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President OKs Emergency Funds to Run Agencies

December 18, 1985|SARA FRITZ | Times Staff Writer

WASHINGTON — President Reagan signed a bill Tuesday night keeping the Defense Department and many other government agencies operating through Thursday.

Congress had passed the bill earlier Tuesday, but only after Senate supporters of the Synthetic Fuels Corp. delayed passage of the legislation in an effort to allow the controversial agency to approve $684 million in loan guarantees before being abolished.

Although the Pentagon and many other major government agencies went without funds for more than 24 hours, they remained open during the funding interruption.

A White House spokesman said Reagan signed the stopgap bill Tuesday night to prevent any interruption in government operations.

Meanwhile, congressional negotiators made no progress on a bill to provide funds for the affected agencies through the current fiscal year, which ends Sept. 30.

The delay on the short-term funding bill was engineered by Republican Sens. William L. Armstrong of Colorado and Jake Garn of Utah, who opposed congressional efforts to halt operations of the Synthetic Fuels Corp. before the agency approved loan and price guarantees for projects in their home states. At issue were oil shale projects in Seep Ridge, Utah, and Grand Junction, Colo.

Lee Stillwell, a spokesman for Armstrong, argued that the agency had already made a commitment to provide loan guarantees to the Colorado project. But Rep. Silvio O. Conte (D-Mass.) insisted that no such commitment had been made and that the agency was trying to commit funds before legislation put the corporation--known as Synfuels--out of business.

'Lock the Doors'

"The corporation is scheduled to meet today to spend millions and millions of dollars before Congress shuts the door on this wasteful agency," Conte warned shortly before the House voted 334 to 74 in favor of the short-term funding measure. "It's time we ought to send marshals down there . . . to lock the doors of the Synthetic Fuels Corp."

Synfuels Chairman Edward E. Noble waited until after 10 p.m. before deciding not to call an "emergency" board meeting to approve funding for the two huge projects.

The Colorado oil-shale project is planned by Los Angeles-based Union Oil Co., which has invested $800 million of its own money and is seeking $500 million in federal loan guarantees on top of $900 million in already allotted federal subsidies. A consortium backing the Utah oil-shale project is seeking up to $184 million in loan guarantees and subsidies.

Noble decided not to consider those projects only after the White House budget office indicated late Tuesday that Reagan would sign the spending resolution--thus temporarily curbing Synfuel's fiscal powers--as soon as he returned from an evening at the Kennedy Center.

Synfuels board member Tom Corcoran indicated that Noble had hoped for "clarification" of the apparent White House opposition to further funding of the corporation's much-criticized alternative fuels projects. Budget Director James C. Miller III had signaled the opposition in a letter last Thursday, but some observers believed that that stance would change under pressure from Western senators and the oil industry.

"We were ready to weigh and respond to whatever clarification may have been coming," Corcoran said, but "it's not yet been clarified."

Despite the lack of White House support, however, Corcoran warned against writing off the two synfuels projects. The resolution curbing the corporation's fiscal powers, he noted, expires at midnight Thursday and must be succeeded by a second resolution if the projects' loan guarantees and subsidies are to be officially killed.

Also Tuesday, House and Senate negotiators failed to reach agreement on a long-term bill that would finance the Pentagon and other as-yet unfunded agencies for the rest of fiscal 1986. On Monday night, the House precipitated the funding crisis by rejecting a long-term $370-billion bill.

Among other things, the long-term measure would abolish the Synfuels agency over a period of 120 days. The board of directors would be disbanded 60 days after enactment of the legislation.

The Synfuels Corp., established in 1980 with great fanfare, originally was designed to answer the nation's energy needs by providing financial incentives to firms that intended to develop unconventional means of producing oil and natural gas. Since then, it has gained a reputation for inefficiency and wasteful spending.

Although many agencies of the government went without funding during the congressional delay, the Administration kept all of them operating. Twice, under similar circumstances, Reagan has closed unfunded agencies and furloughed their workers.

Edwin L. Dale Jr., spokesman for the Office of Management and Budget, said an estimated 350,000 employees in the unfunded departments were instructed to remain on the job but to operate in what is known as the "shutdown mode"-- conducting a minimum of business.

Administration officials were highly critical of Congress for failing to enact the long-term spending bill. "Truly, the system has broken down," OMB Director Miller said.

The House members who voted against the long-term funding bill were opposed to a wide variety of provisions in the omnibus legislation. Some objected to the level of defense spending and others complained that the bill would pave the way for congressional pay raises in 1987. A few were angered that the bill would have made permanent a law denying federal highway funds to states where the legal drinking age is below 21.

Senate leaders were reluctant to give in to these House objections. "I intend to hang tough--tough as I can," said Sen. Ted Stevens (R-Alaska), who was representing the Senate in negotiations with the House on defense spending matters.

Also contributing to this story was Staff Writer Michael Wines.

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