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B-202463 1 (1984-01-19)

handle is hein.gao/gaobabklk0001 and id is 1 raw text is: 4/ ' COMPTROLLER GENERAL OF THE UNITED STATES /WASHINGTON D.C. 20648 B-202463 JAN I RELEASED - 123551 The Honorable Tom Corcoran Ranking Minority Member Subcommittee on Fossil 0 T hE W1A F0 and Synthetic Fuels fl'r Committee on Energy and Commerce House of Representatives Dear Mr. Corcoran: This is in response to your request of September 20, and follow-up letter of December 1, 1983, for our opinion on the legality of the United States Synthetic Fuels Corporation pro- viding price guarantees under Part B of title I of the Energy Security Act, 42 U.S.C. S 8701 et seq. (Supp. IV 1980), to Great Plains Gasification Associates, the sponsor of the Great Plains Coal Gasification Project in Mercer County, North Dakota. The Project will be the Nation's first commercial- sized plant producing synthetic natural gas from coal. Up to this point Federal participation in the Project has been pro- vided by the award of loan guarantees under the auspices of the Department of Energy pursuant to the Federal Nonnuclear Energy Research and Development Act of 1974 (Nonnuclear Act), as amended, 42 U.S.C. S 5901 et seq. (1976 & Supp. IV 1980). The loan guarantee assistance is supported with funds appropriated from the Energy Security Reserve. Project con- struction has been financed by a $2.02 billion loan guarantee from Energy (the loan itself was obtained from the Federal Financing Bank), coupled with a $740 million equity commitment from the sponsor. The Project sponsor has not currently nor in the past sought further assistance from Energy. Rather, now that Great Plains nears the operational stage, the sponsor has applied to the Corporation for price guarantees covering the synthetic natural gas to be sold by the Project. The ex- tent of the requested price guarantees is based upon (1) the unused portion of the Federal Financing Bank loan and asso- ciated Energy loan guarantee and (2) the amount of guaranteed debt repaid. In view of the fact that Great Plains is already the recipient of Federal aid provided by Energy, you are con- cerned whether the Corporation has the authority to provide this type of assistance. / 0 57

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