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meeting such minimum value of $3,500,000, but did not do so adequately in the Corporation's view. It seemed logical to believe that this advantageously located plant, accessible to water traffic, should bring a higher price than $3,500,000, with the removal of the restriction of use of the plant to the synthetic-rubber industry and the accompanying modification of the national security clause requirement, both of which had served to limit interest among prospective purchasers and to depress the price which could be obtained. An early sale, not a long-term lease which would tie up the plant for 10 to 15 years, thus appeared to serve better the Government's overall interests, including specifically the greatest possible return on its investment in the property, and the Corporation had received various expressions of interest from nonbidders in the possible purchase of the plant upon a reoffering for sale in the near future under new legislation;

(2) The fact that the Office of Defense Mobilization advised on December 10, 1956, that it affirmed the position taken by it on June 21, 1956, before the committee, that retention of the Louisville plant was not essential to national mobilization requirements in butadiene;

(3) The fact that the alcohol butadiene plant at Kobuta, Pa., transferred to Koppers, Inc., in 1955, had never operated and is available until 1965 for emergency production of alcohol butadiene for national-defense purposes ;

(4) The fact that reports to the Corporation showed that national petroleum butadiene capacity, rated at 661,000 short tons at the end of 1955, would be increased by an additional 416,000 short tons during 1957 and early 1958. This total of 1,037,000 short tons exceeded 1959 estimated annual requirements of butadiene for synthetic rubber and all other purposes by 146,164 short tons;

(5) The fact that any possibility of an assured economically successful operation of the plant in the future as an alcohol-butadiene facility was too unlikely to warrant serious consideration, in the light of the petroleum-butadiene supply picture and of Publicker's 1955–56 operating experience;

(6) The fact that, under existing law, the plant could not be reoffered for sale until after April 1958, when it would be expected to be turned over to General Services Administration for disposal under that agency's established procedures.

After thorough consideration of all pertinent factors, the Corporation decided, as stated previously, to turn down both lease bids, and to advise the committee that it believed that a reoffering and sale of the plant as a general chemical facility as early as possible in 1957 was the method of disposal which would best serve the Government's interests under existing circumstances. The Corporation further believes that legislation in the pattern of H. R. 11813, 84th Congress, 2d session, would permit the desired objectives to be realized. (H. R. 11813 contemplated sale of the plant, subject to the existing lease, as a general chemical facility, not restricted to the synthetic-rubber field, with an appropriate national security clause.) Such a measure would elicit broad bidder interest in the plant, which, under existing law, will remain a financial burden to the Government until after April 1958. The Corporation is convinced that the possibility of an attractive sale will be enhanced if prospective bidders can be assured in the legislation that the sale must be completed in the 1st session of the 85th Congress, since such timing would enable a successful bidder to complete engineering plans for utilization of the Louisville property upon its takeover in April 1958 at the expiration of the Publicker lease, and because companies which might wish to bid would know that they would not be delayed unduly in seeking other properties to fit their plans if their bids were unsuccessful.

EXHIBIT II

FEDERAL FACILITIES CORPORATION INVITATION FOR PROPOSALS FOR LEASE, ALCOHOL

BUTADIENE PLANT, LOUISVILLE, KY. The existence of the Rubber Producing Facilities Disposal Commission terminated on September 23, 1956. By Executive Order 10678, effective September 24, 1956, the President has designated Federal Facilities Corporation to administer all matters involving the Commission, including the powers and authority conferred by Public Law 433, 84th Congress, 2d session (70 Stat. 51) relative to the leasing of the alcohol butadiene plant at Louisville, Ky.

Pursuant to the Rubber Producing Facilities Disposal Act of 1953 (67 Stat. 408) (Act), and Public Law 433, 84th Congress, 2d session (7

maderal Facilities Corporation invites written proposals for the lear

[graphic]

The Government-owned alcohol butadiene plant, Louisville, Ky. This facility, designated plancor 1207, produces butadiene from ethyl alcohol. It has an annual capacity of 87,000 short tons, and is presently leased from the Government by Publicker Industries, Inc. This lease will expire April 4, 1958. Copies of the lease are available upon application to Federal Facilities Corporation. Proposals shall be made subject to the existing lease.

Proposals shall be in writing and may be submitted at any time through October 31, 1956, at the office of Federal Facilities Corporation, 811 Vermont Avenue NW., Washington 25, D. C.

