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grain alcohol could be made from many different products. We got into the synthetic rubber business as you well know, and the petroleum industry came along and spent millions of dollars in developing a method of making butadiene out of petroleum products. Is that a correct statement ?
Mr. ROBBINS. I think it is. I am not certain about the origin of the thing
Senator CAPEHART. Is the Attorney General then taking the position that if you sell this plant and it is no longer available for making butadiene out of grain alcohol, then other than the plant that Koppers has you will
have no facility at all for making butadiene out of grain alcohol or out of alcohol?
Mr. ROBBINS. I do not think it is fair to say that the Attorney General is taking a position on that.
Senator CAPEHART. Then what position is he taking that it is not fostering competition ?
Mr. ROBBINS. Under the terms of this legislation he would be required only to advise that it did not conflict with the antitrust laws.
Senator CAPEHART. Yes. But he advised in his letter against the sale on the ground of the standard set forth in section 3 (c) of the act, section 3 (c) specifically talks about that.
Mr. ROBBINS. That was under a different act, Senator.
Senator CAPEHART. I understand that, but my point is, what has happened now which makes it different?. If the Attorney General was right when he wrote this letter, why is he not still right regardless of the wording of this law? I am looking at it from a practical standpoint now. If he was right on May 23, 1956, then why is not that same set of facts right today!
Mr. ROBBINS. At that time he was governed by the language of the act
Senator CAPEHART. I understand, but as a practical matter-and I will put it this way—are we giving up the idea that we will ever be able to make butadiene out of anything other than petroleum products!
Mr. ROBBINS. There is no restriction. This would not prohibit the manufacture of alcohol butadiene.
Senator CAPEHART. You mean by the person to whom you sold' it?
Mr. ROBBINS. Yes. And it is to be assumed, I think, it might be used for that purpose if the manufacture of butadiene is economically sound.
Senator CAPEHART. But it is not required? The law does not require that it be used for that purpose ?
Mr. ROBBINS. That is right.
Senator CAPEHART. In other words, whoever buys this plant under this bill will be in the same position as anybody else. If they want to they can try to make it out of grain alcohol, or molasses, or petroleum products?
Mr. HOLLAND. That is right.
Senator CAPEHART. They will be in exactly the same position as though you and I, or private enterprise, bought a new plant?
Mr. ROBBINS. That is right.
Senator Douglas. Senator Cooper or Senator Morton, if you have any questions you may feel free to ask them at any time.
Senator COOPER. We talked about this proposed sale a few times. I stated to you, as I stated at the commencement of this hearing, I am not interested at all in the persons involved in the sale or lease, but I have been interested in the effect upon security and upon defense.
I might say to the committee I am not as familiar with the acts and regulations as you are because you have been dealing with these matters over the years.
Senator DOUGLAS. You approach it with a fresh and unconfused mind.
Senator COOPER. It may seem elementary but I would like to get it in the record. Under section 7 of the bill you have defined “chemical products important to the national security," and there are certain criteria upon which that is based. Butadiene is a chemical product essential to national security.
Mr. ROBBINS. Yes. Senator COOPER. Was the plant at Louisville built to produce butadiene by means of the use of alcohol?
Mr. ROBBINS. That was the original plan.
Senator COOPER. Is it ready to produce it, or would it be necessary to make alterations or changes for production?
Mr. ROBBINS. No; it would require no alterations or changes. It would just require a period of getting into operation.
Senator COOPER. What other facilities are there in the country which can produce butadiene from alcohol as a feedstock!
Mr. ROBBINS. From alcohol?
Mr. ROBBINS. The plant at Kobuta, Pa., which was purchased by the Koppers Co. and now kept in standby condition.
Senator COOPER. There is one other plant then?
Senator Douglas. I thought there were originally three plants, and there was another plant at Institute. Is that correct?
Mr. SHEEHAN. If I may, Senator, there was a third plant. It was located at Institute, and it was sold in 1947 by the Government to Union Carbide & Carbon Corp.
Senator DOUGLAS. Do you know what Union Carbide & Carbon Corp. is making now?
Mr. SHEEHAN. I do not know. I know they are not making butadiene.
