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Synfuels Corp. to Delay Aid to 3 Projects : $744 Million in Subsidies Held Up Pending Review

September 06, 1985|DOUGLAS JEHL | Times Staff Writer

WASHINGTON — The controversial Synthetic Fuels Corp., under pressure from the White House, has agreed to delay $744 million in federal subsidies to three major synfuels projects until President Reagan decides whether he wants to abolish the agency, Administration sources said Thursday.

Contracts committing the aid, which was to include $500 million for an oil shale conversion plant sponsored by Los Angeles-based Unocal Corp., were to have been signed next week.

The projects had been given priority status by corporation officials, who spent a frenetic summer implementing a hurry-up plan to grant the synfuels subsidies before a hostile Congress could cut off the corporation's funding altogether.

Synfuels Corp. Chairman Edward E. Noble, a Reagan appointee who previously had claimed White House support for the plan, made the pledge Wednesday during a meeting of the Cabinet Council on Domestic Policy, said the sources, who spoke on the condition that they not be identified.

White House Led Fight

"The request was made to hold off any commitments of dollars until the issue has been reviewed by the President," one source said. "Noble was amenable to that."

The White House led the fight against the Synfuels Corp. in 1984, urging congressional action that eventually stripped the corporation of more than $5 billion in funding. But it has remained publicly silent on the issue this year, even as the House voted overwhelmingly in July to rescind the rest of the agency's money, targeting the corporation for abolition.

The Senate, still away on its summer recess, has not had time to take up a similar measure but is expected to follow the House lead.

The White House request for a delay, the sources said, was influenced by an outpouring of letters from members of Congress from both parties. Angered by the corporation's apparent disregard of the congressional will, many legislators appealed to the President, asking him to contact his appointees on the synfuels board and "place an immediate hold on the corporation's proposed spending spree."

No Pledge Made

Noble was traveling to his home in Oklahoma on Thursday, his office said. He did not return telephone calls placed there.

Karen Hutchison, speaking for the corporation, said: "Mr. Noble did not make any pledge. He simply reiterated at the meeting what he has been saying all along, and that is that he won't sign any contracts before they're ready, and he won't hold up any contracts that are ready to be signed."

Hutchison disclosed for the first time that two of the three contracts, including Unocal's, will not be ready when the corporation's board of directors meets Tuesday. The third contract, a $60-million package for Greenwich Oil Co.'s heavy-oil project in Forest Hill, Tex., will be considered by the board then, she said.

One source said the Cabinet Council hoped to consider "the larger issue"--whether or not the Synfuels Corp. should continue to exist--at a meeting during the third week of September, but the source cautioned that "these things sometimes get pushed back."

The agreement to delay contract funding would impose yet another setback to Unocal, which plans to use the $500 million in aid to install new technology in its troubled Parachute Creek, Colo., plant, which has never produced more than a trickle of oil in the two years since it was built.

Reached for comment, Unocal spokeswoman Carol Scott said only: "We have no information to confirm or deny what happened in that meeting." Discussions with the Synfuels Corp. continue, she said.

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