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that anyone would buy the plant with the intention of tearing it down, he would be required to maintain this plant, or equivalent new facilities, for the production of any one of these important chemicals.
Senator COOPER. Does it say "equivalent new facilities,” or just "equivalent capacity”?
Mr. ROBBINS. I think the law says "equivalent capacity,” but that is the same basis which was in the original disposal provision. The Commission always interpreted that to mean new facilities and not existing facilities, and that clause was incorporated in all of the contracts of sale the Commission entered into.
Senator Douglas. The precise wording of that clause on page 7 of the act, lines 7 and 8, reads: which will assure the prompt availability of the Louisville plant, or facilities of equivalent capacity
Senator COOPER. Is there not a distinction between "equivalent capacity” and “equivalent new capacity”? If Union Carbide should buy this plant and now possessed equivalent capacity, and then decided it wanted to close this plant, would not the provisions of section 7 be fulfilled ?
Mr. ROBBINS. No. As I tried to explain, Senator, the interpretation of that identical provision in the original Disposal Act by the Commission in its negotiations was that that clause implied new facilities, and not existing facilities.
Senator COOPER. Have you written it into the contract?
Mr. SHEEHAN. And it was so written in the Union Carbide contract which the Attorney General disapproved of last year; and it was so provided in the form of lease we were negotiating last fall. New capacity. They cannot substitute something they already own the day they buy the plant.
Senator DOUGLAS. As I understand it, the clause in the contract of last year was one which required the production of butadiene and, therefore, the term “facilities of equivalent capacity” meant facilities of equivalent capacity in the production of butadiene.
Mr. SHEEHAN. That is true. Senator DOUGLAS. Am I correct in that? Mr. SHEEHAN. Yes, sir. Senator Douglas. But now you have a list of 69 chemicals—plus, which can be taken as alternatives, and I am a little uncertain as to how you can get that reduced, to reduce this long list of alternative chemicals to equivalent capacity with butadiene. I will just read a few of them.
Acetic acid; acetone; adipic acid; adiponitrile; aniline; anthraquinone vat dyes (single strength basis); argon; benzene hexachloride (lindane) 99 percent or more gamma isomer content; butadiene. Butadiene shows up as one of them.
Benzene hexachloride (technical grade); calcium carbide; carbon, activated (water purification and decolorizing grade); carbon black; carbon tetrachloride; chlorine; cyclohexane; DDT.
How can you equate DDT with rubber? I think my Division, during the war, was one of the first to use DDT. However, I think this
is a problem of comparing horses and apples. How many apples equal a horse? I have had some experience with index numbers, but I would say this would be extremely difficult to do.
Mr. ROBBINS. Mr. Chairman, this bill does not tie the requirement into the production of rubber.
Senator DOUGLAS. Exactly so. And, therefore, I want to know in regard to facilities of equivalent capacity, what meaning does that have? Suppose you produce in other plants DDT and that is on the list of 69 chemicals.
Senator COOPER. There are some misapprehensions about this bill, and whatever the committee does I wanted these things to be in the record. I think, Mr. Robbins, from this questioning of the chairman, and all of those here, that you have to agree first that if this plant is sold there is no provision at all which would require the purchaser to maintain this plant in Louisville, which a lot of people in Louisville think it does.
Secondly, there is no provision which will require that the present capacity in the United States for the production of butadiene from alcohol feedstock shall be maintained. What is the capacity of this plant?
Mr. ROBBINS. 60,000 tons.
Senator COOPER. Is it not true that if you sell it and the purchaser wanted, as Chairman Douglas said, to close it down, or sell it, he could build a plant to produce some other chemical and satisfy the provisions of this act?
Mr. ROBBINS. Only with the Government's approval.
Mr. ROBBINS. In the original bill there was no requirement that the purchaser of the plant maintain it in Louisville.
Senator COOPER. I see.
Mr. ROBBINS. He was required to maintain that plant or equivalent new facilities at wherever that might be.
Senator COOPER. But from the standpoint of national security he was required to maintain an equivalent capacity to produce butadiene.