Senator DOUGLAS. They are not making butadiene?
Senator DOUGLAS. Would you find out and furnish for the record a statement of what they are making ?
Mr. SHEEHAN. If I can get the information, I shall..
(The information referred to follows:)
FEDERAL FACILITIES CORPORATION,
Washington, D. C., March 8, 1957. Memorandum.
This memorandum is submitted in response to the request of the chairman of the subcommittee at yesterday's hearing for information regarding the chemical products manufactured at the alcohol-butadiene plant at Institute, W. Va., which Union Carbide & Carbon Corp. purchased from the Government in 1947. A check of the files of the former Rubber Producing Facilities Disposal Commission discloses that an answer to this question was furnished to the Commission by Union Carbide & Carbon Corp. by letter dated May 18, 1956, in connection with that company's then pending proposal to purchase the Louisville alcohol-butadiene plant pursuant to Public Law 433, 84th Congress, 2d session. This answer formed part of a response to certain information which the Commission, at the request of the Department of Justice, had asked the company to supply, and upon receipt thereof a copy of the company's letter was transmitted on May 21, 1956, to the Honorable Stanley H. Barnes, Assistant Attorney General, Statement 4 of the May 18, 1956, letter explains in some detail the uses to which the Institute plant has been put since its acquisition by Union Carbide in 1947. A copy of this May 18, 1956, letter is enclosed, and we trust that it furnishes satisfactorily the information desired.
HAROLD W. SHEEHAN, Special Assistant to the Administrator.
CABRIDE & CARBON CHEMICALS Co.,
New York, N. Y., May 18, 1956. Mr. HAROLD W. SHEEHAN, General Counsel, Rubber Producing Facilities Disposal Commission,
Washington, D. C. DEAR MR. SHEEHAN: The following statements were prepared in answer to certain questions (list attached) asked by the Attorney General in relation to Carbide's purchase of the Government-owned alcohol-butadiene plant at Louisville, Ky. Statement 1
Union Carbide presently controls no capacity for the production of butadiene from alcohol.
Union Carbide presently controls butadiene from petroleum capacity which can produce 4 percent of current United States capacity for butadiene from petroleum. Statement 2
Since 1952 Union Carbide has produced no butadiene from alcohol,
Since 1952 Union Carbide has produced the following quantities of butadiene from petroleum : Year:
Short tons 1952
15, 756 1953
19, 218 1954.
17, 476 1955_.
27, 798 Statement 3
Union Carbide has no intentions of creating additional butadiene capacity other than that small amount which will result as byproduct in the production of ethylene and propylene in certain new facilities expected to be installed over the next 5 years. Statement 4
(a) The Institute, W. Va., alcohol-butadiene plant was purchased by Union Carbide in 1947 and no alcohol-butadiene has been produced there since that time. By extensive rearrangement of the original equipment and installation (since 1947) of additional facilities, this plant has been converted to the production of a long line of synthetic organic chemicals. These chemicals include butanol, acetic acid, acetic anhydride, ethylene oxide, acrylonitrile and other derivatives of ethylene.
(6) As noted above, the facility at Institute, W. Va., is not producing butadiene. Among the many chemicals being produced at Institute, the only one which is used to a large extent in the synthetic-rubber industry is styrene.
(c) During the next 10 years Union Carbide intends that any expansion in chemical production at Institute will be for chemicals to supplement or expand current production. There are no plans to produce butadiene from alcohol or petroleum. (See statement 3.)
(d) In the event that it would be necessary to effect reconversion of the Institute facilities for the production of butadiene from alcohol, it is estimated that the cost for reconversion would be at least $28 million.
However, such a reconversion would result in the loss of capacity for production of a large volume of chemicals, many of them essential to national security. In the event that Institute were reconverted to the production of butadiene from alcohol, chemicals now being produced at Institute with an annual value of over $100 million would be lost. Loss of volume of such magnitude would be a serious blow not only to Union Carbide, but also to industries depending upon Union Carbide for their requirements of these important materials.
