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one we can get our teeth into in a small way. Maybe it is not practical, and I am not saying it is. I just want to explore it.
Senator DOUGLAS. I know you are anxious to resume your testimony, but about an hour ago I requested a letter from the President's Appointed Bipartisan Commission on Increased Industrial Use of Ag. ricultural Products. They are very prompt and very efficient and I have now received a copy of this letter signed by Mr. J. Leroy Welsh, chairman of that Commission, which I should like to read and make a part of the record.
PRESIDENT'S APPOINTED BIPARTISAN COMMISSION
March 7, 1957. Hon. J. W. FULBRIGHT,
United States Senate. DEAR SENATOR: The Commission does have a potential interest in the proposal offered by H. R. 2528.
At this point we cannot define the extent of this interest. However, we have been instructed to report upon the possible uses of alcohol from grain in making synthetic rubber and other products. The Louisville butadiene plant is a major intermediary between alcohol from grain and synthetic rubber. If this plant is ordered to be sold before our report is determined upon, it seems that such action might well foreclose an important outlet which may, in some manner, be needed.
Would it be feasible therefore to defer the decision by the subcommittee until our report can be presented to the Congress later this month? Cordially yours,
J. LEROY WELSH,
Chairman, President's Commission. Senator MORTON. Could I comment on that? Senator DOUGLAS. Certainly.
Senator MORTON. I am in full concurrence with the idea that this plant might be used to eliminate an agricultural surplus. I do point this out: That the legislation before you has the provision that the administration has to come back to this committee before any deal can be transacted. In the meantime they can advertise for bids, and so forth. If the Welsh Commission comes up and says they need this plant, I am sure this committee, with its great interest, which I share, in the welfare of agriculture, can then decide. But we will end up without selling this plant, regardless of this recommendation in any way, unless some prompt action is taken, or unless the legislation is changed. If it is changed we will not know whether the House will concur.
Senator Douglas. I think the question is whether we wish to keep in the restriction concerning the production of butadiene from agricultural products, or whether we wish so to broaden the alternatives as to make it possible to produce a wide variety of chemicals from other basic resources.
Senator MORTON. If I may say this. I point out we are fortunate in that there is a butadiene plant larger than this in a standby position today. I am sure, as the Senator from Indiana knows, having operated in business, anybody would like to get an idle plant into production for the sake of his stockholders. I am sure butadiene facilities can and will be found. As I pointed out, this committee has the right to reject any sale if the Welsh Commission or any other commission can point to a better use of this plant in terms of the total economy.
Senator CAPEHART. I know Mr. Robbins' position, and I know his Department, the Treasury Department, is anxious to get rid of this plant and put it to some good use. I assume you would just as soon have the Congress pass the law and if they want to get into a big fight for the use of new farm products then turn it over to them so you can dispose of it and it is out of your Department. I am sure that is your position.
You feel obligated, as one who is running a plant and losing money at the moment, costing the taxpayers money to operate it, that we ought to do something with it. I know Senator Morton's interest is in getting the plant back in production so a lot of people will be employed.
My interest is in doing all three; getting the plant in production so we will employ a lot of people and getting it off the books of the Government; and, No. 3, to use it, if it is practical, for research and pilot plant purposes in the development of new uses for farm products in industry.
I think we are all trying to arrive at the same place.
Let me ask you this question. If we eliminate the 130-day clause and did not pass this legislation for 60 days, you would not be hurt very much, would you?
Mr. ROBBINS. Senator, to dispose of the plant properly requires a period for the receipt of proposals and a period for negotiation with the bidders and a period for review by the Attorney General, whether it comes back to the Congress for review or not. I think it is very difficult to shorten it up and get the results the Congress would like to have.
Senator CAPEHART. My point is, the law says now you must do all of the things you mentioned and then wait 130 days. Mr. ROBBINS. No; those things are part of it. Senator CAPEHART. That is the total?
Mr. ROBBINS. It is 30 days for proposals, 30 days for negotiation, 40 days for review by the Attorney General and for report, and 30 days for review by Congress.
