Nine companies, including one owned by brothers Bunker and Herbert Hunt, are in line to receive federal loan guarantees for alcohol fuel projects, the Energy Department has announced.
The two largest projects will be in Louisiana -- a 40-million-gallon-a-year plant proposed by Great Western Sugar Co. and a 35-million-gallon-a-year plant proposed by Agrifuels Refining Co.
Denver-based Great Western Sugar, a subsidiary of Hunt International Resources Inc. and a cornerstone of the Hunt clan's $8 billion empire, has asked the department for an $80 million loan guarantee. It and the other applicants will begin negotiating loan-guarantee terms with DOE officials.
The department, in selecting nine from among 47 applicants, appeared intent on dispensing as many alcohol-fuel subsidies as possible before Rep. David Stockman (R-Mich.) takes over as President-elect Reagan's budget director in January.
Stockman has written several articles deploring the "senseless stampede" into synthetic fuels and has opposed subsidies for the commercial development of synfuels, including ethyl alcohol, the key component of gasohol. Some Energy Department officials fear the incoming Reagan administration may dismantle the Office of Alcohol Fuels.
Nonetheless, a company in Stockman's district -- Agri Power Inc. of Addison, Mich. -- is one of the applicants chosen to begin negotiations with Energy officials.
Despite Stockman's philosophical objections to synfuel subsidies, it turns out that at least one of his aides intervened on behalf of the Addison company after the department shelved its application in October.
"Dave personally did not become involved but a staffer did call to let DOE know that Dave was interested in the Addison people getting a share of the money," said Fred Davis, a Stockman aide.
Moreover, with the help of Stockman's office, the firm already has obtained a $7 million cooperative agreement from the department for the Agri Power project.
Department sources said Wednesday that Bert Greenglass, acting director of alcohol fuels, hopes to stay on and was trying to win the incoming administration's favor. He could not be reached for comment.
There is a growing concern on Capitol Hill and in the gasohol industry about Greenglass' funding decisions. Rep. John Dingell (D-Mich.) and Rep. Virginia Smith (R-Neb.) have asked the General Accounting Office to investigate the alcohol-fuel funding program.
"We feel the allocation of funds by DOE is excluding small businessmen like farmers and gasoline jobbers," said an aide to Smith.
The legislators also are distressed about the haste with which Greenglass decided what projects should receive loan guarantees. The department set an Oct. 20 deadline for applications and just nine days later announced it had chosen seven companies for loan-guarantee negotiations.
The nine companies selected this time around, included Great Western Sugar and Agri Fuel, had failed to make the Oct. 20 cut. The department had exhausted its $392 million budget for guaranteeing alcohol fuel projects.
Thanks to an amendment offered by Sen. J. Bennett Johnston (D-La.) and pushed by Great Western's lobbyists, that budget since has been tripled.
This amendment to an appropriations bill signed two weeks ago by President Carter increased the amount available for guarantees from $392 million to $1.1 billion. Before, the Energy Department had to set aside $1 for every $1 loan it guaranteed in case the loan applicant defaulted and the government had to make good on the loan. The department now has to set aside only $1 for every $3 guaranteed.
The other firms selected Wednesday are Gulf Coast Resources, Keokuk, Iowa; D.W. Small & Sons, Inc., Auburn, Maine; American Development Corp., Hastings, Neb.; Andco Energy Corp., Buffalo, N.Y.; J.E. Sirrine Co., Lane, S.C.; and Tennol Inc., Jasper, Tenn.