I

106TH CONGRESS

1ST SESSION H. R. 1822

To establish an emergency loan guarantee program for steel and iron ore

companies.

IN THE HOUSE OF REPRESENTATIVES

MAY 14, 1999

Mr. REGULA (for himself, Mr. NEY, Mr. CALLAHAN, and Mr. ADERHOLT) introduced the following bill; which was referred to the Committee on

Banking and Financial Services, and in addition to the Committee on the

Budget, for a period to be subsequently determined by the Speaker, in

each case for consideration of such provisions as fall within the jursidition

of the committee concerned

A BILL

To establish an emergency loan guarantee program for steel

and iron ore companies.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Emergency Steel Loan

5 Guarantee Program’’.

6 SEC. 2. FINDINGS.

7 Congress finds that—
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1 (1) the United States steel industry has been

2 severely harmed by a record surge of more than

3 40,000,000 tons of steel imports into the United

4 States in 1998, caused by the world financial crisis;

5 (2) this surge in imports resulted in the loss of

6 more than 10,000 steel worker jobs in 1998, and

7 was the imminent cause of 3 bankruptcies by me8 dium-sized steel companies, Acme Steel, Laclede

9 Steel, and Geneva Steel;

10 (3) the crisis also forced almost all United

11 States steel companies into—

12 (A) reduced volume, lower prices, and fi13 nancial losses; and

14 (B) an inability to obtain credit for contin15 ued operations and reinvestment in facilities;

16 (4) the crisis also has affected the willingness

17 of private banks and investment institutions to make

18 loans to the U.S. steel industry for continued oper19 ation and reinvestment in facilities;

20 (5) these steel bankruptcies, job losses, and fi21 nancial losses are also having serious negative ef22 fects on the tax base of cities, counties, and States,

23 and on the essential health, education, and munic24 ipal services that these government entities provide

25 to their citizens; and
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1 (6) a strong steel industry is necessary to the

2 adequate defense preparedness of the United States

3 in order to have sufficient steel available to build the

4 ships, tanks, planes, and armaments necessary for

5 the national defense.

6 SEC. 3. DEFINITIONS.

7 For purposes of this Act—

8 (1) the term ‘‘Board’’ means the Loan Guar9 antee Board established under section 5;

10 (2) the term ‘‘Program’’ means the Emergency

11 Steel Guaranteed Loan Program established under

12 section 4; and

13 (3) the term ‘‘qualified steel company’’ means

14 any company that—

15 (A) is incorporated under the laws of any

16 State;

17 (B) is engaged in the production and man18 ufacture of a product defined by the American

19 Iron and Steel Institute as a basic steel mill

20 product, including ingots, slab and billets,

21 plates, flat-rolled steel, sections and structural

22 products, bars, rail type products, pipe and

23 tube, and wire rod; and
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1 (C) has experienced layoffs, production

2 losses, or financial losses since the beginning of

3 the steel import crisis, after January 1, 1998.

4 SEC. 4. ESTABLISHMENT OF EMERGENCY STEEL GUARAN5 TEED LOAN PROGRAM.

6 There is established the Emergency Steel Guaranteed

7 Loan Program, to be administered by the Board, the pur8 pose of which is to provide loan guarantees to qualified

9 steel companies in accordance with this Act.

10 SEC. 5. LOAN GUARANTEE BOARD MEMBERSHIP.

11 There is established a Loan Guarantee Board, which

12 shall be composed of—

13 (1) the Secretary of Commerce, who shall serve

14 as Chairman of the Board;

15 (2) the Secretary of Labor; and

16 (3) the Secretary of the Treasury.

17 SEC. 6. LOAN GUARANTEE PROGRAM.

18 (a) AUTHORITY.—The Program may guarantee loans

19 provided to qualified steel companies by private banking

20 and investment institutions in accordance with the proce21 dures, rules, and regulations established by the Board.

22 (b) TOTAL GUARANTEE LIMIT.—The aggregate

23 amount of loans guaranteed and outstanding at any one

24 time under this Act may not exceed $1,000,000,000.
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1 (c) INDIVIDUAL GUARANTEE LIMIT.—The aggregate

2 amount of loans guaranteed under this Act with respect

3 to a single qualified steel company may not exceed

4 $250,000,000.

5 (d) MINIMUM GUARANTEE AMOUNT.—No single loan

6 in an amount that is less than $25,000,000 may be guar7 anteed under this Act, except that the Board may, in ex8 ceptional circumstances, guarantee smaller loans.

9 (e) TIMELINES.—The Board shall approve or deny

10 each application for a guarantee under this Act as soon

11 as possible after receipt of such application.

