Mr. ROBBINS. No. No. He could not quite-it was a close decision, I think, but he could not make that required statement because it was not clear that this was going to be operated for the manufacture of alcohol butadiene, and he could not certify that it would increase the competition in that field.

Senator CAPEHART. Are you not saying what I said? My question was, or my observation was, that the Attorney General turned the sale down on the basis that there would be no competition between alcohol butadiene and petroleum butadiene.

Mr. ROBBINS. May I ask Mr. Sheehan to comment on that?
Senator CAPEHART. Is that correct?

Mr. SHEEHAN. No, Senator Capehart. The Attorney General's opinion went to two points. On the competition point he observed that the plant then was leased to the Publicker people and was in operation by them. They were the other bidder for the plant. He said, however, without putting any stress on or distinguishing between their representation for future operations as contrasted to Union Carbide's both of which were essentially the same; namely, that they would operate it when it was economically possible to operate-nevertheless, he pointed out the sale to Union Carbide would cut off this production in being at the plant at that time and, therefore, he could not say a sale to another party with no definite assurance of an operation would best foster a free, competitive synthetic-rubber industry. Senator CAPEHART. Are you not saying about what I did?

Mr. SHEEHAN. No, sir. If I followed you, you were relating it specifically to alcohol butadiene, and that was not in his statement. He was not making that distinction.

Senator DOUGLAS. In order that we may have the actual letter of the Attorney General before us, I would like to read into the record at this point the letter signed by William P. Rogers as Acting Attorney General, under date of May 23, 1956, addressed to Mr. Holman D. Pettibone, who was then Chairman of the Rubber Producing Facilities Disposal Commission, and I will read the second paragraph, which I think is the salient paragraph, and if anyone wishes the whole letter to be made part of the record it may be, but this is just the second paragraph.

This is to advise you that, on the basis of the information furnished to us by the Commission, I do not view the proposed sale of the Louisville plant to Union Carbide & Carbon Corp. as being in violation of the antitrust laws. However, it is my view that the proposed sale would not best foster the development of a free competitive synthetic-rubber industry, the standard set forth in section 3 (c) of the Rubber Producing Facilities Disposal Act of 1953, as amended. Accordingly, the proposed sale is not approved. My reasons for this conclusion are found in my attached statement of findings as required by section 9 (a) (4) of the act. That statement of findings follows the letter of the Attorney General, and it is also signed by Mr. Rogers. I think without reading it I shall make it part of the record.

(The letter referred to follows:)

OFFICE OF THE ATTORNEY GENERAL,
Washington, D. C., May 23, 1956.

Hon. HOLMAN D. PETTIBONE,

Chairman, Rubber Producing Facilities Disposal Commission,

Washington, D. C.

MY DEAR MR. CHAIRMAN: This has reference to your letter of May 16, 1956, submitting copies of a proposed report which the Commission intends to submit to the Congress recommending the sale of the Louisville, Ky., alcohol-butadiene

plant to Union Carbide & Carbon Corp., and requesting my advice and findings pursuant to the Ruuber Producing Facilities Disposal Act of 1953, as amended by Public Law 433, 84th Congress, 2d session, whether the proposed disposition if carried out, will violate the antitrust laws.

This is to advise you that, on the basis of the information furnished to us by the Commission, I do not view the proposed sale of the Louisville plant to Union Carbide & Carbon Corp. as being in violation of the antitrust laws. However, it is my view that the proposed sale would not best foster the development of a free competitive synthetic-rubber industry, the standard set forth in section 3 (c) of the Rubber Producing Facilities Disposal Act of 1953, as amended. Accordingly, the proposed sale is not approved. My reasons for this conclusion are found in my attached statement of findings as required by section 9 (a) (4) of the act.

In reply to your letter of May 23, 1956, we believe that it is entirely appropriate to submit your report to the Congress for review.

Sincerely yours,

WILLIAM P. ROGERS, Acting Attorney General.

STATEMENT OF THE ATTORNEY GENERAL AS REQUIRED BY SECTION 9 (a) (4) or THE RUBBER PRODUCING FACILITIES DISPOSAL ACT OF 1953, AS AMENDED BY PUBLIC LAW 433 (84TH CONG.)

