Copyright by Hervey Amsler Priddy 2013 The Dissertation Committee for Hervey Amsler Priddy Certifies that this is the approved version of the following dissertation: UNITED STATES SYNTHETIC FUELS CORPORATION: Its Rise and Demise Committee: David M. Oshinsky, Supervisor Henry W. Brands Mark A. Lawrence Michael B. Stoff Francis J. Gavin David B. Spence R. Hal Williams UNITED STATES SYNTHETIC FUELS CORPORATION: Its Rise and Demise Hervey Amsler Priddy, B.B.A.; M.B.A.; M.A. Dissertation Presented to the Faculty of the Graduate School of The University of Texas at Austin in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy The University of Texas at Austin May 2013 Dedication To the Future: Jackson Priddy Bell Eleanor Amsler Bell Leighton Charles Priddy In Memory of: Ashley Horne Priddy Acknowledgments This project began in 1994, when I returned to school to pursue a master of arts in American history at Southern Methodist University, where a beautiful friendship developed with historian and Professor R. Hal Williams. In classes I took under Hal, I found his enthusiasm and passion for history infectious. When it came time to select the subject for my thesis, I was compelled that the topic had to be the United States Synthetic Fuels Corporation (SFC), where I had worked from 1980-82, and that Hal must be my advisor. That academic paper was completed in 1999 for the MA degree, but it was obvious to me at that time that I had barely scratched the surface of the subject. It seemed to me a superb dissertation topic, with much remaining to be discovered. And, so began a twelve-year pilgrimage to The University of Texas at Austin in 2001 to complete my mission at UT’s renowned Department of History. Many individuals assisted me on this journey. Several former employees of the United States Synthetic Fuels Corporation, with whom I had worked, provided valuable information and guidance. Ralph Bayrer, vice president of projects, was gracious with his time and SFC papers which he had retained. He wrote a book on the SFC that has a different perspective than my dissertation does, yet we remain friends to this day. Larry Lukens was likewise generous with his schedule in offering critical comments on the manuscript as it developed. Betty Nolan shared her SFC papers, which provided superb insights, enhanced through several conversations. Skyla Harris remembered many things that had receded in my mind. Jim Bowden also shared his documents and recollection of events that occurred while he was at the SFC. Former board member Eric Reichl and his lovely wife, Fran, invited me to stay at their house in Princeton, New Jersey, when I visited at length with Eric. v Martin Lipton merits gratitude as he introduced me to John Sawhill, which culminated in my position as senior financial analyst at the SFC. Marty has followed my progress with interest through these many years. Several other SFC board members reminisced with me about their terms at the corporation. Bob Monks was especially helpful by making available copies of the minutes from closed sessions of board meetings. Over the years, we have become friends. Tony Dammer has advised me on the specifics of energy policy and oil shale. John Lyon, Roger Chittum, and Glenn Vawter, all formerly with Tosco (The Oil Shale Corporation), offered their time and papers that informed me about the application process. Their memories of these events were indispensible. Edith Holleman, former counsel to Rep. Toby Moffett’s (D-CT) Subcommittee on the Environment, Energy, and Natural Resources of the Committee on Government Operations, has gone beyond what I could possibly expect. How fortuitous for this endeavor that she had kept most of her SFC papers and kindly provided me copies. Her memories of the events of that period filled in many blanks and she articulately explained numerous actions that took place. She read a draft of the dissertation for accuracy and all of her comments were appreciated and exceedingly helpful. Edith also helped me establish contact with Bill Rankin, who launched The Synfuels Report. Otherwise, I never would have discovered his publication. Bill, in turn, had saved all copies of the Report and willingly provided me with those. David Oshinsky, my dissertation advisor, has demonstrated enormous patience and became a good friend in this decade long process. Mark Lawrence encouraged me when I became discouraged. Michael Stoff was the first department member I met when considering whether to attend UT. Bill Brands has been a sounding board and an unparalleled resource for vi presidential history. I had the privilege of taking courses from Frank Gavin and David Spence, both model teachers. My sincere thanks to my entire committee for agreeing to serve, provide constructive inputs, along with their enduring patience. Admiral Bobby Inman answered a myriad of questions from