Proposals shall be accompanied by a deposit of $2,500. Deposits shall be made by certified check payable to the order of Federal Facilities Corporation and will be refunded without interest at the conclusion of negotiations.

Any lease shall contain a "national security clause" and shall also contain provisions for the recapture of the facility and the termination of the lease if the President determines that the national interest so requires. Any lease shall be for a term of not less than 5 years nor more than 15 years from the date of termination of the existing lease; the precise term desired should be specified in the proposal.

Upon receipt of proposals, Federal Facilities Corporation will enter into lease negotiations for a period of not less than 30 days from October 31, 1956, with those submitting proposals. The date of termination of negotiations will be determined by Federal Facilities Corporation and announced to all eligible bidders.

A detailed descriptive brochure relating to the Louisville facility may be obtained upon application to Federal Facilities Corporation.

The act and Public Law 433 prescribe in detail, as well as generally, procedural and substantive standards pursuant to which lease of the Louisville facility is to be effected. To facilitate compliance with these standards, Federal Facilities Corporation has prepared instructions for the submission of proposals which set forth the requirements for such proposals. Copies of the instructions will be available upon application to Federal Facilities Corporation.

FEDERAL FACILITIES CORPORATION

811 Vermont Avenue NW., Washington 25, D. C.

Laurence B. Robbins, Administrator

Dated : September 25, 1956.

FEDERAL FACILITIES CORPORATION

Washington 25, D. C.

INSTRUCTIONS AND INFORMATION IN CONNECTION WITH THE LEASE OF THE GOV

ERNMENT-OWNED RUBBER-PRODUCING FACILITY AT LOUISVILLE, KY., OFFERED FOR LEASE IN ACCORDANCE WITH THE RUBBER-PRODUCING FACILITIES DISPOSAL AOT OF 1953 (67 STAT. 408) (ACT) (EXHIBIT A) AND PUBLIO LAW 433, 84TH CONGRESS, 2D SESSION (70 STAT. 51) (EXHIBIT B)

I. Introductory

The existence of the Rubber Producing Facilities Disposal Commission terminated on September 23, 1956. By Executive Order No. 10678, effective September 24, 1956, the President designated Federal Facilities Corporation (hereinafter sometimes referred to as the “Corporation") to administer all matters involving the Commission, including the powers and authority conferred by Public Law 433, 84th Congress, 2d session (70 Stat. 51) relative to the leasing of the alcoholbutadiene plant at Louisville, Ky. II. Alcohol butadiene plant (plancor 1207), Louisville, Ky.

1. As heretofore officially announced, written proposals for the lease of this facility will be received during the period ending October 31, 1956.

2. This facility is presently leased from the Government by Publicker Industries, Inc., under a lease which will expire April 4, 1958. Proposals shall be made subject to the existing lease.

3. A brouchure containing pertinent information with respect to this facility and a copy of the present lease may be obtained by interested parties upon

request to the Corporation. Any prospective lessee desiring to inspect the facility may make application in writing to the Corporation, and the appropirate arrangements will be made for such inspection.

4. Upon receipt of proposals, the Corporation will enter into lease negotiations with those submitting proposals for a period of not less than 30 days from October 31, 1956. The date of termination of negotiations will be determined by the Corporation and announced to all eligible bidders.

5. Proposals shall be in writing and one duly executed counterpart, complete in all details including the lease rental proposed, together with five additional counterparts omitting any figures pertaining to the rental proposed, shall be delivered to the Administrator of the Corporation. The full executed copy shall be enclosed in a separate, sealed envelope, marked “Complete Executed Proposal." Among other matters, such proposals shall contain:

(a) Full and complete identification of the prospective lessee, together with complete details regarding any and all affiliations or associations (arising out of stock ownership or otherwise) existing or contemplated in connection with his acquisition or operation of the facility.

(b) A description of the product or products which the prospective lessee intends to produce at the facility.

(c) A statement of the arrangements or plans, if any, whether formal or informal, which the prospective lessee has made for supplying feedstock to the facility. The proposal shall also state the arrangements or plans, if any, whether formal or informal, which the prospective lessee has made, or contemplates making, for the disposal of the end product or products of the facility.

(d) The desired term of the lease, which shall be for not less than 5 nor more than 15 years from the date of termination of the existing lease.

(e) In the event that a prospective lessee claims, or intends to claim, directly or indirectly, any “right,” as defined below, with respect to any process, rectly or indirectly, any “right," as defined below, or which is necessary to permit the use of the facility for the purpose for which it was designed and constructed, he shall include in his proposal to lease a statement of the basis of his claims. As used in this paragraph, the term “right” means right to a royalty or license fee, or right to exclusive proprietary interest, or power to grant immunity, or right to disclose technical information or trade secrets.

