In response to a congressional request, GAO reported on the Great Plains Coal Gasification Project in North Dakota following the project sponsors' default of a $1.54 billion federal loan.

GAO found that: (1) a purchase order pricing formula controls the price of the fuel produced by the project; (2) the Department of Energy (DOE) has paid off the project's principal and interest payment due August 6, 1985 from the project's appropriated loan guarantee default reserve fund and plans to ask Congress for whatever additional appropriations may be needed to retire the loan; (3) the Attorney General's assistance will be needed to protect the government's interest in the project and to recover payments DOE has made on behalf of the project; (4) until DOE obtains title to the property, its options are fairly limited; (5) DOE has negotiated an interim agreement with a private company which will operate the project; (6) DOE has no liability under current supply contracts; (7) litigation is pending as to whether present gas purchase agreements remain valid; (8) a standstill agreement was effected to keep the plant in operation while federal price supports were being negotiated and to delay interest and guarantee fee payments; (9) pending a final decision, additional equity contributions may be required to meet liabilities incurred under the standstill agreement; (10) auditors reported that the accounts payable and accrued liabilities of the project as of July 31, 1985, were presented fairly and no unrecorded liabilities were found; (11) DOE is studying its options on the future of the project; and (12) North Dakota officials believe that the closing of the project could have a significant socioeconomic impact on the state.