Circumstances Surrounding the First Colony Peat-to-Methanol Project
RCED-84-32: Published: Nov 10, 1983. Publicly Released: Nov 21, 1983.
Additional Materials:
- Full Report:
Contact:
(301) 353-3711
contact@gao.gov
Office of Public Affairs
(202) 512-4800
youngc1@gao.gov
Pursuant to a congressional request, GAO examined certain issues relating to the First Colony peat-to-methanol project, including: (1) the authority of the Chairman of the U.S. Synthetic Fuels Corporation to sign a letter of intent favorably recommending to the Corporation's Board of Directors the award of loan and price guarantees to a particular firm; (2) whether the Davis-Bacon Act applies to the project; (3) concerns held by the staff of the Corporation; (4) concerns held by environmentalists and Corporation efforts to consider such concerns; (5) the Corporation's justification for providing price guarantees for the project; and (6) the ownership of the peat land on which the project will be situated and the arrangements for developing it.
GAO found that nothing prohibits the Corporation from being party to a letter of intent. However, it is unclear whether the Chairman had the authority to sign such a letter without formal approval or delegation from the Board of Directors. Since the letter of intent includes financial assistance in the form of loan guarantees, the Davis-Bacon Act would apply. GAO also found that there is conflicting information regarding those concerns raised by the Corporation staff, which recommended against federal backing for the project. While the Corporation has stayed abreast of environmental concerns, it did not attempt to resolve these concerns before the letter of intent was signed and is leaving resolution of these issues to the state permitting process. Corporation officials believe that price guarantees are necessary to insulate the project sponsor from uncontrollable factors such as market prices, inflation, and interest rates. The sponsor will acquire real property for the plant site and loading terminal, easements for access to the site, and mineral rights to about 15,000 acres of land, with an option for about 100,000 acres more.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: The Board of Directors of the Corporation should either formally authorize or prohibit the chairman's signing of any future letters of intent.
Agency Affected: United States Synthetic Fuels Corporation
Status: Closed - Implemented
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: The Board of Directors of the Corporation should assess the adequacy of Corporation information on two key questions regarding the peat-to-methanol project--replication potential, which is a statutory factor to be considered in awarding financial assistance to a project, and successful testing of the North Carolina peat in a pilot-scale facility, which is important to the economic viability of the project and a condition placed upon the project by the Board of Directors during the Corporation staff's review of the project--to assure itself that both have been fully resolved.
Agency Affected: United States Synthetic Fuels Corporation
Explore the full database of GAO's Open Recommendations
»
Dec 10, 2020
-
Uranium Management:
Actions to Mitigate Risks to Domestic Supply Chain Could Be Better Planned and CoordinatedGAO-21-28: Published: Dec 10, 2020. Publicly Released: Dec 10, 2020.
Dec 8, 2020
-
Offshore Wind Energy:
Planned Projects May Lead to Construction of New Vessels in the U.S., but Industry Has Made Few Decisions amid UncertaintiesGAO-21-153: Published: Dec 8, 2020. Publicly Released: Dec 8, 2020.
Nov 19, 2020
-
Nuclear Waste Disposal:
Better Planning Needed to Avoid Potential Disruptions at Waste Isolation Pilot PlantGAO-21-48: Published: Nov 19, 2020. Publicly Released: Nov 19, 2020.
Oct 29, 2020
-
Nuclear Safety:
DOE and the Safety Board Should Collaborate to Develop a Written Agreement to Enhance OversightGAO-21-141: Published: Oct 29, 2020. Publicly Released: Oct 29, 2020.
Oct 15, 2020
-
Nuclear Weapons:
NNSA Plans to Modernize Critical Depleted Uranium Capabilities and Improve Program ManagementGAO-21-16: Published: Oct 15, 2020. Publicly Released: Oct 15, 2020.
Jul 24, 2020
-
Nuclear Weapons:
Action Needed to Address the W80-4 Warhead Program's Schedule ConstraintsGAO-20-409: Published: Jul 24, 2020. Publicly Released: Jul 24, 2020.
Jun 24, 2020
-
National Nuclear Security Administration:
Analyzing Cost Savings Program Could Result in Wider Use and Additional Contractor EfficienciesGAO-20-451: Published: Jun 24, 2020. Publicly Released: Jun 24, 2020.
Jun 9, 2020
-
Nuclear Weapons:
NNSA Needs to Incorporate Additional Management Controls Over Its Microelectronics ActivitiesGAO-20-357: Published: Jun 9, 2020. Publicly Released: Jun 9, 2020.
May 13, 2020
-
Environmental Liabilities:
DOE Needs to Better Plan for Post-Cleanup Challenges Facing SitesGAO-20-373: Published: May 13, 2020. Publicly Released: May 13, 2020.
May 12, 2020
-
Hanford Waste Treatment Plant:
DOE Is Pursuing Pretreatment Alternatives, but Its Strategy Is Unclear While Costs Continue to RiseGAO-20-363: Published: May 12, 2020. Publicly Released: May 12, 2020.
Looking for more? Browse all our products here