November 8, 1979
Page 31618
Mr. JOHNSTON. Mr. President, I will not press the point of order. The distinguished Senator from Illinois has importuned me as to the importance of letting the Senate express itself on this amendment.
I would just urge the Senate in the strongest possible way to defeat the Percy amendment because, otherwise, Mr. President, we are going to denude this corporation of that essential bargaining power which it needs.
The Percy amendment completely strips out of the bill any authority whatsoever, even the possibility of a GOCO. If that happens, we are going to subject the Corporation and, in turn, the American public to being taken to the cleaners, to have to pay exorbitant loan guarantees, or exorbitant price guarantees.
Remember, Mr. President, we have given this corporation the mandate to go out and put on line the most promising of the synthetic fuel technologies.
Without this bargaining power, Mr. President, we can just expect the market forces to work. The companies that own these technologies will try to get the best deal they can, and that is going to be a sweetheart deal unless we have the possibility of a GOCO.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. MUSKIE. Mr. President, I cannot support the Percy amendment to bar the construction of synthetic fuel facilities by the Synthetic Fuels Corporation.
I would like to reiterate some of the thoughts I have about the concept of a Government corporation, as well as the concerns I have about the structure of the corporation authorized in the pending legislation.
The establishment of a Government corporation to build a few "yardstick" plants is worthy of consideration, particularly in the synthetic fuels area.
A Government corporation with all of the powers inherent in a private corporation could play an important role in the development of synthetic fuels. This kind of corporation would inject important social, economic, and environmental objectives into its decisionmaking that would not necessarily be present in a private enterprise.
The corporation construction projects would provide the Government with full information on all aspects of the development of these new technologies. This would then provide a yardstick by which to measure proposals for private construction and requests for financial support from the private sector. These requests could be measured against the Government's own experience with its own plants.
Unfortunately, the kind of corporation and the kind of Government construction projects available in the Energy Committee bill do not contain the characteristics I have discussed. A Government construction project would not be allowed unless all other means of bringing the project into construction had failed. In other words, the Government would be given the right to build the projects most likely to fail, and be barred from constructing facilities when private interests would undertake such projects.
I fear that this limitation may result in Government construction of projects with a high likelihood of failure for economic or environmental reasons.
Nevertheless, these plants will still provide a proving ground for technologies which may be successful. I do not think we can foreclose this avenue of technology development. And, if the projects constructed by the corporation are unsuccessful: this knowledge also will be a yardstick by which to measure other proposed facilities and other unproven technologies.
For these reasons, Mr. President, I will oppose the Percy amendment to prohibit construction of synfuels facilities by the Synthetic Fuels Corporation.
Mr. DOLE. Mr. President, I agree with the amendment proposed by the distinguished Senator from Illinois (Mr. PERCY) . While title I would authorize GOCO's only as a last resort to develop synthetic fuels, this is not an option we ought to make available. Our goal is to find a commercially viable technology for developing synfuels, and the Government is not known for engaging in commercially viable enterprises. The GOCO's would be an unfortunate hybrid, sufficiently insulated from market pressures to be useless in providing information about the commercial potential of synthetic fuel technologies. We need an energy bill that is tightly focused and carefully constructed to encourage new enterprises that can stand on their own feet. We cannot afford to keep energy options open, and we need to make choices. The GOCO's are one option that we ought to eliminate right now.
Mr. FORD. Mr. President, I rise in opposition to the amendment and in support of the Government owned/company operated (GOCO) last resort option in S. 932.
Certain promising technologies or abundant domestic energy resources may not be developed if the GOCO option is not available to the Synthetic Fuels Corporation (SFC) . It is possible — but far from certain — that the SFC may need to use a GOCO to commercialize the gasification/ liquefaction or other energy use of municipal or agricultural waste, peat, eastern oil shale, or highly caking eastern coal.
The GOCO provision is a last resort alternative. Sufficient safeguards exist — including Senator BENTSEN'S amendment — to prevent its abuse. As S. 932 is presently drafted, the SFC could build a GOCO only if no private sector party is interested in constructing that project in spite of the availability of all other SFC incentives — including the joint ownership incentive. In addition, the Corporation is limited to three GOCO's, after which it needs two-House approval to build another GOCO.
The Corporation can only build a GOCO if the construction of that plant is necessary to achieve its overall plan.
GOGO's constructed by the SFC will be subject to all Federal and nondiscriminatory State and local environmental land use and siting laws to the same extent as private sector projects.
Small and regulated companies cannot use the front-end incentives (that is, price and purchase guarantees) that are provided in the SFC. In certain cases, the technological risk associated with a key process or resource such as highly caking eastern coal will prevent use of the back-end incentives provided for in S. 932 (that is, loan guarantees, loans, and joint ventures).
In these special cases a GOCO incentive may be needed to allow the complete and competitive
development of a comprehensive' synfuels industry. For a number of industries, particularly regulated industries such as the gas and electric utilities, it may prove difficult to raise the investment capital needed to construct the synthetic fuels facilities. This is particularly true during periods of tight money.
Therefore, it may be necessary in the SFC to have a limited GOCO incentive available to assist technologies which supply energy to our Nation's regulated utility systems and smaller companies.
For example, in previous synthetic fuels hearings before the Congress, members of the investment banking community have testified that synthetic gas plants would not be built without some form of front-end incentive, such as loan guarantees, loans, joint ventures, and GOCO's.
Mr. President, the Percy amendment should be defeated in order to provide the similar massive undertaking that our great Nation did in World War II to develop the aluminum and rubber industries with Government financing. The South African Government is often cited as a model for the synthetic fuels industry.
Additionally, I have been advised that GOCO's will allow the chemical industry to participate in synthetic fuels development through their considerable operating expertise. This additional industry participation helps diversify the type involvement in our Nation's energy production.
North Carolina and Minnesota peat, coal in Pennsylvania, Ohio, Kentucky, West Virginia, and other eastern States, New Jersey municipal waste, Midwestern States' agricultural waste — all these resources across the United States could move faster through this limited GOCO provision.
Mr. PERCY. Mr. President, a parliamentary inquiry.
The PRESIDING OFFICER. The Senator will state it.
Mr. PERCY. If the Senator from Illinois removes the last two lines of the amendment, if he removes the following wording, "and making conforming amendments striking references thereto throughout the bill," would the point of order be withdrawn?
Mr. JOHNSTON. Mr. President, I have told the Senator that I will not press the point of order.
Mr. PERCY. I thank the Senator.
I am prepared to yield back the remainder of my time.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
Mr. JOHNSTON. Mr. President, I move to table the amendment, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.
The result was announced — yeas 47, nays 44, as follows:
[Roll call vote tally omitted]