that number, three were rejected for failure to comply with statutory 
or regulatory requirements and three others were rejected because the 
board did not find that there was a reasonable assurance of repayment. 
The board approved the other seven applications, totaling $550,525,500 
and issued offers of guarantee to the applicant lenders during Fiscal 
Year 2000. Nevertheless, no guaranteed loans were closed and funded 
during Fiscal Year 2000, and only one guaranteed steel loan--$110 
million to Geneva Steel Company of Vineyard, UT--has closed this year.
  So, it is time to consider whether we can make changes to the program 
that will increase its effectiveness without imposing significant 
additional costs on the Federal Government. I have offered an amendment 
that has three key features:
  No. 1, for $100 million worth of guarantee authority, the amendment 
increases the federal guarantee from 85 percent of principal to as much 
as 95 percent of principal, provided that no steel company gets more 
than $50 million of these more favorable guarantees. Similarly, for 
another $100 million worth of guarantee authority, the amendment 
increases the federal guarantee from 85 percent to as much as 90 
percent, with a $50 million limit for any single company.
  No. 2, loans approved after the effective date of the amendment could 
be structured so that repayment is not completed until 2015--extended 
from 2005 under current law.
  No. 3, the Emergency Steel Loan Guarantee Board would have guarantee 
authority until December 31, 2003--extended from December 31, 2001, 
under current law.
  The current balance of budget authority is $127.2 million for $890 
million

[[Page S7653]]

of unused guarantee authority. The Office of Management and Budget has 
estimated that the existing $127.2 million budget authority balance 
will be adequate to support the more generous terms and conditions 
contained in my amendment. The amendment, therefore, does not need to 
provide any additional budget authority.
  If we do not take every action we can to support this vital industry, 
I am afraid the wave of bankruptcies will continue. By the end of the 
year, we may not have much of a steel industry to speak of. What will 
we then say to those who question our defense preparedness? What will 
we say to the steelworkers of America, to their families, and to the 
communities and consuming industries that depend upon a vital American 
steel industry? What will we say to the industries that are next on the 
hit lists of foreign predators? Let us stand up for steel in its time 
of need, as the industry has stood up for us in times of war and times 
of peace. Let us not allow imports to eviscerate this efficient and 
productive industry, an industry that has provided quality jobs to 
generations of hardworking Americans.
  I would like to thank several Senators who helped in crafting this 
amendment. Senators Gramm of Texas and Nickles of Oklahoma, as well as 
Senators Voinovich of Ohio and Specter of Pennsylvania, all of whom 
demonstrated their creativity and flexibility--as well as good humor--
in coming to agreement. I also wish to thank our distinguished majority 
whip for his very considerable help and encouragement to all of us.
  I urge my colleagues to support this amendment to the Emergency Steel 
Loan Guarantee Program.

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