Lawmakers Consider Synfuels Pact Fight
A House subcommittee will explore the possibility of bringing charges against U.S. Synthetic Fuels Corp. officials and challenging an “11th-hour” contract that the synfuels board granted to Unocal Corp. to provide $327 million in federal loan guarantees, a key congressional aide said Tuesday.
At the same time, Rep. Silvio O. Conte (R-Mass.) demanded at a highly charged subcommittee hearing that synfuels board members “go to jail” for approving the pact Jan. 21 in what he called “an arrogant display of contempt for the will of Congress and the law.”
The move violated a congressional resolution passed Dec. 19 that barred further synfuels spending or the awarding of contracts, he declared.
“We passed the resolution because we believed that the issuance of a contract would be illegal, and if the company officers issued that contract, they should all go to jail,” Conte said.
One House Appropriations Committee staff member, speaking on the condition of anonymity, added in an interview: “We are taking a look at the legal arguments that would nullify the contract and also whether members of the House and others have standing to sue.”
Ralph Bayrer, synfuels vice president for projects, told members of the House Appropriations subcommittee on the Interior that when the five-member board voted unanimously to grant the Unocal contract, the action “was not inconsistent with the logic” of the congressional resolution.
A commitment to Unocal by corporation officials predated the resolution and created a legal obligation to approve the contract, synfuels attorney Andrew Tashman argued.
“The board was aware” of both House and Senate legislation to halt any new contracts, but “we concluded there were funds available, and we believe there was a binding contract before the January meeting took place,” Tashman said. He said he also based his conclusion on the opinion of outside law firms hired by the corporation.
Created in the aftermath of the oil crisis five years ago, the synfuels corporation was charged with exploring and funding low-cost alternative fuels such as producing oil from shale. With the overall lowering in oil prices, Congress decided to abolish the agency and suspend more than $7 million remaining in its budget.
“This monster never dies,” one aide observed. “This is the monster Congress has been trying to kill for the past two or three years.”
Rep. Sidney R. Yates (D-Ill.), the subcommittee chairman, noted that the Unocal contract was approved at a time when most legislators were just returning from the Christmas recess.
“That action kind of took us by surprise. We intended that you just go out of existence as fast as can be without approving any new projects,” he said.
Yates also summoned the synfuels board’s chief attorney, Leonard Rawicz, to appear before the subcommittee, requested copies of bills from private legal firms contracted by the company and requested more detailed lists of termination expenses that total $10 million.
Among the expenses listed in a “termination report” budget for the agency are projected payments of $1.5 million in employee severance pay, $1.3 million in “consultant fees” and more than $2 million for office space leased through 1987 that will not be used when the corporation meets its April 15 phase-out date.
In January, a Unocal spokesman called the loan guarantee “the last step” for its proposed military jet fuel plant in Parachute Creek, Colo., which already had cost the Los Angeles-based company more than $700 million.
Once the plant begins producing oil, Unocal’s subsidiary, Union Oil Co. of California, will be guaranteed a price of almost $68 per barrel--far above current oil prices of less than $20 a barrel--until $900 million in federal subsidies for shale oil is exhausted.
