architects to design it, calculating the costs of it, estimating the returns on it, getting the actual development accomplished, and managing to return that capital and return on capital.

Senator RUDMAN. And that would be on things like the Atlanta Apparel Mart, Peachtree Center, things of that sort?

Mr. SCHROEDER. Yes, sir.

Senator RUDMAN. Those are large mercantile shopping centers; am I correct?

Mr. SCHROEDER. They are commercial. They are not only shopping centers; they are all sorts of horizontal and vertical developments.

Senator RUDMAN. Do they involve the construction of industrial facilities?

Mr. SCHROEDER. Some, but very few. No process plant experience. Senator RUDMAN. Refineries?

Mr. SCHROEDER. No. I said no process plants.

Senator RUDMAN. No chemical processing plants or so forth. So your business experience has been, as you describe it, for a number of years in the actual construction business because you came from a family that was in that business, then more into development, meaning all phases of development of large commercial property? Mr. SCHROEDER. Right.

Senator RUDMAN. That certainly is management experience. I won't quarrel with that. But in terms of having experience in managing and in large process establishments such as the kind that you have to do here; you did not have that kind of specific experience before you came to the company?

Mr. SCHROEDER. You are correct. And I won't have it when I leave it-when I leave the company.

Senator RUDMAN. You will not?

Mr. SCHROEDER. No, sir. This is an investment banking thrust, not a construction development thrust, on the part of the SFC. Our primary task is to pass judgment on the work that others do and make decisions concerning assistance or nonassistance.

Senator RUDMAN. You have technical staff to advise you on the investment wisdom of the proposals that are made to you? Is that your position?

Mr. SCHROEDER. Not only the investment wisdom, but a lot of the underlying wisdom that has to do with final investment wisdom.

Senator RUDMAN. I just wanted to clarify that point so the record is clear on what your experience is and what you propose to do and what you think you are doing in the Corporation. I understand Mr. Bowden has a very substantial technical background coming out of the industry. But you do not represent yourself in any way to be an expert in the construction or the feasibility of synthetic fuel plants as such?

Mr. SCHROEDER. Right.

Senator RUDMAN. Thank you.

Senator COHEN. You came to Washington in November 1980. You were promised $1 a year for that period of time or whatever, and you never received that. How did you survive? How were you paid? Who paid you?

Mr. SCHROEDER. I wasn't paid. I was reimbursed for some expenses that we incurred while we were up here. The Heritage Foundation did that.

Senator COHEN. How much did you receive from the Heritage Foundation?

Mr. SCHROEDER. I don't know, sir. I reported it, and I can't recall-that has been given your staff. It's accurate, but I can't recite what the amount was. It was less than the out-of-pocket costs for coming up here and working on that transition.

Senator COHEN. Heritage paid your expenses? Did they also pay your wife's?

Mr. SCHROEDER. Yes, they did.

Senator COHEN. Would it be fair to say Heritage Foundation paid the expenses of all those who worked on the transition team?

Mr. SCHROEDER. I have no knowledge of anybody other than my wife and myself in that regard.

Senator COHEN. And that was the total income you had at that time other than your own personal holdings, solely from the Heritage Foundation to fund the expense?

Mr. SCHROEDER. That's right, sir.

Senator COHEN. Prior to your confirmation, and I assume Mr. Noble recommended you as a member of the Board of Directors-

Mr. SCHROEDER. Right.

Senator COHEN. That was held up principally due to Congress; it had nothing to do with you, but principally because the Congress didn't take any action on it. What was your salary during the time you were acting as a consultant?

Mr. SCHROEDER. I didn't act as a consultant. At first, it was intended that I come in and act as a consultant. After the SFC legal staff looked at the situation, they decided that that would be an incorrect way to handle my services up here. So there was never any consulting agreement consummated. There was one drafted. I was put on the payroll as an employee at approximately $69,000 a year. Senator COHEN. An employee of the Corporation?

Mr. SCHROEDER. Yes, sir.

Senator COHEN. You worked how long in that capacity? Was it a year?