(f) Agreement of the prospective lessee to negotiate with the Corporation at times and places to be specified by the Corporation.

(9) A clear statement, where a proposal is submitted subject to any conditions or contingencies, spelling out fully and separately each such condition or contingency.

6. Proposals shall be accompanied by a deposit of $2,500. Deposits shall be made by certified check payable to the order of Federal Facilities Corporation and will be refunded without interest at the conclusion of negotiations.

7. Any lease shall contain, among other provisions, a national security clause having terms, conditions, restrictions, and reservations which will assure the prompt availability of the facility to the Government for the production of butadiene. Any lease shall contain also provisions for the recapture of the facility and the termination of the lease if the President determines that the national interest so requires.

8. Proposals may be withdrawn or modified at any time during the period for the submission of proposals.

9. (a) Standard Government clauses, such as the prohibition against Government officials benefiting from the transaction and the covenant against contingent fees, shall be incorporated in any lease.

(b) Any lease will be made by the Government without representation or warranty of title, express, or implied.

(c) The cost of obtaining any title evidence desired by the lessee and the cost of placing the lease of record in the manner prescribed by local recording statutes shall be for the lessee's account. Examination and inspection of deeds, abstracts, tax receipts, affidavits of title, judgements in condemnation proceedings, or other available documents related to the title of the premises and property involved, will be permitted by the Corporation.

10. Each prospective lessee shall submit a general statement regarding the types of business activity in which he is engaged, with an indication as to his relative position in each such field of activity, with particular reference to the rubber industry, the petroleum industry, and that part of the chemical industry which supplies or can supply feedstocks for the manufacture of synthetic rubber; an indication as to the leading producers in each of these fields of activity show

ing the relative share of the total market held by each; the unit production, dollar volume of sales, and capacity for the production of natural or synthetic rubber products or the raw materials necessary for their production controlled by the prospective lessee, and other information of a similar nature.

11. Prospective lessees may register with the Corporation, if they so desire, by advising the Corporation in writing of their identity, affiliations, and interest; registration shall be deemed to have been effected upon acknowledgment of such advice by the Corporation,

12. The Corporation reserves the right, upon notice in writing by ordinary mail to all persons who shall have registered pursuant to the preceding paragraph, and upon such other notice as it may deem reasonable and practicable, to withdraw or to modify these instructions or such other instructions as it may from time to time announce for the submission of proposals, and to require, from any person who may have submitted a proposal, such additional information as it may deem necessary or appropriate to fulfill its responsibilities under provisions of the act and Public Law 433. Subject to the requirements of the act and Public Law 433, the Corporation reserves the right, in its sole discretion, to determine all issues which may arise concerning adequacy as to form or substance of any proposal. Nothing herein contained shall be deemed to be a determination of the time or manner in which the Corporation may proceed further with the discharge of its responsibilities under the act and Public Law 433.

EXHIBIT IV

PUBLICKER INDUSTRIES, INC.,

Philadelphia, Pa., October 30, 1956. FEDERAL FACILITIES CORPORATION,

Washington, D. C.

(Attention: Mr. Laurence B. Robbins, Administrator.) GENTLEMEN : In accordance with the terms of Public Law 433, 84th Congress, and instructions to prospective bidders issued September 25, 1956, Publicker Industries Inc. (hereinafter referred to as Publicker), hereby proposes to lease, under the terms and conditions hereinafter set forth, the alcohol butadiene plant at Louisville, Ky., known as Plancor 1207.

Reference herein to Publicker includes its several wholly owned subsidiaries.

Publicker is a Pennsylvania corporation, and owns and operates alcohol plants at Gretna, La., Westwego, La., and Philadelphia, Pa. It also owns tanker vessels, and terminal facilities in Cuba, utilized in the importation of molasses, the chief raw material for the production of alcohol in its plants. The Louisville butadiene plant is under lease to Publicker from the former Rubber Producing Facilities Disposal Commission. Publicker has no other existing or contemplated affiliation or association in connection with the proposed acquisition or operaton of the above-mentioned facility.

Publicker intends to operate the facility in the production of alcohol butadiene to the extent raw material is available and market conditions for butadiene warrant.

