The defunct U.S. Synthetic Fuels Corp. lives on in court. Five members of Congress yesterday charged in federal court that, shortly before it went out of business, the Synfuels Corp. signed two illegal contracts providing $500 million in subsidies to Unocal Corp. for a controversial oil shale plant in Parachute Creek, Colo.
The contracts would guarantee Unocal a price of nearly $68 a barrel for the synthetically produced oil -- or more than four times current market prices.
In a lawsuit filed in U.S. District Court in Washington, Sen. Howard M. Metzenbaum (D-Ohio) and four other Synfuels critics asked the court to overturn the contracts -- a move they say would almost certainly bring work on the facility to a halt. The suit names as defendants Unocal and the Treasury Department, which assumed control of the Synfuels program when the corporation officially closed last April. At issue are contracts worth $500 million, including one for $327 million in loan guarantees that the Synfuels Corp. signed with Unocal more than a month after President Reagan signed a law abolishing the agency within 120 days. The lawsuit charges that the contracts were not valid because Synfuels Corp. never fulfilled a legal requirement that it first consult with Treasury.
"The administration allowed the U.S. Synthetics Fuels Corp. to flaunt the will of the Congress," Metzenbaum said. "Now we must take this extraordinary step to seek intervention of our legal system." Joining in the suit were Sen. Gordon J. Humphrey (R-N.H.) and Reps. Mike Synar (D-Okla.), Howard E. Wolpe (D-Mich.) and Thomas J. Tauke (R-Iowa).
A Treasury spokesman said the department would have no comment because it hasn't seen the suit. A spokesman for Unocalsaid in Los Angeles: "Our position is we have a valid contract with the Synfuels Corp. ."