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SALE OF LOUISVILLE, KY., ALCOHOL BUTADIENE

PLANT

THURSDAY, MARCH 7, 1957

UNITED STATES SENATE,
COMMITTEE ON BANKING AND CURRENCY,
SUBCOMMITTEE ON PRODUCTION AND STABILIZATION,

Washington, D.C. The subcommittee met, pursuant to call, in room 301, Senate Office Building, at 10 a. m., Senator Paul H. Douglas (chairman of the subcommittee) presiding.

Present: Senators Douglas, Frear, Capehart, and Bush.
Also present: Senators Curtis, Cooper, and Morton.

Senator Douglas. The hour of 10 o'clock having arrived, the subcommittee will come to order and the hearing will begin.

This hearing is held to consider H. R. 2528, a bill to authorize the sale of the Government-owned alcohol butadiene facility at Louisville, Ky., known as Plancor 1207. We will insert the bill. (The bill, H. R. 2528, follows:)

[H. R. 2528, 85th Cong., 1st sess.] AN ACT To authorize the sale of the Government-owned alcohol butadiene facility at

Louisville, Kentucky, known as Plancor 1207 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act shall be known as the “Plancor 1207 Disposal Act of 1957."

SEC. 2. The Federal Facilities Corporation (hereinafter referred to as the “Corporation”), successor to the Rubber Producing Facilities Disposal Commission pursuant to Executive Order 10678 of September 20, 1956, is hereby authorized and directed, notwithstanding any other provisions of law, to take steps immediately to sell, as soon as practicable and in accordance with the provisions of this Act, the Government-owned alcohol butadiene facility at Louisville, Kentucky, known as Plancor Numbered 1207 and hereinafter referred to as the "Louisville plant,” subject to the existing lease which expires April 4, 1958. The sale thereof shall not limit the use of the plant to the manufacture of alcohol butadiene.

SEO. 3. In carrying out the provisions of this Act, the Corporation shall (1) invite and receive proposals for the purchase of the Louisville plant; negotiate for its sale and make a recommendation therefor to the Congress; enter into an appropriate contract of sale, which contract shall be binding upon the Government and the prospective purchaser upon execution subject only to the further provisions of this Act, and, in the performance of such contract, execute and deliver such deed and other instruments appropriate to transfer title to the purchaser effectively, and (2) take such action and exercise such powers as may be necessary or appropriate to effectuate the purposes of this Act, including specifically the authority to accept a proposal which may not represent the highest price offered.

SEC. 4. (a) The Corporation shall invite, upon adequate notice and advertisement, proposals for the purchase of the Louisville plant. The period for the receipt of proposals shall be determined and publicly announced by the Corporation, and shall terminate not less than thirty days after the first day on which proposals may be received pursuant to the advertisement.

(b) Proposals shall be in writing, and shall contain, among other things

(1) identification of the person in whose behalf the proposal is submitted, including the business affiliation of such person;

(2) the arrangements or plans, if any, formal or informal, for the supply of feedstock to, and the disposition of the end products of, the Louisville plant;

(3) the amount proposed to be paid, and, if such amount is not to be paid in cash, then the principal terms of the financing arrangement proposed ;

(4) such other information as the Corporation in its notice and advertisement for proposals shall require be set forth in proposals including the prospective purchaser's acceptance of the terms, conditions, restrictions and reservations contained in section 7 of this Act, and the interest rate to be charged on the purchase-money mortgage referred to in subsection (e) of this

section. (c) Should it become necessary to the effective prosecution of its duties under this Act, the Corporation may, after the termination of the period for the submission of proposals provided for in subsection (a) of this section, disclose the contents of the proposals at such time, in such manner, and to such extent as it deems appropriate.

(a) Proposals shall be accompanied by a deposit of cash or United States Government bonds of face amount equal to 212 per centum of the gross amount proposed to be paid. Except in the case of the purchaser, deposits made hereinunder shall be refunded without interest and not later than upon the termination of the period for congressional review as provided in section 5 of this Act. In the case of the purchaser, the deposit made hereunder shall be applied without interest to the purchase price: Provided, however, That upon the closing of the contract of sale the purchaser shall be required to substitute cash equal to the face amount of any Government bonds then held in connection with such purchaser's proposal

(e) Payment of the purchase price may be made in part by a first lien purchase-money mortgage, in an amount not to exceed 75 per centum of the purchase price. The terms of any such mortgage obligation, to be determined by negotiation, shall provide among other things for a maturity of not more than ten years, periodic amortization, and an interest rate of not less than 4 per centum per annum.

(f) Promptly after the termination of the period for the receipt of proposals, pursuant to subsection (a) of this section, and for such period thereafter, which shall be not less than thirty days, as may be determined and publicly announced by the Corporation, it shall negotiate with those submitting proposals for the purpose of entering into a definitive contract of sale.