Publicker has alcohol fermentation capacity adequate to operate the butadiene plant at full capacity, together with adequate transportation and terminal facilities to assure the production of alcohol and delivery thereof at Louisville. With respect to the disposal of butadiene production, Publicker intends to make generally available the butadiene produced at the plant for purchase by producers of synthetic rubber as raw material is available and market conditions warrant.

Publicker offers to lease the facility for a term of 10 years from the expiration of the present lease.

Publicker has the right pursuant to agreement for the purpose with Union Carbide & Carbon Corp. to use the process for which the Louisville facility was designed, that is, the production of butadiene from ethyl alcohol.

Publicker agrees to negotiate with the Federal Facilities Corporation at times and places specified by it.

Publicker encloses herewith a deposit of $2,500. Publicker is primarily a manufacturer of solvents by fermentation and its sole connection with the synthetic rubber industry is its present lease on the Louisville plant and as a manufacturer of fermentation alcohol. It has 20 other position in the rubber industry and manufactures no other product that enters significantly into the rubber industry. In regard to butadiene production,

Publicker in the past 12 months has produced slightly more than 20,000 tons of butadiene valued at approximately $6 million, equal to about 242 percent of the total national production. In regard to ethyl alcohol, Publicker is today the only substantial producer by fermentation, though substantial unused fermentation capacity still exists in the possession of other companies. In comparison with total national ethyl alcohol production, Publicker in the fiscal year 1956 produced 61,688,000 wine gallons, 25 percent of the total, making it approximately about the second largest producer.

Publicker hereby bids to lease the alcohol butadiene facility at Louisville, Ky. (Plancor 1207) for a term of 10 years from March 4, 1958, under the following terms and conditions:

(a) The present lease to Publicker, expiring March 4, 1958, to be renewed and extended for 10 years being the period of time during which the security clause is presumed to be required.

(0) The present protection and maintenance contract between Publicker and your Corporation to be renewed and extended for the same period of time.

Attached is a memorandum discussing certain relevant aspects of Publicker's bid.

A. E. LANG, Assistant Treasurer.

MEMORANDUM CONCERNING CERTAIN ASPECTS OF PUBLICKER BID Publicker's offer is based upon the fundamental premise that disposition of the Louisville plant remains within the legal requirement that the plant be at all times available for the production of butadiene from alcohol. In view of the statute we do not believe any other premise is proper.

Admittedly, if there were no legal requirement that the plant be kept available as an alcohol butadiene plant and subject to recapture, it might be leased on terms financially more favorable to the Government, but Federal Facilities Corporation is under an existing congressional authority to make a new lease or to extend the present lease, an authority that clearly reflects the purpose of Congress to dispose of this plant-as a butadiene plant- by lease after the Rubber Producing Facilities Disposal Commission, failed to arrange a sale satisfactory to Congress. The question has been before Congress first on the passage of Public Law 433 and second on the rejection of the Commission's recommended sale. We believe that such congressional purpose has been clearly expressed.

In connection with the depressing effect of the requirement that a plant must be kept in condition to produce butadiene from alcohol, we point out, for instance, that the Commission sold the alcohol butadiene plant at Kobuta to the Koppers Co. at a lower price for the whole plant (including the butadiene producing facilities) than Koppers' original unnegotiated offer for part of the plant (excluding the butadiene producing facilities).

Admittedly, again, the future national requirements for butadiene for synthetic rubber and other essential uses are difficult to predict precisely. Expansions of petroleum butadiene capacity are underway-but so are expansions of synthetic rubber polymerizing capacity and also certain chemical demands for butadiene in quite different fields. We think it pertinent to point out also that the emergency value of the Louisville plant cannot be weighed solely by comaring total available petroleum butadiene capacity, present and planned, with total estimated synthetic rubber and chemical requirements. The critical point is the large proportion of butadiene capacity, both present and future, that depends and will continue to depend, on butylene. It is thus competitive with high octane gasoline for which the total potential military demand, which is considerably larger than the demand for aviation gasoline alone, is not only large but absolutely indispensable. The vital fact—other than congressional policy to keep this plant as an alcohol butadiene producer-is that from 1942 to the present-day alcohol butadiene has always been said by certain important industrial interests to be unnecessary, but in every rubber crisis it has alw: "s been required. Congress has clearly taken the position that the chances of alcohol butadiene being required again are great enough, and its importance when required is sufficiently urgent, that the Louisville plant must remain available for this purpose.

In the light of the foregoing, we believe that Publicker's bid offers the Government the best possibility of return on the Government's investment while still

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