me about top secret American listening posts that existed in Iran before the Iranian Revolution. Elaine Tankard offered encouraging words at all times, as well as helpful suggestions and comments. Joyce Sibley of former Sen. Kay Bailey Hutchinson’s office answered many questions about the location of official government documents at the Federal Records Center and how to access these. Erica Whittington, Eric Busch, and Michael Anderson joined the PhD program on the same day as I did. Through it all, we have encouraged, critiqued, and offered help to each other, besides becoming close friends, though I am the last of our foursome to complete the dissertation. As each passed the defense hurdle, we shared in the victory celebration. My mother, Kathryn Priddy, endured my long absence from Dallas and is jumping with joy that this effort is at long last over, and eagerly anticipates our return to Dallas. She has been an ardent supporter of my educational dreams from the start. I wish my father were alive to share in this moment. His two brothers and my uncles, Robert and Charles, celebrate with me. Throughout this marathon, my wife, Dianne, has endured the good, the bad, and the ugly. We met in 1972 while at UT in the BBA program. She has been with me for the MBA in 1975, the MA in 1999, and now the pinnacle – the PhD. The last degree has tested her patience and love to the nth degree. During the past twelve years at The University of Texas at Austin for the doctorate, our family has blossomed. Our daughter, Amsler, completed law school, married Don vii Bell, and blessed us by giving birth to our first two grandchildren, Jackson Priddy Bell (2005) and Eleanor Amsler Bell (2007). Our son, Ashley, married Ashley Suzanne Johnson and they bore us a precious third grandchild, Leighton Charles Priddy (2012). While I have been studying history, our son Ashley graduated from Baylor University with a BA in History, enlisted in the US Army for four years, and after concluding his military commitment, he began studying veterinary medicine and will graduate in June 2013 from the University of Glasgow, receiving his DVM degree a month after his father receives his PhD. Our daughter-in-law also graduated from law school and both Amsler and Ashley Suzanne passed the State of Texas Bar exam. Amsler also passed the State of New York Bar exam. Without the active assistance of this large group of family, friends, and supporters, as well as the librarians at several presidential libraries and Peggy Ann Brown in Washington, DC, who located many documents that at first seemed impossible to find, I would not have been able to accomplish my mission. I am deeply grateful to each and every one. Thank you! viii UNITED STATES SYNTHETIC FUELS CORPORATION: Its Rise and Demise Hervey Amsler Priddy, Ph.D. The University of Texas at Austin, 2013 Supervisor: David M. Oshinsky The energy crisis during the presidency of Jimmy Carter stimulated several major pieces of legislation that together produced the Department of Energy (DOE), the National Energy Plan (NEP), the windfall profits tax, and the Energy Security Act of 1980 (ESA). This dissertation focuses on the Energy Security Act, which was signed into law on June 30, 1980, and created the congressionally chartered United States Synthetic Fuels Corporation (SFC), one of the initial efforts to provide the United States energy security. John Sawhill, nominated by Carter as the first SFC chair, was responsible for managing the corporation along with six other directors. The Senate confirmed none of these seven individuals. This inaction forced Carter to make recess appointments of Sawhill and four others to the SFC board. With the election of former California governor Ronald Reagan as president in November 1980, emphasis on the SFC and financial ix assistance for development of a domestic synthetic fuels industry diminished – so much so that the corporation closed its doors in April 1986.1 The SFC funded four synthetic fuels projects. None survive today.2 During its life, Synfuels Corporation spent approximately $960 million. Congress authorized funding of $88 billion plus $35 million in annual administrative expenses (adjusted for inflation) for the SFC, with a maximum of three hundred full-time professional employees, over its legislated twelve- year existence. The mandated goal was the production of at least five hundred thousand barrels of crude oil equivalent per day of synthetic fuels from domestic sources by 1987 and at least two million per day by 1992. The SFC was legislatively chartered to be free of normal government rules, regulations, and procedures. Carter did not want the synthetic fuels effort to be housed within the Department of Energy. He knew that to meet the goals of the act, any entity must be able to move with speed and be permitted to pay above government-level salaries.