Query Concerning Synthetic Fuels Corporation Adherence to Financial Assistance Restrictions

GAO responded to a congressional query as to whether the U.S. Synthetic Fuels Corporation is adhering to the restrictions on financial assistance placed on it by the Energy Security Act. GAO concluded that the Corporation should not reserve funds for projects that are merely the subject of letter of intent. However, funds are required to be reserved under a certain kind of conditional commitment that the Corporation could use, and these moneys may be reused for another project if the first project does not go forward or is halted. Moreover, the Corporation may provide for convertible assistance in a financial assistance award for a project without charging its obligational authority twice, but the form of each assistance, the dollar amount, and the terms of convertibility must be set forth in one financial assistance award. Conversely, if, subsequent to a Corporation award of assistance for a project, the project sponsor applies for another form of assistance on a dollar-for-dollar basis, as the first assistance award is repaid, both awards must be charged against the Corporation's obligational authority.