Senate considers expanding loan program to big trucks

David Shepardson
Detroit News Washington Bureau

Washington — Senators are considering expanding the long-dormant $25 billion auto retooling program to include medium- and heavy-duty trucks — or even ships.

Sens. Debbie Stabenow, D-Lansing and Bill Cassidy, R-La., have introduced separate proposals to expand the program that has more than $16 billion in unused loans to large truck manufacturers and suppliers to them. Cassidy’s bill would also cover new U.S. ships.

Stabenow’s “Building Better Trucks” act would allow the Advanced Technology Vehicles Manufacturing program to make loans to big truck and engine manufacturers. She said she is working with Cassidy to “focus the advanced vehicle loan program on medium and heavy duty trucks.”

At an Energy Committee hearing Tuesday, Stabenow noted that heavy trucks account for 7 percent of traffic but consumer 25 percent of the fuel. She noted that the ATVM program has come under criticism from many — including herself — for not working “as it should.” She praised Energy Secretary Ernest Moniz for reviving the program.

Sen. Lisa Murkowksi, R-Alaska, the chair of the Energy Committee, said she hopes to propose an energy bill by August that is expected to address a number of energy efficiency issues. The hearing was considering 42 separate energy bills pending.

In an interview, she said the program needs a review and said she hasn’t decided if she will propose eliminating the program entirely or backing some updates to the program. “If it doesn’t work let’s reform it -- let’s get rid of it or let’s do something different,” she said. “I think it neeeds to be reviewed.”

In March, the Energy Department announced it planned to loan aluminum producer Alcoa Inc. $259 million to expand production of lightweight materials for vehicles at its Tennessee plant, the first new award from the $25 billion program in four years.

The award is a major milestone for the beleaguered auto retooling loan program created by Congress in 2007 that last issued a loan in March 2011.

The department announced a "conditional commitment" for the Alcoa loan, but hasn't formally closed yet. If completed, it would mark the first loan to an auto supplier.

Energy officials said in March they expect the Alcoa loan won't be the last from the Advanced Technology Vehicles Manufacturing program.

Officials said then number of other applicants and potential applicants that include well-known established firms are in the pipeline. Most are in the sector of creating lightweight technologies. Loans could go to supplier firms making lightweight interior components and advanced steel. Those loans could help support thousands of jobs in auto-intensive states like Michigan.

In a Detroit News interview in March, Moniz said the department has been in "very, very active early stage discussions with potential applicants." He said more loans may be forthcoming, declining to say how many current applicants the program is reviewing, but saying the government is "getting a lot of interest."

"I think we're on the right track," Moniz said, adding the auto loan program "is running on all cylinders. ... We are going to be very aggressive in terms of good projects — we're going to try to move them out." He emphasized the program is still accepting applicants and said he wants to be "on the offense" in providing new loans.

The auto retooling loan program was created by Congress in 2007 and funded in 2008. It hasn't issued a new loan in more than four years, even though it still has more than $16 billion in available low-cost government subsidized loans.

The program had some significant early success. In 2009, it loaned $5.9 billion to Ford, a key source of liquidity for the company at the time, and $1.4 billion to Nissan Motor Co. That helped support more than 35,000 jobs at the two companies.

It loaned $465 million to start-up electric vehicle maker a Tesla Motors Inc., which repaid its loans nine years early. But loans to start-up automaker Fisker Automotive Inc. and Allen Park based-VPG went unpaid as both firms shut down.

In March, House Republicans again proposed to kill the program and take back the remaining $4.2 billion that Congress has set aside to subsidize the remaining $16 billion in potential loans.

The news comes as the National Highway Traffic Safety Administration and Environmental Protection Agency are getting close to unveiling the second round of fuel efficiency standards and greenhouse gas emissions limits for medium and heavy duty trucks.

The Obama administration in 2011 finalized the introduced the first-ever national program for medium- and heavy-duty emissions for the 2014-2018 model years. The administration is expected to announce the next round of standards this month that will extend the program “well into the next decade,” EPA said in a fact sheet. The new standards are expected to include the first-ever emissions rules for new trailers pulled by semi-tractors.

The first round covered medium- and heavy-duty trucks such as garbage trucks, buses, and ¾-ton pickups.

The standards are required under a 2007 energy law and will boost the efficiency of bigger vehicles by up to 20 percent. They are expected to save the industry $50 billion in fuel costs, or 530 billion barrels of oil, over that time period — but will cost manufacturers $8.1 billion to build the more efficient vehicles.

Prior to the 2007 law, medium- and heavy-duty trucks faced no regulations — unlike light-duty vehicles subject to the Corporate Average Fuel Economy mandates.