Section 9 (a) (4) of the Rubber Producing Facilities Disposal Act of 1953, as amended by Public Law 433 (84th Cong.), requires the Attorney General to submit to the Rubber Producing Facilities Disposal Commission a statement setting forth findings approving the proposed disposal of Plancor 1207, the Louisville, Ky., alcohol-butadiene plant in accordance with the standards set forth in section 3 (c) of the act. Section 3 (c) requires of the disposal program that it "best foster the development of a free competitive synthetic-rubber industry."

The Commission proposes to sell to Union Carbide & Carbon Corp. the Louisville butadiene plant which has an annual designed capacity for the production of 60,000 short tons of alcohol butadiene. It is one of the alcohol-butadiene plants constructed by the Government during World War II, the others having already been disposed of by sale to private industry, the one at Institute, W. Va., to Union Carbide in 1947 and since converted to the production of other chemical products.

The Louisville plant had been in standby until its lease for a period of 3 years in April 1955 to Publicker Industries Inc., a company which is presently producing butadiene on 1 of the 3 production lines at this facility.

Public Law 433 provides that with certain exceptions not pertinent here, disposal of the Louisville plant shall be fully subject to all the provisions of the Rubber Producing Facilities Disposal Act of 1953 and such criteria as have been established by the Disposal Commission in handling disposal of other Governmentowned rubber-producing facilities under that act. Section 17 of the act lists criteria which, together with such other criteria as the Commission deems necessary or desirable to best effectuate the purpose of the act, are to be used by the Disposal Commission in arriving at its recommendations for disposal. Section 17 (4) requires that the prospective purchaser act in good faith and actually intend to operate the facility or facilities for the purpose of manufacturing synthetic rubber or its component materials.

Paragraph 1 (d) of the appendix to the contract of sale provides that Union Carbide "intends to operate the facility for the purpose of manufacturing butadiene when and to the extent such operation is economically feasible." In its proposal to purchase the Louisville plant, Union Carbide sets forth more specifically its intended utilization of this facility. Paragraph 4 of the proposal, entitled "Operation of Facility," states as follows:

"Carbide intends to operate the facility for the purpose of manufacturing butadiene as economic conditions, raw material supply, and market demand make such an operation feasible. At present such an operation is not economically attractive because of the high cost of ethyl alcohol.

"In the meantime (pending negotiations with the present lessee, Publicker Industries, Inc.) Carbide would utilize existing storage facilities at Plancor 1207 for any chemical storage requirements that might be needed in Carbide's regular operations. This would be done in an effort to defray at least some of the cost of maintaining the butadiene units in stand-by condition.

"Carbide is presently exploring possible other operations not inconsistent with the national-security clause referred to below. A possibility exists that after

a few years a part of Plancor 1207 might be used by Carbide with additional new facilities in the manufacture of chemicals such as acetic acid, acetic anhydride, and ethyl acetate.

"Present forecasts for these products indicate that only one-third of Plancor 1207 would be utilized in their production by the year 1960.

"The manufacture of these products would not interfere significantly with a reconversion to butadiene production since the bulk of the products noted would be produced in adjacent new facilities, thereby presenting little or no interference with butadiene production."

Paragraph 5 of the proposal entitled "Feedstock Supply" states as follows: "The production of butadiene from ethyl alcohol under normal conditions is not economically attractive because of the high cost of alcohol. Carbide will, therefore, operate Plancor 1207 for the production of butadiene when economic conditions and market demand warrant such an operation. The present cost of ethyl alcohol is unfavorable to economic production of butadiene. Because of this, if Carbide is the successful bidder, Carbide currently plans to keep the facility in standby condition in accordance with the requirements of the national-security clause and in accordance with the obligations, if any, imposed upon Carbide by virtue of purchasing Plancor 1207 subject to the lease now held by Publicker Industries, Inc. Carbide, therefore, has made no arrangements for supplies of ethyl alcohol for use in Plancor 1207 for the production of butadiene.

"Carbide is, however, investigating possible new sources of less expensive ethyl alcohol, particularly ethyl alcohol produced by fermentation from surplus grain held by the Government."