Mr. SCHROEDER. Approximately. I don't remember actually when my salary was submitted to the President of the United States and approved. It was about a year.

Senator COHEN. During that time that you were an employee of the Corporation, did you have any income from Heritage Foundation or any of the Noble companies?

Mr. SCHROEDER. Nothing other than what I reported, which was my wife's.

Senator COHEN. It was actually your wife's, not yours?
Mr. SCHROEDER. Right.

Mr. NOBLE. Senator, I would like to say that Mr. Schroeder, even with his increased salary, has taken a considerable cut to come with this Corporation. I would wager to say that in industry he could make at least twice as much as he is making today.

Senator COHEN. I have no doubts about that.

Mr. NOBLE. I just had to add that because there are a lot of folks, and Jim Bowden, we have got a number of people that we have been criticized on salaries. But frankly, they are here at considerable sacrifice from what they could do in industry.

Senator COHEN. I have no question about that whatsoever. I am told, as a matter of fact, I see a lot of people here that I do not recognize-I assume they work with Synthetic Fuels Corporation. I am told you have assembled quite a few very talented people. And they do, on the whole, quite a good job. So I am not questioning that.

What I am really trying to find out is what was the arrangement, how were you paid, whether or not there was any other outside income during that period that you served for $67,000. Then as I understand it, once you were confirmed, there was a recommendation that they double essentially your salary to $137,000— $135,000?

Mr. SCHROEDER. $135,000. Yes, sir.

Senator COHEN. At the time you were serving on the transition team, apparently you felt differently than Mr. Noble about the need for Synthetic Fuels Corporation. Is that right?

Mr. SCHROEDER. That's correct, sir.

Senator COHEN. Did you make that recommendation to him that you thought the Synfuels Corporation should go forward?

Mr. SCHROEDER. Sometimes way into the early mornings, yes, sir. Senator COHEN. When that final time came, the chairman said he was opposed to it and recommended its abolition; right?

Mr. SCHROEDER. Senator, it's very difficult to talk about something you can't talk about. We took an oath, and we were instructed when we went on the transition team that the transition information we carried away was our personal property and the report was the personal property of the President of the United States. I have held very closely to that, and I was corrected by you a while ago for trying to draw the Chairman's attention. The reason I was trying to draw his attention was because I felt that there was a lot of concentration on one element of the report. The report was much more than one paragraph.

Senator COHEN. It said abolish it.

Mr. SCHROEDER. That was one element of it.

Senator COHEN. After you get beyond that one element, what else is there?

Mr. SCHROEDER. As I said when I started talking here, it's rather difficult to talk about something you can't talk about, and I certainly don't expect to violate one oath to serve another one.

But I will tell you this, sir, the report also contained language in it which said substantially this: that if you as President of the United States determined that the Synthetic Fuels Corporation should go ahead, then I recommend so-and-so. Those recommendations were fairly detailed.

Now, I tell you that, and I would request specifically that I not be asked any further details on this.

Senator COHEN. I didn't intend to get into the details. What I intended to get into was whether you yourself as a personal judgment felt that the Synthetic Fuels Corporation should continue. Apparently, Mr. Noble said that you were of a different mind than

he, and he's made it clear that he is opposed to it. So I assume that you were in favor?

Mr. SCHROEDER. You're absolutely right.

Senator COHEN. But when it came down to making the decision, what happened was when the Chairman says no, the Chairman's vote is the one that prevails?

Mr. SCHROEDER. As you, as chairman, know, that's right.

Senator COHEN. So there we have a situation where the recommendation again is no synfuels.

Senator RUDMAN. It doesn't work quite that way here, Mr. Schroeder. [Laughter.]

We can outvote our chairman.

Senator COHEN. There is an even split today. So I am raising this once again to come back, and it's fairly painstaking, I know, and perhaps seemingly irrelevant to you, but I am trying to get at the basis of what has happened from the time that this new management took over to the time of today, tomorrow, looking at the record itself.

Frankly, when I go back and I read the Appropriations Committee report, it is fairly damning. It is fairly damning in terms of comparing the Synfuels Corporation's record with DOE during a 9month period of time.

