President Reagan will be asked today to resolve a sharp dispute within his Cabinet on federal support for a trio of synthetic fuels plants whose sponsors are seeking up to $3.5 billion in government loan and price guarantees, administration officials said yesterday.
Energy Secretary James Edwards is pushing hard to have the Reagan administration provide the guarantees for the three projects, but until now he has been stymied by Budget Director David Stockman, who has not provided the necessary certification that would permit the guarantees to be made.
The issue goes before the Cabinet committee on natural resources and the environment today, with Reagan presiding, a White House spokesman said.
Meanwhile, the administration is facing an ultimatum from one of the sponsors, American Natural Resources Co., which says that unless it gets a favorable decision very soon, it will stop work on a $2 billion-plus project to produce synthetic natural gas from coal in Beulah, N.D. If built, it would be the first large-scale synfuels plant in the country.
"If the answer is 'no' we will promptly abandon the project," said company chairman Arthur Seder.
Despite this warning, Stockman continues to oppose the Energy Department's decision to grant loan guarantees to the Great Plains project with Exxon Corp. to produce oil from shale deposits in western Colorado. The third project, which Stockman also opposes, is the plan by Union Oil Co. to build a shale oil plant in Colorado, with the Department of Defense promising to purchase the plant's entire output and the Energy Department providing a guaranteed price to Union at a maximum potential governmental cost of $400 million.
Stockman regards these guarantees as unwarranted and contrary to the administration's policy of reducing federal subsidies to business. He hews to the Reagan administration's initial decision to pass the projects to the semi-independent U.S. Synthetic Fuels Corp. which could decide whether or not to support them.
Edwards' aides say the secretary feels Stockman is simply exercising his long-standing opposition to synfuels subsidies. Edwards "believes he was given authority to proceed with whatever projects seemed appropriate," an aide said, and since the synfuels corporation still isn't operational, Edwards decided to support the projects, the aide added.
Stockman and Edwards reportedly are barely on speaking terms. At one meeting that both attended a week ago, the tension was "extraordinary," said an associate. "There was no 'hello,' no 'goodbye.' They didn't even acknowledge each other," this source said.
Along with the personal friction, the standoff has created political complications.
Sen. James A. McClure (R-Idaho), chairman of the Energy and Natural Resources Committee, is a strong supporter of the North Dakota gasification project and wants immediate action by the Energy Department on the loan guarantee request.
McClure also has delayed Senate confirmation hearings on four people nominated by the president to be directors of the synfuels corporation.
The corporation has only one confirmed director -- Chairman Edward Noble -- and cannot act until more members are approved.
McClure "isn't holding the nominations hostage," an aide said, but he is waiting until the administration nominates two more directors, filling all of the vacancies. The Idaho senator is anxious that the final two be from the Western states, the aide said.
But the delay has effectively prevented the administration from transfering the three projects from DOE to the synfuels corporation, as Stockman has urged. "Stockman wants to get those projects out of Edwards' hands," said one source close to the debate.
Yet another complication is a subpoena issued to Edwards by the House Government Operations subcommittee on environment, energy and natural resources, which wants the details of DOE's proposed contract with Union Oil.
Edwards says he is willing to let the subcommittee see the documents after a contract is signed, not before. Rep. Toby Moffett (D-Conn.), the subcommittee chairman, said he and other members want to be convince that the project would fail without government backing.
The proposed contract between DOE and Union would provide for a maximum price of $42 a barrel, increasing at a rate of 9 1/2 percent a year, with DOE paying the difference between the market price and the guarantee, administration officials said.