WASHINGTON -- Senate defenders of the $11 billion Superconducting Super Collider appeared likely to throw in the towel yesterday, a day after the House resoundingly voted for the second time this year to kill the energy research project.
"It's clear the House doesn't want to proceed with the project, and in my judgment, it's just a matter of how much you put in the [energy appropriations] bill now to close it out," said David Gwaltney, a Senate Appropriations Committee aide.
Gwaltney pointed to a statement issued by Sen. Bennett Johnston, D-La., the chairman of the Appropriations Committee's energy and water development subcommittee, right after the House's 282-to-143 vote on Tuesday to strip the collider funding out of the pending energy appropriatons measure.
In his statement, Johnston said the House-Senate conference committee meeting over the appropriations bill must "accommodate" the House's wishes, even if the House is wrong. Gwaltney said, "That clearly implies that the project is not going to go forward the way we thought it would" only a month ago.
Gwaltney cautioned that the House and Senate appropriations conferees have not yet made a final decision on the fate of the collider. He said that could occur by the end of the week.
"There are discussions going on now over how to handle this between Sen. Johnston, the administration, and other interested parties, especially the Texas delegation," the aide said. "It's going to take a couple of days to decide what is the best way to proceed."
Meanwhile, $250 million of lease revenue bonds that Texas issued in 1991 to finance the collider came under pressure because of speculation that the project's federal funding is about to dry up and the state would be unable or unwilling to keep up payment on the bonds.
Municipal traders said yesterday that they saw no collider bonds change hands. However, they said the projects' problems have markedly increased concern about the value of the outstanding debt.
"You've got to be really nervous about owning these bonds," said a senior trader at a large firm based in New York City. "The revenue bonds for the collider are absolutely in jeopardy. The question on everybody's mind is, will the state be on the hook for this?"
Texas officials have repeatedly said they will honor their pledge to appropriate funds to pay debt service on the bonds, regardless of what Congress does. They could not be reached for comment on the status of the bonds yesterday.
The bonds' official statement says that the loss of federal funding is a clear risk for bondholders, since the state could not complete the massive research project on its own.
"I know where you can get some collider bonds real cheap," said one analyst, who said one trader was looking to dump collider bonds yesterday in the widespread belief that the Senate in the Next day or two will cave in to the House's position and agree to close out the project's federal funding.
Collider bonds for sale yesterday were priced with a "full cancellation discount" under the expectation that federal funding for the project will evaporate altogether and that the state will eventually stop paying the bonds, the analyst said.
The analyst said that traders were giving little credence even to the possibility that Congress might keep the project alive with significantly reduced funding. Gwaltney also discounted that possibility.
"Phasing it out costs you more money, If you're going to terminate it, do it the best way you can to save cost and try not to disrupt people's lives any more than you have to," he said, noting the likelihood of thousands of collider workers losing their jobs.
"The Texas people are going to be upset, and rightly so," Gwaltney said. "They may have an opportunity through the legislative process to insist on funding the project in a Senate vote on the bill, but in the end you can't ignore the fact that the House has voted overwhelmingly against it."
Gwaltney said the appropriations committees are conscious that Texas has a half billion dollars of bonds outstanding, including $250 million of general obligation bonds. The state issued the GO bonds as well as the lease securities to finance its share of the collider project.
While the federal government may provide as a much as $1 billion of close-out funding for the project in the next couple of years, Gwaltney said he doubted that any of that money would be earmarked to help state repay the bonds.
"I would guess the state might have some kind of legal ground to seek some kind of compensation from the federal government," he said. "If I was the state, I would take some kind of action to recoup some of my loss."