The Commission has also submitted for our review a copy of the proposal to purchase Louisville submitted by the only other bidder, Publicker Industries, Inc. Publicker is currently operating one of the three production lines at Louisville for the commercial production of butadiene under the 3-year lease previously mentioned. The statements of intention by Publicker in its purchase proposal as to the continued utilization of this facility for the production of butadiene, while on their face more optimistic than those made by Union Carbide, may, from a legal point of view and considering the economics of the industry, no more assure the long-range production of butadiene at this plant than do the representations made by Union Carbide. For this reason nothing contained in this statement should be considered as implying that Publicker's statement of intention when viewed in conjunction with a contract similar to the one negotiated with Union Carbide would permit a finding that the competitive standards of the Disposal Act have been met.

We have been informed that Publicker since October 1955 has been producing alcohol butadiene at Louisville at an annual rate of approximately 24,000 short tons, and has been selling such butadiene to GR-S rubber producers.

In view of Union Carbide's stated intentions, its acquisition of the Louisville plant would appear to provide no reasonable assurance that this facility would be utilized for the production of butadiene beyond the period of Publicker's lease. Therefore, the proposed sale of the Louisville facility to Union Carbide, as presently proposed by the Commission, in my view, will not best foster the development of a free competitive synthetic rubber industry as required by section 3 (c) of the act. I have reached this conclusion since I feel that a sale of the plant to Union Carbide in the present circumstances would probably not result in its use for production in the field of synthetic rubber and may even tend to bring about the elimination of an existing butadiene producer. Accordingly, the proposed sale is hereby not approved.

WILLIAM ROGERS, Acting Attorney General.

Dated: May 23, 1956.

RUBBER PRODUCING FACILITIES DISPOSAL COMMISSION,
Washington 25, D. C., May 23, 1956.

The honorable the ATTORNEY GENERAL,

Washington 25, D. C.

SIR: We have been advised that the Attorney General disapproves the recommended sale of the Government-owned alcohol-butadiene plant at Louisville, Ky. (Plancor 1207) to Union Carbide and Carbon Corporation on the grounds that such sale would not best foster the development of a free competitive synthetic rubber industry.

This poses the question as to whether under section 9 (a) (4) of the Rubber Producing Facilities Disposal Act of 1953 the Commission can file a report with the Congress in the absence of affirmative findings from the Attorney General approving the proposed disposal in accordance with the standards set forth in section 3 (c) of the Act.

In conference with members of your staff, it has been indicated that the Department believes that under the circumstances the law permits the Commission's report on disposal to be duly filed with the Congress for its consideration. Will you kindly formally confirm this opinion.

Respectfully,

HAROLD W. SHEEHAN, General Counsel.

Senator DOUGLAS. Would you proceed?

Mr. ROBBINS. House bill 2528 does not restrict the use of the Louisville plant to the manufacture of alcohol butadiene; it requires a national security clause, however, applicable to any chemical important to the national security, and requires the Attorney General to advise whether a proposed sale would tend to create or maintain a situation inconsistent with the antitrust laws.

Senator DOUGLAS. I want to get a clear idea on this subject. Do I understand that the present legislation and the legislation under which the Attorney General gave his opinion on May 23, 1956, required the concurrence of the Attorney General. Am I correct in that?

Mr. ROBBINS. Required the approval of the Attorney General. Senator DOUGLAS. I thought the term "concurrence" meant "approval" but I will accept "approval." In other words, under existing legislation the Attorney General has the right of approval or veto, and what you are proposing is that in the bill before you he merely be given the duty of giving an advisory opinion but the Federal Facilities Corporation would have the final determination subject to review by Congress. Am I correct in that?

Mr. ROBBINS. That is right, except for one point, Mr. Chairman. We are not recommending this change. The change was recommended by the Attorney General himself or, by Judge Barnes, who testified at the hearing of the Armed Services Committee last spring. That was followed by a letter, and it was discussed in the meeting of the Armed Services Committee in January of this year. That was one of the very few, I think only two, amendments which were made to this bill you have before you as it was originally introduced.

Senator DOUGLAS. I have a letter from Mr. William P. Rogers, this time signed as Deputy Attorney General, under date of March 4, addressed to Senator Fulbright, and I will make that a part of the record. I will read the next to the last paragraph.