Mr. ROBBINS. Yes.
Senator COOPER. One other thing and then I will close and thank the chairman of the committee. I think Senator Capehart brought out this point, and again it is a matter for the committee. The Attorney General, when this matter was first considered, would not approve it as an antitrust matter, and you have written into this bill and changed this bill in order to permit its approval by the Congress without the prior approval of the Attorney General. Is that true?
Mr. ROBBINS. Senator, the Attorney General did not object to the bill on antitrust grounds. I think that is made perfectly clear in the Deputy Attorney General's statement.
Senator CAPEHART. What did he object to?
Mr. ROBBINS. He was required to determine that the sale of this plant would best foster a free competitive synthetic rubber industry.
Senator CAPEHART. That is right.
Mr. ROBBINS. It was not that he objected to anything, but that was a requirement he had to meet.
Senator CAPEHART. He said, if you eliminate this plant from the manufacture of butadiene out of alcohol you will no longer have a free competitive industry in butadiene.
Mr. ROBBINS. No. His statement did not go that far. He only said he could not go far enough to say that the sale would best foster it.
Senator CAPEHART, Let me read what he said. 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.
Now let me read section 3 (c):
From the time of its appointment and throughout the course of the performance of its duties the Commission shall consult and advise with the Attorney General in order (1) to secure guidance as to the type of disposal program which would best foster the development of a free competitive synthetic rubber industry; and (2) supply the Attorney General with such information as he may require to enable him to * *
And so forth. Under this he had to do it. It says:
* * * to secure guidance as to the type of disposal program which would best foster the development of a free competitive synthetic rubber industry. The only part of the rubber industry that these people were producing in was the butadiene end of it, and they were using the butadiene plant to produce butadiene from grain alcohol.
He certainly meant to say, if you eliminate this plant-you said a moment ago there is still one left in Pensylvania-you are eliminating competition between grain alcohol butadiene and petroleum butadiene. Is that not what he was saying?
Mr. ROBBINS. No.
Senator MORTON. Will the Senator yield at that point? I think it is some time since the Attorney General wrote this letter. At the time he wrote the letter the plant was in operation making alcohol butadiene. He said, to transfer it from one company to another, or one group to another—to transfer a facility producing alcohol butadiene would not foster the development of competition, or whatever words you want to use, in the synthetic rubber industry. Now you have an entirely different situation. You have a closed plant.
Senator CAPEHART. Are you sure that the day he wrote this letter this plant was making it, on the 23d of May, 1956 ?
Senator MORTON. Yes, sir. I have seen the smoke coming out of the stacks.
Senator CAPEHART. You might have seene smoke coming out of the stacks
Senator MORTON. They were making butadiene, because at the time this came up the employees of the plant came to me and asked me to urge the Attorney General to turn this down because they said, “We are working, and we do not know what will happen if this is sold.”
Senator CAPEHART. Then it is a fact they were producing butadiene?
Senator MORTON. They were producing. You have a difference here. It is also significant that there was no bid for this plant. Here was a property that cost the Governmenet $30 million, and in the
original act when it had to be sold as an alcohol butadiene plant nobody was even interested in it.
Senator CAPEHART. I had better make myself clear so you will understand my questioning throughout these hearings. I have not made up my mind definitely on this matter, but I tell you that one of my chief interests in this is simply that of protecting or trying to do something for the American farmer. Here we have a case where the manufacture of butadiene started out originally using agricultural products. There were 6 million farmers, with nobody to represent them in the way of research, etc.
The oil industry, which is a tremendous industry, and thank God it is, with many advantages from a tax standpoint, spent millions and millions of dollars and developed petroleum butadiene,
We are trying to solve the farm problem in this country as regards the surpluses. One way you can do that is to find new industrial uses for farm products and new markets. This was a market that we farmers thought we were going to have originally because if all synthetic rubber was made out of butadiene from grain alcohol it had been estimated that it would consume something like nearly 1 billion bushels of grain a year.
