Press Releases

Washington, DC – U.S. Senators Dianne Feinstein (D-Calif.) and Olympia Snowe (R-Maine) today urged the new head of the Department of Energy, Dr. Steven Chu, to set a timeline for the dispersal of funds from the $25 billion loan program for the struggling automobile industry – called the Advanced Technology Vehicles Manufacturing Incentive Program, which was established in Section 136 of the 2007 comprehensive energy and fuel economy law.

Senators Feinstein and Snowe also urged Dr. Chu to ensure that these auto loan funds are used to pay for the construction of new cars, trucks and SUVs that are 25 percent more efficient than the CAFE (or corporate average fuel economy) standard for that vehicle in the year the retooled auto manufacturing factory reopens. The current interim ruling, issued by the Department of Energy last year, defined the “base year” of this program as 2005, instead of the year a retooled factory reopens. This is significant because using the 2005 baseline fails to incorporate the significant fuel economy increase from the Feinstein and Snowe “Ten-in-Ten Fuel Economy” Act.  

Senators Feinstein and Snowe were the lead authors of the “Ten-in-Ten Fuel Economy” Act, which was enacted by Congress in December 2007 as part of the comprehensive energy package. The law requires an increase in average fuel economy standards for America’s fleet of vehicles by at least 10 miles per gallon over 10 years, and permits even higher standards if feasible. This was the largest increase in fuel efficiency in more than two decades.

Pasted below is the text of the letter sent by Senators Feinstein and Snowe to Dr. Chu:
February 2, 2009

The Honorable Steven Chu
United States Department of Energy
1000 Independence Avenue SW
Washington, DC 20585

Dear Dr. Chu:

Congratulations on your confirmation as Secretary of Energy.  We look forward to working with you to address our daunting energy challenges in the coming months and years.

We are writing to encourage the Department of Energy (DOE) to establish an aggressive timeline for revising regulations and issuing loans under the Advanced Technology Vehicles Manufacturing Incentive Program, established in Section 136 of the Energy Independence and Security Act of 2007.  According to press reports, DOE currently lacks any timeline for distributing loans under this program.

We view the Section 136 loan program as an opportunity to financially advantage a shift in automobile companies’ business models towards advanced technology hybrid, electric and other high efficiency vehicles.  Many of the applicants for the first tranche of loans plan to make significant capital investments that they would otherwise be unable to afford.  Providing these firms with a precise timeline would allow them to plan their business operations during a time of extraordinary financial challenge.  

As the authors of the Ten-in-Ten Fuel Economy Act, which increases Corporate Average Fuel Economy (CAFE) standards at least 40 percent over ten years, we are also concerned that the current interim final rule would allow loans that fail to produce improvements in fuel economy beyond what CAFE regulation will require.  As we indicated in our November 14, 2008, letter to Secretary Bodman, attached, we are concerned that DOE’s interim final rule erroneously defined the “base year” of this program as 2005, instead of the year a retooled factory reopens.  DOE’s error could allow automakers to receive subsidized loans for mere compliance with CAFE regulations, which would violate Congress’s intent and squander government resources.  We encourage you to quickly address this mistake.

Section 136 has the potential to help the American automotive industry establish itself as the world’s leading producer of fuel efficient, cost effective, advanced technology vehicles.  We trust you share our commitment to assuring that Federal resources are deployed as quickly as possible and targeted toward the production of vehicles that are more efficient than minimum standards will soon require.

We look forward to working with you on this important issue.


            Dianne Feinstein                                                     Olympia J. Snowe
            United States Senator                                           United States Senator