Mr. SCHROEDER. Sir, I would be quick to tell you that DOE filled a void that had been been worked on by industry for 10 years, and in some cases longer than that. Mr. Hartley, the chairman of Union Oil Co., tells me that he has worked on shale oil since 1959 and even before that. So this is not a matter of DOE just simply performing miracles in a very effective and efficient way. It is a matter of comparing a situation with a different situation.

Mr. NOBLE. I think the main thing is that there were basically three projects that were somewhat mature. I believe that other projects just fall way behind those in maturity as far as their being ready to do something. And two of those three, I might add, one is shut down and one is in trouble.

Senator COHEN. What I am basically trying to find out, here you have a Department of Energy which the President as a campaign pledge said he wanted to abolish. Here you have the Chairman of the Synthetic Fuels Corporation who thought we ought to abolish it prior to his becoming Chairman. And my personal naive judgment would be that that would have to have an impact upon industry in terms of its perception as to whether the Synthetic Fuels Corporation had any credibility or whether or not they were really committed to going forward and making this work, notwithstanding the deflationary climate which followed.

It would seem to me that had to have an impact, saying, “Are these guys serious?" I refer to the Wall Street Journal, I refer to the New York Times. I refer to the Appropriations Committee report, which in my judgment was quite critical.

And then I go further, I look at the so-called Project Indigo. That was as of April of this year. Let me go through and look at some of these quotes-

Mr. SCHROEDER. Sir, would you please look that date up again? Senator COHEN. You tell me when it was then.

Mr. SCHROEDER. I was told it ended in December of last year.

Senator COHEN. The survey may have ended. The report was filed, I believe, in April of 1983.

Mr. SCHROEDER. That's what the Inspector General, as I recall, told me, that it ended in December of last year.

Senator COHEN. You have looked at this report, again quite critical.

Mr. SCHROEDER. Oh, on balance, in my opinion, it's not quite critical. On balance, it's way more suggestive of a positive set of recommendations than it is a negative set of recommendations. Senator COHEN. Let me read this to you. It said,

The net impression regarding the Synthetic Fuels Corporation decisionmaking from all the interviews was basically two-fold: The Corporation has an inordinate difficulty in making decisions; those that have been made have been very slow in coming, and as a result, many opportunities to move ahead have been lost. These remarks have always been tempered by the added statement that the respondent fully understood startup problems which the SFC has faced.

Nonetheless, that's the general impression of the interviews conducted by members of the industry.

Mr. NOBLE. Many of those industry representatives were people who had been turned down, too, Senator, and sometimes you don't get exactly as

Senator COHEN. Communications within the Corporation do not get high marks from industry representatives. Those sponsors who have dealt with the Corporation at times have experienced numerous situations where one part of the Corporation did not know what the other was doing.

They believed that the top management had not made its policy decisions known to the staff. They also felt the Board of Directors was taking actions on matters about which it was insufficiently briefed, and nearly all the respondents felt the Corporation had not done a good job in cultivating industry.

Now that is a report that was filed in April 1983. So again, I raise the question, what is going on?

What has happened between the creation of the Synthetic Fuels Corporation and to date that would justify its continuation?

Mr. Schroeder, what can you point to, to say let's continue this Corporation?

Mr. SCHROEDER. Senator, we have looked at about 100 projects. We have winnowed through the 100 projects. Some of them have submitted proposals as many as three times. It is my opinion we have 21 or 22 projects now before us, several of those projects are, in my opinion, relatively mature.

I would be inclined to guess that we will be able to assist as many as a dozen of those projects in the next 12 to 15 months. This is a complicated process. It is a learning curve that Mr. Noble referred to.

It is certainly there for the Synthetic Fuels Corporation, as well as for the industry, and I believe that we are on the threshold of being able to vote on the assistance of those dozen or so projects that I referred to quite generally.

I am inhibited from talking about specific projects at this time simply because of the responsibility of it.

Senator COHEN. Mr. Noble, on January 28, 1982, there was an annual report for 1981 filed, and it indicates that although progress