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procedures, with the Secretary of Defense making any requisite statutory determination regarding national security requirements under the National Industrial Reserve Act of 1948, as amended, and with no opportunity for review by the Congress.
This will inevitably necessitate a further delay of weeks or months in disposal with continuing expense to the Government at the rate of nearly $30,000 per month. Only when a sale is finally consummated can the purchaser begin to make plans for additional facilities and any desired conversion of existing facilities. There is little doubt that at least a year would be lost in getting the plant into operation and thereby providing substantial employment. In the opinion of the Corporation, the prospect of such a delay will lessen the interest of prospective bidders who might very well decide to proceed more promptly with other plans.
It will be noted that H. R. 2528 requires a period of 30 days for the receipt of proposals, 30 days for negotiation, 40 days for an opinion of the Attorney General and a report to the Congress, and 30 days for congressional review, a total of 130 days. It is extremely important that this entire program be completed during the current session of Congress. Otherwise, nothing can be done with the plant until sometime in 1958.
Senator DOUGLAS. We thank you very much.
Senator Beall, who is a member of the full committee, but was not able to be here, sent a memorandum. He would like to have a question asked, which I will now read with the understanding that this comes from Senator Beall.
Public Law 433, he states, provided for the sale or lease of certain catalyst equipment in Baltimore, Md. He wants to ask what has been done under this provision.
Mr. SHEEHAN. We have pending a proposal for the purchase of that equipment. We received one proposal, and still have it. We did not act on it, and have not acted on it because it is the only equipment of its type that can produce a special catalyst which is used in the manufacture of alcohol butadiene. The equipment itself is not a complete manufacturing process, but is used in tandem with privately owned facilities at Baltimore.
We have not acted because of the fact that there might be a need, so long as the Louisville plant was confined to the manufacture of alcohol butadine, for more catalyst. The proposal is still pending.
Senator DOUGLAS. You still have the authority to sell or lease this catalyst equipment under Public Law 433 ?
Mr. SHEEHAN. Yes, sir, and the power is retained in the bill which we have before us now.
Senator DOUGLAS. Then that would be only practically effective if the Louisville plant were used for the production of butadiene?
Mr. SHEEHAN. No, we can sell that. We can sell it under existing legislation. Senator DOUGLAS. It could be used for petroleum? Mr. SHEEHAN. For whatever use the purchaser might make.
Senator DOUGLAS. It is not limited to the conversion of alcohol into butadiene?
Mr. SHEEHAN. No.
Senator DOUGLAS. There is one other question which comes up in connection with the letter of Secretary Weeks, the Secretary of Com
merce. We were pushing you, Mr. Robbins, into making the language in section 7 (a) more definite. Now the Secretary of Commerce, Secretary Weeks, apparently wants to have section 7 eliminated completely.
I would like to read the passage on page 2 of the his letter. This is the second paragraph from the top of page 2, which agrees with your general conclusion:
Thus, there appears to be no further need for continued Government ownership of plancor 1207. If idle, its standby maintenance and obsolescence will prove increasingly costly to the Federal Government; if operated, the Government would find it necessary to subsidize its costs of production in order for it to sell its product.
Under these conditions there would be no need with respect to supply requirements for the preemptive provisions contained in section 7. Further, it appears to us that the provisions of section 7 could limit potential purchasers' interest virtually to the vanishing point as the purchaser could not economically make the product for which it is designed and equipped. Yet he could not modify it to produce a feasible product without incorporating in his redesign "equivalent capacity” for any one, or a number of products, the identities of which are not known. The plant as it now stands could not fill this requirement.
So, apparently what Secretary Weeks would like is to have the elimination of section 7 completely.
I wondered if you would give your opinion on that.
Mr. SHEEHAN. I think from a quick reading that I have made of this paragraph, Senator, that perhaps
Senator Douglas. Would you prefer to give your comments later? Mr. SHEEHAN. Yes. I think that will be more satisfactory.
Senator DOUGLAS. Your reply will be inserted in the record at this point. (The information requested follows:)
FEDERAL FACILITIES CORPORATION,
Washington, D. O., March 8, 1957. Memorandum.