12 (f) ADDITIONAL COSTS.—For the additional cost of

13 the loans guaranteed under this section, including the

14 costs of modifying the loans as defined in section 502 of

15 the Congressional Budget Act of 1974 (2 U.S.C. 661a),

16 there is authorized to be appropriated $140,000,000, to

17 remain available until expended.

18 (g) REQUIREMENTS FOR LOAN GUARANTEES.—A

19 loan guarantee may be issued under this Act upon applica20 tion to the Board by a qualified steel company pursuant

21 to an agreement to provide a loan to that qualified steel

22 company by a private bank or investment company, if the

23 Board determines that—

24 (1) credit is not otherwise available to that

25 company under reasonable terms or conditions suffi-
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1 cient to meet its financing needs, as reflected in the

2 financial and business plans of that company;

3 (2) the prospective earning power of that com4 pany, together with the character and value of the

5 security pledged, furnish reasonable assurance of re6 payment of the loan to be guaranteed in accordance

7 with its terms;

8 (3) the loan to be guaranteed bears interest at

9 a rate determined by the Board to be reasonable,

10 taking into account the current average yield on out11 standing obligations of the United States with re12 maining periods of maturity comparable to the ma13 turity of such loan; and

14 (4) the company has agreed to an audit by the

15 General Accounting Office, prior to the issuance of

16 the loan guarantee and annually while any such

17 guaranteed loan is outstanding.

18 (h) TERMS AND CONDITIONS OF LOAN GUARAN19 TEES.—

20 (1) LOAN DURATION.—All loans guaranteed

21 under this Act shall be payable in full not later than

22 December 31, 2005, and the terms and conditions of

23 each such loan shall provide that the loan may not

24 be amended, or any provision thereof waived, with25 out the consent of the Board.
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1 (2) LOAN SECURITY.—Any commitment to

2 issue a loan guarantee under this Act shall contain

3 such affirmative and negative covenants and other

4 protective provisions that the Board determines are

5 appropriate. The Board shall require security for the

6 loans to be guaranteed under this Act at the time

7 at which the commitment is made.

8 (3) FEES.—A qualified steel company receiving

9 a guarantee under this Act shall pay a fee in an

10 amount equal to 0.5 percent of the outstanding prin11 cipal balance of the guaranteed loan to the Depart12 ment of the Treasury.

13 (i) REPORTS TO CONGRESS.—The Secretary of Com14 merce shall submit to the Congress annually a full report

15 of the activities of the Board under this Act during fiscal

16 years 1999 and 2000, and annually thereafter, during

17 such period as any loan guaranteed under this Act is out18 standing.

19 SEC. 7. SALARIES AND ADMINISTRATIVE EXPENSES.

20 For necessary expenses to administer the Program,

21 there is authorized to be appropriated to the Department

22 of Commerce $5,000,000, to remain available until ex23 pended, which may be transferred to the Office of the As24 sistant Secretary for Trade Development of the Inter25 national Trade Administration.
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1 SEC. 8. TERMINATION OF GUARANTEE AUTHORITY.

2 The authority of the Board to make commitments to

3 guarantee any loan under this Act shall terminate on De4 cember 31, 2001.

5 SEC. 9. REGULATORY ACTION.

6 The Board shall issue such final procedures, rules,

7 and regulations as may be necessary to carry out this Act

8 not later than 60 days after the date of enactment of this

9 Act.

10 SEC. 10. IRON ORE COMPANIES.

11 (a) IN GENERAL.—Subject to the requirements of

12 this section, an iron ore company incorporated under the

13 law of any State shall be treated as a qualified steel com14 pany for purposes of the Program.

15 (b) TOTAL GUARANTEE LIMIT FOR IRON ORE COM16 PANIES.—Of the aggregate amount of loans authorized to

17 be guaranteed and outstanding at any one time under sec18 tion 6(b), not to exceed $30,000,000 of the amount of

19 loans guaranteed and outstanding at any one time shall

20 be loans with respect to iron ore companies.

21 (c) MINIMUM IRON ORE COMPANY GUARANTEE

22 AMOUNT.—Notwithstanding section 6(d), a single loan to

23 an iron ore company in an amount of not less than

24 $6,000,000 may be guaranteed under this section.
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1 SEC. 11. EMERGENCY DESIGNATION.

2 The entire amount made available to carry out this

3 Act—

4 (1) is designated by the Congress as an emer5 gency requirement pursuant to section 251(b)(2)(A)

6 of the Balanced Budget and Emergency Deficit Con7 trol Act of 1985 (2 U.S.C. 901(b)(2)(A)); and

8 (2) shall be available only to the extent that an

9 official budget request that includes designation of

10 the entire amount of the request as an emergency

11 requirement (as defined in the Balanced Budget and

12 Emergency Deficit Control Act of 1985) is trans13 mitted by the President to the Congress.

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