If the above statements do not give you an adequate answer to the Attorney General's questions please do not hesitate to ask us for additional information. Very truly yours,
W. F. REICH, Jr., Executive Vice President. By H. B. MCCLURE,
STATEMENTS REQUIRED BY ATTORNEY GENERAL (1) A statement of the existing capacity for the production of butadiene produced from (a) alcohol, and (b) petroleum presently controlled by Union Carbide.
(2) The annual production in short tons of each petroleum and alcohol butadiene produced by Union Carbide in each year for the years 1952 to 1955, inclusive.
(3) A statement as to Union Carbide's intentions with respect to the expansion of its existing capacity for the production of butadiene other than through the purchase of the Louisville alcohol-butadiene plant.
(4) With respect to the Institute, W. Va. butadiene plant, which was designed for the production of alcohol-butadiene and which was purchased by Union Carbide from the Government in 1947, supply the following:
(a) A statement as to the products produced at this facility since acquisition from the Government, with an indication as to the total volume of butadiene produced.
(b) The present utilization of this facility with particular emphasis on the production of butadiene and/or other uses related to the synthetic rubber industry.
(c) To the extent feasible, an indication as to Union Carbide's intended utilization of this facility during the next 10 years.
(d) In the event it would be necessary to effect reconversion of these facilities for the production of butadiene, we should be supplied with an estimate as to the cost thereof in relation to the tonnage that could be produced.
Senator COOPER. May I ask a few more questions?
Senator Douglas. Certainly. I hope you will excuse me for interrupting.
Senator COOPER. It is all right. I appreciate the help. If this plant should be sold then there will be one plant remaining in the country capable of producing butadiene from alcohol as a feed stock?
Mr. ROBBINS. That is right.
Senator COOPER. You talked about the availability of this plant for production if it should be sold. Does the security clause in this bill differ from the security clauses that have been included in the measures under which other plants have been sold?
Mr. ROBBINS. The security clause in this bill would broaden the field to which the security clause applies. It would apply the security
clause to a list of chemicals important to the national defense. The clause in regard to the other plants sold under the synthetic rubber program required them to be maintained for a period of 10 years for the manufacture of the products which go into synthetic rubber or rubber itself.
Senator COOPER. I want to bring out this point. Under the prior laws and regulations the plant itself had to be maintained for a period of 10 years. Is this not true? I would like to direct the attention of this committee to this although I know they are familiar with it. The provision has been changed in this bill and you do not have to maintain this plant as a facility. Is that not true?
Mr. ROBBINS. As a facility for the manufacture of alcohol butadiene. No, sir.
Senator COOPER. Yes. We are talking now about butadiene manufactured from alcohol, and I am only directing my inquiry to that. Then it is true that the security clause in this bill does represent a change, and if the plant is sold there is no requirement that whoever will have to maintain it so that it will be available for a period of 10 years, or any term of years, to produce butadiene from alcohol. Is that right?
Mr. ROBBINS. That is right, sir.
Senator COOPER. And did not the Defense Department testify on this bill?
Mr. ROBBINS. Yes, sir.
Mr. ROBBINS. The Defense Department directly, and the Office of Defense Mobilization, after conference with the delegate agencies, including the Department of Defense, and after assuring first the Commission and then this corporation at different times within an interval of 6 months that after examining the question fully there was no need to retain this plant for the manufacture of butadiene for mobilization requirements.
Senator COOPER. Senator Capehart just raised this question. I think he raised it in a speech on the floor the other day, too. However, is it not true that the recommendation of the Office of Defense Mobilization was made on the basis that they could look to butadiene in the future produced from a petroleum base and we are not dependent on its production from alcohol?
Mr. ROBBINS. Yes, sir.
Mr. ROBBINS. Senator, there is a witness here from ODM who can answer your questions directly and authoritatively.
Senator COOPER. I am sure I do not know all of the facts upon which that opinion was based. I do point out, and I think you will agree with me, that this bill does represent two changes. One, that ODM has decided that butadiene produced from the foodstock of alcohol is not necessary for defense; and, second, that you have no way at all to insure the maintenance of this plant in Kentucky.
If the purchaser decides that he does not want to operate it he can dispose of it.
Mr. ROBBINS. Well, he is not required to keep that plant in Louisville. But aside from the obvious observation that it is very unlikely