The Department of Justice would have no objection to the enactment of the bill. (The letter referred to follows:)

Hon. J. W. FULBRIGHT,

DEPARTMENT OF JUSTICE, Washington, D. C., March 4, 1957.

Chairman, Committee on Banking and Currency,

United States Senate, Washington, D. C.

DEAR SENATOR: This is in response to your request for the views of the Department of Justice concerning the bill (H. R. 2528) to authorize the sale of the Government-owned alcohol butadiene facility at Louisville, Ky., known as plancor 1207.

The bill, which is described as "Plancor 1207 Disposal Act of 1957," would provide the Federal Facilities Corporation (successor to the Rubber Producing Facilities Disposal Commission pursuant to Executive Order 10678 of September 20, 1956) with authority to sell plancor 1207 subject to an existing lease which

expires April 4, 1958. It would also repeal Public Law 433, 84th Congress, with certain exceptions immaterial here, relating to the sale or lease of certain related equipment now located in Baltimore, Md. Plancor 1207 had previously been offered for sale by the Rubber Commission in 1956 pursuant to Public Law 433 but was not disposed of at that time. More recently the Federal Facilities Corporation unsuccessfully attempted to negotiate a long-term lease of this facility.

The measure would also authorize the Corporation to invite proposals and to negotiate with those submitting responses thereto. It would require the Corporation, after consultation with the Attorney General, to submit a report to the Congress containing its disposal recommendations. The report is to contain a statement from the Attorney General advising whether the proposed disposal would tend to create or maintain a situation inconsistent with the antitrust laws. Unless disapproved by either House of Congress the recommended contract of sale is to become effective and transfer of title shall be made within 30 days after the expiration of the existing lease (April 4, 1958).

Section 6 of the bill would require the Corporation before submitting its report to Congress to submit it to the Attorney General who "shall, within 30 days after receiving the report, advise the Corporation whether the proposed sale would tend to create or maintain a situation inconsistent with the antitrust laws." Section 5 of the bill providing for the statement from the Attorney General contains a similar standard. Section 6 would also require the Corporation to consult with the Attorney General throughout the course of the disposal proceedings (1) to secure guidance as to the application of the antitrust standard set forth above and (2) to supply the Attorney General with information requisite for him to provide the advice required.

Section 10 of the bill which would preserve the applicability of section 6 (a), (b), and (c) of Public Law 433, would utilize the standard of "consistency" with the antitrust laws as the standard applicable to the disposal of the catalyst equipment.

Basically H. R. 2528 would eliminate the provisions of the Rubber Producing Facilities Disposal Act of 1953, as amended, requiring disposal of the Louisville plant in a manner which would best foster the development of a free competitive synthetic-rubber industry. In lieu of such standard the bill would authorize disposal in a fashion consistent with the national security and in a manner that would not tend to create or maintain a situation inconsistent with the antitrust laws.

The standard of antitrust advice set forth in sections 5, 6, and 10, i. e., "consistency" with the antitrust laws, is similar to that used in section 207 of the Federal Property and Administrative Services Act of 1949, the act governing disposal of Government properties generally. This standard is desirable from an antitrust point of view since it has proven to be a workable and reasonable one in the application of other Federal property disposals.

The Department of Justice would have no objection to the enactment of the bill. The Bureau of the Budget has advised that there is no objection to the submission of this report.

Sincerely,

WILLIAM P. ROGERS, Deputy Attorney General.

Senator CAPEHART. May I ask this question? What is the difference between the sale that will be made under this proposed bill before us, and the attempted sale under the old bill?

Mr. ROBBINS. The proposed legislation eliminates the language that refers to "best fostering a free competitive synthetic rubber industry." It authorizes the sale of the plant as a general chemical facility with a national security clause that is tied not to synthetic rubber but to the manufacture of any chemical important to the national defense.

Senator CAPEHART. But you are familiar, are you not, with the fact that the original butadiene was made out of grain alcohol? Mr. ROBBINS. Yes.

Senator CAPEHART. It was thought at that time that it would consume tremendous quantities of farm products, meaning of course that