Senator DOUGLAS. There is one thing that puzzles me. As I understand it from the earlier part of your statement this plant is under lease already to April 1, 1958. I understand it is under lease to the Publicker Co.
Mr. ROBBINS. April 4 I think it is.
Senator DOUGLAS. And any sale would of necessity be subject to that lease?
Mr. ROBBINS. That is right.
Senator DOUGLAS. Therefore, any firm that buys this plant would not be able to take occupancy until after April 4, 1958. In view of that I do not quite see what all of the hurry is about.
Mr. ROBBINS. If you will permit me to go ahead with my statement, it is covered by what follows here.
Senator DOUGLAS. Very good.
Senator CAPEHART. Do we understand then if you sold this plant tomorrow the new purchaser could not move in or do anything with it until 1958?
Mr. ROBBINS. The purchaser could not take possession of the plant until April 4, 1958. But if the contract
Senator CAPEHART. Why the rush then?
Mr. ROBBINS. If the contract of sale were executed and the period required under this bill should run before Congress adjourns, then the sale would be finalized at that time and the purchaser would have 8 months more or less to make engineering plans and to be ready to step in and take over the plant and go right ahead with it on April 4, 1958. If this legislation is not passed, then the lease will run out at the end of
Senator CAPEHART. Suppose we delay passage of this legislation 60 days and then pass it and make the reporting date January 1 next
Mr. ROBBINS. It will run over into 1958 at the best, and what effect that will have on the interest of the prospective purchasers, I do not know.
Senator CAPEHART. You only have to give Congress 30 days notice, do you not?
Mr. ROBBINS. Yes.
Senator CAPEHART. Then if you give them notice by January 1 they can act by February 1, which is 2 months before the lease contract expires.
Mr. ROBBINS. The purchaser will have been delayed by that time at least 6 months in knowing whether he has the plant or not, and knowing whether he can go ahead with plans to utilize it.
Senator DOUGLAS. Would it not be possible for him to make his engineering plans even though the plant was under lease to the Publicker Co.?
Mr. ROBBINS. Certainly, if he knows he is going to get the plant. But if he does know until some time next year, he is not going to spend
Senator Douglas. Union Carbide & Carbon Co. is a rather large company and I would think would have the engineering resources to put some of their people to work on an as-if basis. That is the way we have to proceed in life anyway.
Mr. ROBBINS. Senator, I would like to say again this is not restricted to the Union Carbide Corp.
Senator DOUGLAS. I understand, but they have been the chief bidder aside from the present tenants.
Mr. ROBBINS. They have been up to date, but we have had expressions of interest and inquiries from a number of other companies.
Senator DOUGLAS. Let us say as of this date 1 of the 2 chief bidders for the plant has resources which would enable them to draw up engineering plans. Then the question would be whether Publicker under the terms of its lease could bar them from the plant and whether they would do so. They are scheduled to come up here as witnesses later in these hearings.
Mr. ROBBINS. I do not think any company, regardless of its size and some of these companies interested in the plant are much smaller than Union Carbide-I do not think any company, regardless of its size, is going to spend money on engineering and other plans for the utilization of this plant unless they think they are going to buy it.
Senator Douglas. I may be naive, and I certainly do not have the business experience you do, Mr. Robbins, but I have visited around a good deal in industry and I find that they frequently draw up plans on tentative assumptions. A concern with large engineering staff
and research facilities is doing that all the time. I happen to know some of the work in the field of oil and sulfur and I can say
that some of those companies are reaching out in all directions to find new processes and new products, and so on, on highly conjectural assumptionshighly conjectural.
In this case it would certainly not be highly conjectural but be pinpointed to a specific plant.
Mr. ROBBINS. Yes; but with a great uncertainty as to whether a sale would ever be finalized or not.
Senator Douglas. I have always thought that taking a risk was commonplace in our economic system.
Senator CAPEHART. Was this plant built exclusively to make butadiene out of alcohol?
Mr. ROBBINS. That was the original design of the plant.
Senator CAPEHART. It was designed especially for that purpose and that purpose only?
Mr. ROBBINS. That is right.
