House Panel Votes to Abolish Synfuels Corp.

A House subcommittee, trying to “cut our losses,” voted Wednesday to abolish the Synthetic Fuels Corp. and establish a sharply trimmed synthetic fuel program in the Energy Department.

If the 5-year-old corporation awards no more money, as much as $6.2 billion could revert to the Treasury.

“If you’re looking for ways to save money down the road, this is an easy one,” said Rep. Mike Synar (D-Okla.), one of the sponsors of the bill, after the action by the fossil fuels subcommittee of the House Energy and Commerce Committee.

The subcommittee action, by voice vote without audible dissent, sends the abolition bill to the parent committee, whose powerful chairman, Rep. John Dingell (D-Mich.), is participating in the abolition effort for the first time.

Passage Not Assured

Passage is by no means assured. The Senate has opposed abolition and House Majority Leader Jim Wright (D-Tex.) has beaten back House efforts.

The independent, government-owned corporation was set up following the gasoline shortages in the wake of the 1979 Iranian revolution. But an enduring worldwide oil glut and falling energy prices have led opponents to question the wisdom and necessity of any synthetic fuels program on a large scale.

It has been attacked, in the words of the preamble to the bill, for “unreasonable and excessive personnel and administrative costs,” as well as sloth in bringing production on line.

The bill would immediately dismiss the five current directors of the corporation, require the energy secretary to wind up its business in 90 days and transfer responsibility for its projects and contracts to the Energy Department.

It would authorize $500 million for synthetic fuels projects and would limit government exposure to 60% of any project’s capital and operating costs. Any price guarantees could be no more than 25% above market price.

Projects would have to demonstrate the feasibility of commercial production.

Congress would get 90 days to disapprove projects costing more than $20 million.

Sees Skepticism

The vice chairman of the corporation, former Rep. Tom Corcoran (R-Ill.), who opposed the corporation as a House member, picked up that point at a news conference before the vote.

“I know pork-barrel politics would not enter into decisions on Capitol Hill, but there are skeptics,” he quipped. “We think Congress was right with respect to this structure back in 1980, and we don’t think it should be changed.”

Synar told the subcommittee: “It is time to cut our losses and put an end to what I believe is the most wasteful and unproductive agency in the federal government.”

It was “not a vote on whether or not we will have synthetic fuels,” but rather “a vote on the most efficient, productive and least costly manner” for the government to help private industry develop the necessary technologies, Synar said.

Corcoran told reporters that the synfuels directors, at a closed meeting Tuesday, had abandoned any idea of lending $850 million to the Great Plains coal gassification plant at Beulah, N.D., a $2.1-billion project that has a $1.46-billion loan from the government guaranteed by the Energy Department.

Instead, the staff will try to complete negotiations for a new price support plan by June 28 to replace the current Energy Department plan under which the private sponsors get about $5.80 per thousand cubic feet of synthetic natural gas, compared to a market price of less than $3.