At yesterday's hearing the chairman of the subcommittee invited Federal Facilities Corporation to comment with relation to certain statements of the Secretary of Commerce contained in his letter of March 5, 1957, to Senator Fulbright, with respect to section 7 of H. R. 2528.
As we interpret the letter of the Secretary of Commerce, he recommends enactment of H. R. 2528, but sees no need for a national-security clause. The question of the necessity of the inclusion of such a clause, as provided in H. R. 2528, was discussed in detail at yesterday's hearing by representatives of the Office of Defense Mobilization and the Department of Defense, which bear primary responsibility within the executive branch of the Government in such matters.
This Corporation advised the subcommittee yesterday that, in its view, H. R. 2528 as presently drafted provides a workable sales vehicle. However, should the Congress determine to eliminate the national-security clause requirement of the bill, the Corporation is prepared to administer such a modified measure.
HAROLD W. SHEEHAN,
Special Assistant to the Administrator. Senator DOUGLAS. We want to thank you for your patience and courtesy in coming. I think we have had a productive discussion.
We are very glad to hear from you, indeed.
We will recess now until 2:30 this afternoon. Then we have a number of witnesses who are already scheduled to come at 2:30.
In addition, Senator Morse has asked Mr. Marion T. Weatherford, a representative of the Wheat Growers’ Organization of Oregon, to testify.
Is Mr. Weatherford here?
Mr. WEATHERFORD. Thank you.
Dr. BRESSMAN. Yes, sir.
Senator DOUGLAS. Will you come back this afternoon, and both of you will be very welcome indeed to testify.
Dr. BRESSMAN. Thank you.
(Whereupon, at 12:25 p. m. the hearing was recessed until 2:30 p. m. of the same day.)
Senator Douglas. The hour of 2:30 having arrived, the committee will reconvene.
The first witness scheduled for this afternoon is Mr. Arthur Wolf of the Office of Defense Mobilization.
Mr. Wolf, will you give your name and position?
STATEMENT OF ARTHUR WOLF, CHIEF, MATERIALS BRANCH,
OFFICE OF PRODUCTION, OFFICE OF DEFENSE MOBILIZATION
Mr. WOLF. My name is Arthur Wolf, Chief of the Materials Branch in the Office of Production of the Office of Defense Mobilization. I am here at the request of the committee to
Senator Douglas. We have a letter from Mr. Arthur S. Flemming, Director of the Office of Defense Mobilization, under date of March 5. I presume you are acquainted with that letter?
Mr. WOLF. Yes. As a matter of fact, it was my intent to confine my prepared testimony to a reading of this letter to get it into the record if I may.
Senator Douglas. Very good.
EXECUTIVE OFFICE OF THE PRESIDENT,
Washington, March 5, 1957.
Under present conditions, the fulfillment of our full mobilization requirements is not dependent upon continued production of butadiene at the Louisville plant. We believe that the interests of the United States would be better served if the operation of the plant were under private ownership.
We would be in favor of legislation which would make such a disposal possible and believe that the provisions of H. R. 2528 would provide all the safeguards necessary to protect the national interest. It should be pointed out, however, that in section 7 dealing with the national security clause the definition of
"chemical products important to the national security” may well include chemicals for which no new productive capacity or supply is needed for purposes of national defense. Expansion goals under the Defense Production Act may be closed for certain chemicals and the stockpile objectives may be met for others and yet such items would fall within the definition. It is possible, of course, that technological advances and new requirements might in the future require additional capacity for chemicals for which there is now an adequate supply to meet anticipated mobilization needs.
The Bureau of the Budget advises that it has no objection to the submission of this report. Sincerely yours,
ARTHUR S. FLEMMING, Director. Senator Douglas. Mr. Wolf, are you in a position to state whether you favor amendments to section 7---whether your office favors amendments to section 7?
Mr. WOLF. Section 7 as it now is written is perfectly acceptable to us. However, without knowing what amendments are proposed
Senator Douglas. No; but the letter of Director Flemming seems
criticize the wording of section 7, and I wondered if you had any changes which you wanted to suggest.