(g) Nothing contained in this Act shall be construed to prevent the Corporation from securing such additional information from those submitting proposals at any time as the Corporation may deem necessary or appropriate to fulfill its responsibilities under this Act.

SEC. 5. Within forty days after the termination of the actual negotiating period referred to in subsection (f) of section 4 of this Act, the Corporation shall prepare and submit to the Congress a report containing, with respect to the disposal under this Act of the Louisville plant, the information described in paragraphs 1, 2, 3, and 8 of section 9 (a) of the Rubber Producing Facilities Disposal Act of 1953, as amended (hereinafter referred to as the “Disposal Act”), together with a statement from the Attorney General advising whether the proposed disposal would tend to create or maintain a situation inconsistent with the antitrust laws. The report of the Congress shall be submitted in accordance with section 9 (b) of the Disposal Act, and unless the contract is disapproved by either House of the Congress by a resolution, as defined in section 23 of the Disposal Act, prior to the expiration of thirty days of continuous session (as defined in section 9 (c) of the Disposal Act) of the Congress following the date upon which the report is submitted to it, upon the expiration of such thirty-day period the contract shall become fully effective and the Corporation shall proceed to carry it out, and transfer of title to the Louisville plant shall be made as soon as practicable, but in any event within thirty days after the expiration or termination of the existing lease on the Louisville plant. The failure to complete transfer of title within thirty days after the expiration or termination of the existing lease shall not give rise to or be the basis of rescission of the contract of sale.

Sec. 6. The Corporation, before submission to the Congress of its report relative to the Louisville plant, shall submit it to the Attorney General, who shall, within thirty days after receiving the report, advise the Corporation whether the

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proposed sale would tend to create or maintain a situation inconsistent with the antitrust laws. Throughout the course of disposal proceedings on the Louisville plant, the Corporation shall consult with the Attorney General in order (1) that the Corporation may secure guidance as to the application of the standard - set forth in this section, and (2) that the Corporation may supply the Attorney General with such information as he may deem requisite to enable him to provide the advice contemplated by this section.

SEC. 7. The Contract of sale for the Louisville plant and instruments in execution thereof shall contain a national security clause having terms, conditions, restrictions, and reservations which will assure the prompt availability of the Louisville plant, or facilities of equivalent capacity, for the production of one or more chemical products important to the national security, for a period of ten years from the date of transfer of title of the Louisville plant. As used in this Act, the term "chemical products important to the national security" shall mean (1) chemicals for which expansion goals have been established under the Defense Production Act of 1950, as amended, during the calendar years 1951 to 1955, inclusive, or (2) chemicals for the production of which a material has been determined to be strategic and critical under the Strategic and Critical Materials Stockpiling Act of 1947, or (3) any other chemical which the President may, upon request from the Corporation, or, during the period of the national security clause, upon request from the purchaser, approve as important to the national defense.

SEC. 8. Such sums as may be required to finance the Corporation's activities hereunder shall be provided out of the proceeds heretofore realized from disposal of the Government-owned synthetic rubber facilities, and all final net proceeds from sale of the Louisville plant shall be covered into the Treasury as miscellaneous reecipts.

Sec. 9. The provisions of section 6 of the Disposal Act are hereby made fully applicable to the activities of the Corporation and its employees in the sale of the Louisville plant under this Act.

Sec. 10. Public Law 433, Eighty-fourth Congress, with the exception of section 6 (a), (b), and (c) thereof, is hereby repealed; and Federal Facilities Corporation shall be substituted for the Rubber Producing Facilities Disposal Çommission therein.

SEC. 11. In the event of dissolution of the Federal Facilities Corporation, the powers hereby conferred by this Act shall be exercised by such successor agency of the government as may be designated by the President.

Passed the House of Representatives February 5, 1957.
Attest:

RALPH R. ROBERTS, Olerk. Senator DOUGLAS. This bill was passed by the House of Representatives on February 5 and has been referred to the Banking and Currency Committee.

This facility is one of the plants which was offered for sale under the Rubber Producing Facilities Disposal Act of 1953. chasers showed any interest in the plant at that time. Publicker Industries, Inc., leased the plant for a 3-year period ending in April · 1958. This lease is still in effect.

Under the Disposal Act of 1953, the plant must be kept available for use as part of the synthetic rubber industry and, if the plant had been sold under the 1953 act, it would have been subject to a 10-year national security clause.

If this bill is not enacted, the plant may be transferred on termination of the lease in April 1958, to the General Services Administration, to be administered in accordance with the provisions of the National Industrial Reserve Act of 1948, or to another agency as directed by the President. Under the National Industrial Reserve Act, as I understand it, the property could be disposed of by the General Services Administration only with the approval and subject to any conditions which might be imposed by the Secretary of Defense in the light of security interests at that time.

