Synthetic Fuels Corporation's Management of Demonstration Projects Would Be Limited

GAO conducted a review of the current Department of Energy (DOE) management structure, process, and decisionmaking for the two solvent refined coal demonstration projects, SRC-I and SRC-2, and the relevant Synthetic Fuels Corporation (SFC) management structure for projects of this type. The effect of a potential transfer of these projects to SFC was discussed.

DOE management and control of the demonstration projects differs substantially from that contemplated by SFC officials for joint venture demonstration modules or for commercial projects requiring other forms of SFC financial assistance. DOE has responsibility for the management and technical direction for both SFC projects. The SFC role in a joint venture project is restricted to that of a limited partner. While SFC can participate in the management decisions of the joint venture, SFC cannot have any direct role in the construction or operation of the project module. The private sponsors must have primary responsibility for the management of the joint venture. The role of DOE and SFC regarding environmental impact also varies. DOE has developed a program to monitor emission levels and mitigate their environmental impact, including the measurement of worker exposures and research studies on potential health effects. For SFC projects, financial assistance contracts must contain a plan developed by the sponsors for monitoring the environmental and health related emissions from the construction and operation of the project.