Mr. WOLF. Well, we believe that the actual recitation—if I may get my copy for a minute
Senator DOUGLAS. You are looking for the report of the House committee?
Mr. WOLF. No; I am looking for a copy of H. R. 2528, which I thought I had in my folder here.
Senator DOUGLAS. Mr. Hale will furnish you one. Article 7.
Mr. WOLF. With regard to section 7, where there are three subdivisions (1) chemicals for which expansion goals have been established, and (2)
Senator DOUGLAS. No. 1 is the list of 68 chemical commodities which we spoke about this morning. (See p. 16.)
Mr. WOLF. Well, the only point I wish to make in that regard is as noted in the letter here. If we had a need for additional capacity of these chemicals which are on the list, presumably the expansion goals would still be open. But since the expansion goals have been closed, the assumption must be made
Senator DOUGLAS. When you say "closed," do you mean fulfilled?
Mr. WOLF. Fulfilled. The assumption must be made that the additional capacity is not necessary for mobilization.
Senator DOUGLAS. Does that mean that the expansion goals for each and all of the 68 chemical commodities have been met?
Mr. WOLF. They have been put it this way, Senator: They have been closed, and in many cases they have been met. In other cases a determination has been made that the holding of the goal in an open status would not necessarily mean additional capacity would be built. In other words, the
Senator DOUGLAS. One of the troubles we have up here is understanding your language. I think it was Talleyrand who said that language was used to conceal thought. Sometimes listening to the talk from the agencies downtown I am convinced that Talleyrand was a good semanticist.
Do I understand that when you say that expansion goals on each and all of these 68 commodities have been closed that either the production requirements have been met or you have decided that you do not need any more plant capacity to produce them?
Mr. WOLF. That is correct.
Senator DOUGLAS. So that for all practical purposes you are full up on section 1?
Mr. WOLF. I am not sure as to what you mean by "section 1.” Do you mean
Senator DOUGLAS. Subsection 1 of section 7 of H. R. 2528.
Mr. WOLF. With regard to subsection 2, the stockpile act, Public Law 520, is a vehicle for acquiring those strategic materials which this country has a need for for mobilization purposes, and it may well be that we have attained the particular goals in chemicals for the stockpile.
Senator DOUGLAS. You say it "may well be.” But have you or have
Mr. WOLF. Well, in the particular chemicals area in which we would assume this
plant to be useful, we have. Senator Douglas. I see. Well, now, we are getting down to cases. So that we have enough produced of items covered under both subsections 1 and 2, or plant in being, to meet potential defense needs? Mr. WOLF. As we now see it that is correct.
Senator DOUGLAS. Then, what need is there for including subsections 1 and 2 in this?
Mr. WOLF. Well, that is the question we were trying to raise in the letter we sent to
Senator Douglas. That is what I was trying to find out from you.
Do you go to the extreme of Secretary Weeks saying that this whole section 7 should be tossed out of the window?
Mr. WOLF. That is a little more difficult to answer, and I will put it this way: We think that there would be a net accretion to our national interest if the capacity of this plant were limited to so-called essential chemicals rather than to the manufacture of
Senator DOUGLAS. What are those essential chemicals?
Mr. WOLF. Well, the criteria could well be a determination as announced in section 3—by the President as to what constitutes a chemical necessary for the national defense.
Senator Douglas. Are you asking us to buy a pig in a poke? Here you have had 1 and 2. I think the President will take his advice from you. Can you dream up some other chemical which is in short supply?
Mr. WOLF. Well, potentially there could well be any number of chemicals which the Department of Defense will in the near future have large demands for. For example, we did have an expansion goal on high-purity oxygen that was established in either 1951 or 1952, one of the goals referred to here. That goal, I think, was closed in 1953 or 1954 or thereabouts. And just recently—as a matter of fact, within the past 30 days—there has been a very new and sudden demand for liquid oxygen, which caused us to establish a new goal on oxygen.
Now, we could not foresee at that time that we would need this new capacity.
Senator CAPEHART. Mr. Chairman, may I ask a question ?