No pur

Early in 1956 a bill was introduced for the purpose of authorizing the Rubber Producing Facilities Disposal Commission to renegotiate again for the sale or lease of the Louisville plant, but still subject to a 10-year security clause requiring the plant to be kept in condition to produce butadiene from alcohol. At that time the Disposal Commission expressed the opinion that both for national security and economic reasons it was desirable to have the Louisville plant in operation, in view of the then existing shortage of butadiene. This bill was enacted and became Public Law 433, 84th Congress.

The sale proposed by the Commission under Public Law 433 was disapproved by the House of Representatives on June 19, 1956. The Federal Facilities Corporation, successor to the Disposal Commission, proceeded to offer the plant for lease in September 1956, and received two bids. However, the Federal Facilities Corporation on December 12, 1956, decided not to accept either bid. A report was received from the Federal Facilities Corporation on these lease negotiations under Public Law 433. A copy of this report will be inserted as an appendix to these hearings, also copies of Public Laws 205 and 433. (See p. 107.)

H. R. 2528, the bill before the committee, would authorize the sale of the Louisville plant under arrangements generally similar to those provided in the Disposal Act of 1953 and Public Law 433, with one principal difference: Instead of requiring that the plant be kept available for production of alcohol butadiene as part of the synthetic rubber industry, H. R. 2528 would call for a security clause assuring the availability of the plantfor the production of one or more chemical products important to the national security. This term is defined as meaning

(1) Chemicals for which expansions goal were established under the Defense Production Act during the years 1951 to 1955, inclusive;

(2) Chemicals for the production of which a material has been determined to be strategic and critical under the Stockpiling Act; or

(3) Any other chemicals which the President may approve as important to the national defense. The only other significant change from the procedures followed in the earlier disposals is that the Attorney General would not be required to approve the proposed disposal with respect to whether it would or would not tend to create or maintain a situation inconsistent with the antitrust laws, but would instead merely be required to advise whether the proposed disposal would tend to do so.

As in the case of previous disposals, the bill would require a period for receipt of proposals of not less than 30 days; a period for negotiations not less than 30 days; a period of not more than 40 days for the Federal Facilities Corporation to file a report with the Congress (including a 30-day period of review for the Attorney General); and a 30-day period for congressional review and possible disapproval by House or Senate resolution.

I think that is a fair statement of the background of the proposed legislation and the contents of this bill.

We are very happy to have 3 of our colleagues here, 2 of whom, I understand, have statements to submit. Senator Cooper, do you also have a statement ?

Senator COOPER. I wish to make a short statement.

Senator DOUGLAS. Since Senators Morton and Curtis made the first request to testify, I hope you will excuse me if I call on them first.

Senator Morton, you made the first request, so we will be very glad to hear from you.

STATEMENT OF HON. THRUSTON B. MORTON, A UNITED STATES

SENATOR FROM THE STATE OF KENTUCKY

you wish.

Senator MORTON. Thank you very much, Senator.

I have a short statement, and I think if I read it it will probably save time, rather than elaborate otherwise.

Senator Douglas. Very well. You may proceed in whatever way

Senator MORTON. Mr. Chairman, I am grateful for the opportunity to appear before the committee in support of H. R. 2528. This bill, if it becomes law, permits the Federal Facilities Corporation to dispose of the Louisville, Ky., butadiene plant, otherwise known as Plancor 1207. This facility is presently under lease to Publicker Industries, Inc., with a termination date of April 4, 1958. The plant has been closed down for several months because it is impossible on today's market to produce butadiene from alcohol for a variety of reasons. The only employment opportunity that the plant offers today is for a very limited number of custodial, maintenance, and security personnel.

I would like to make one point clear at the outset. I have absolutely no interest in who buys this plant under the terms of the bill before you. My chief interest is in getting the plant into operation. As an operating facility, it might well provide employment for several hundred citizens in the Louisville area.

Mr. Chairman, I firmly believe that the best way to get this plant into operation is to sell it to private industry at the earliest possible date. It seems to me axiomatic that if any privately owned corporation should invest its stockholders' funds in the Louisville property, it would expect to operate the plant as soon as practicable. "I repeat that I am not concerned about who buys the plant-it might well be the present lessee or anyone else. I am concerned about transforming a cold smokestack into an operating facility with employment opportunities.

I am aware, Mr. Chairman, that the opponents of this measure may question the need of this legislation on the premise that no purchaser can take possession until the expiration of the present lease to Publicker on April 4, 1958. Therefore, they argue, let the matter alone until the lease expires and then let the plant be sold by the General Services Administration, as presently authorized. Why take the time of Congress with legislation that is unnecessary?

There are several very effective answers to this line of reasoning. In the first place, there is no way of accurately measuring the time required for General Services Administration to dispose of the property. A different agency, with no experience in the matter and new criteria, would be required to assume the responsibility of advertis

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