Senator CAPEHART. But Union Carbide feels that for $4 million they can convert it into a plant that can make many different kinds of chemical items?
Mr. ROBBINS. That is right. Convert it and enlarge it. Senator Douglas. Or furnish facilities of equivalent capacity elsewhere.
Mr. ROBBINS. That is true, Mr. Chairman, if you think that is a reasonable assumption to make
Senator CAPEHART. Do they agree in the contract they make with you they will keep the plant in Louisville and operate it?
Mr. ROBBINS. That is not required and it has not been required in the disposal of any plants.
Senator CAPEHART. They do not even agree to operate it at all, although the assumption is they would not buy it if they did not intend to operate it?
Mr. ROBBINS. No one in this disposal program has ever done that.
Senator CAPEHART. Then we have no definite assurance Louisville will get employment.
Mr. ROBBINS. We have no definite assurance, Senator, but it seems to me certainly to be entirely reasonable to believe that no company is going to spend the money it will have to spend to acquire the plant, and an additional amount of many that it will spend
Senator CAPEHART. I hope that the Congress will pass the farm research bill in which they have designated no less than $100 million the first year for farm research. I would much prefer to have a big plant in Indiana, but my next preference would be Louisville, and I will settle for Danville, Ill.
Senator DOUGLAS. I am glad you mentioned that because the two greatest corn States in the country are Illinois and Iowa, each of which produce 500 million bushels of corn a year.
Senator CAPEHART. If I cannot get it in Indiana I will settle for Danville, Ill., or Louisville, Ky. You have my thoughts on it. I have not made up my mind on it definitely.
Mr. SHEEHAN. Senator, I would like to go back to a point you expressed interest in, and I think it is of interest also to Senator Cooper. That is the list of chemicals. The idea there is that that shows industry the ranges or the items which would be permitted. The proposals then would have to specify which chemical or chemicals on that list the buyer would propose to manufacture in the plant.
Mr. DOUGLAS. Is that stated in advance? Mr. SHEEHAN. Yes. Then that specific chemical or those specific chemicals would be written into the national-security clause, so there is something tangible there and it is not indefinite.
Senator DOUGLAS. There is one technical point I should like to raise. The present definition in the bill is that the sale of the plant is to be under terms— which will assure the prompt availability of the Louisville plant, or facilities of equivalent capacity * * * On page 2 of your memorandum, next to the bottom of the first paragraph you say: *** have to be maintained for a period of 10 years to produce alcohol butadiene or another chemical important to the national security unless the purchaser with the Government consent substitutes * * * and these two words are underlined*** new separate facilities of equivalent capacity. That is in your memorandum, but it is not in the act as drawn?
Mr. SHEEHAN. That is right, sir.
Senator Douglas. The question I would like to ask is, Do you not think to carry out the intent of the memorandum that at a minimum the language should be redrawn to coincide with the memorandum so it would read "new and separate facilities of equivalent capacity's?
Mr. ROBBINS. There would be no objection on our part to having it done, if it would not delay the passage of the bill.
Senator CAPEHART. It will not delay it anyhow, a little change like that.
Mr. ROBBINS. That is what is intended and that is the interpretation which the Disposal Commission has always given to that phrase, and it has incorporated it in its sales contracts for 26 other plants.
Senator DOUGLAS. We, here on the Hill, would like to have the meaning spelled out in the act so as not to give wide administrative discretion to the administrative authorities. Sometimes you gentlemen downtown think we are unduly suspicious. This is not so, but we believe that legislation should be as specific as possible, and where the intent is clear that we should not be content with mere declarations of purpose on the part of the administrative officials. This is a perennial source of conflict between the legislative and administrative agencies, but I have been led by bitter experience to believe that we should be specific in that.
Mr. ROBBINS. The declaration of purpose can be supplemented by any assurance you would like to have from Federal Facilities Corporation that this clause will be in any contract of sale.
Senator DOUGLAS. Would you like to have it in the act itself?
Mr. ROBBINS. As I say, we have no objection to putting it in the act if it will not delay the passage. That is the only reservation I have.