At the moment I have a bill pending in the Senate, in which some 40 other Senators joined with me, to spend $100 million in research, and through pilot plants, and so forth, to find new industrial uses for farm products and new markets. The Senate last year, and the Congress, passed a resolution setting up a commission to study this problem. That commission is in the process of doing that now and will make a report in about 30 days. The bill I introduced calls for the building of pilot plants and doing whatever is necessary to find new uses for farm products.
It ran through my mind, can this plant in Louisville be used as a part of a new program to be passed by Congress to do a lot of research in behalf of the wider use of farm products. Ought we to keep at least one plant available to see if we cannot reduce the cost of making butadiene out of products made from grain? That is my interest in this and I have not as yet made up my mind on it.
I can say I am very unhappy with the progress we are making in solving the farm problem. I am wondering if the time has not come when some of us should start representing the farmers and farm products rather than eliminating the farmer entirely from these markets. I say that because industry is spending millions and millions of dollars to find new products that they can use, or new materials that they can use in order to get away from using farm products. Here is a case where we are spending at least $4 billion of this $5 billion, more or less, subsidizing farmers and paying farmers for not growing things, and the soil bank is paying them for this and that and the other thing. Yet I am not advocating it because I will never advocate something which is not practical and economically sound.
Still, on the other hand, if you wanted to make all synthetic rubber out of grain alcohol, you could possibly use 1 billion bushels of grain a year, or its equivalent in farm products. That would be much cheaper than the $4 billion we are spending this year to help the farmer, and probably would solve that problem better because it would ake it out of the realm of Government assistance.
That is my interest in this and I just wonder if there is some merit in what Senator Curtis recommends that we delay any action on this matter to see what the President's Commission is going to come up with. _As I envision this I want to keep this plant for Louisville, because Louisville employs people in Indiana. However, if we can get a big plant in Louisville and use that plant as a nucleus for testing a lot of things in addition to butadiene, that would be very helpful. This research is going to require pilot plants to prove the practicability of the things we find out through research.
So I am just wondering. It might be well if we take the 130-day clause out of this bill and pass this bill maybe 60 days from now, before we go home. That is my interest in it and that will be my line of thinking all the way through on this whole business.
Mr. ROBBINS. May I say, Senator, there is a witness here from the Department of Agriculture who can comment on some of the things you have brought up.
Senator CAPEHART. Yes.
Mr. ROBBINS. This plant is not, in my opinion, well adapted to research, and it is not a pilot plant. It is a large commercial operation.
Senator CAPEHART. Will you yield for 1 moment? Here is a plant that cost $31 million and you are going to sell it for $3,500,000. If we get into research, which I think every Senator is interested in, and I think the President's Commission is going to recommend that the Government get into a lot of research and build pilot plants trying to prove the practicability of using farm products in industry, then they will possibly be coming up here for appropriations to build a $25 million plant some place.
You say that the people to whom you are going to sell this are going to convert it into making other chemicals, and that will cost $4 million. It might well be that we will be selling here for $372 million something that the Congress may be appropriating money for before the year is over to be used for research on farm products. We will have to go right out and duplicate partially what has been done at a cost of millions and millions of dollars.
That is just my thinking on the thing.
Mr. ROBBINS. I should like to have the Department of Agriculture testify as to whether this is adaptable for use as a laboratory for research, or as a pilot plant.
Senator CAPEHART. You say the people you are going to sell it to are able to convert it into making some other sort of chemical product.
Mr. ROBBINS. Yes.
Senator CAPEHART. This research we are talking about doing for the farmers is research in finding new uses for farm products in industry. It covers using farm products to make paper and a thousand and one other things. It would seem to me as though at least the buildings themselves could be converted into that purpose, even if the machinery could not be converted. You can use the skeleton. You can take the machinery out and leave the walls and roof and floors.
Mr. ROBBINS. If you have ever seen the plant I think you will agree it is not well adapted to a pilot plant.
Senator CAPEHART. I am not saying I am right and you are wrong, but I wanted to give you my interest in this. My line of questioning will be based upon trying to find a permanent solution to the farm problem by finding new uses for farm products by industry. Here is