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Si• LPN IATIONAL STOCKPILE DISPOSAL BILLS

GOVERNMEN'i

Storage KSU LIBRARIES 

HEARING

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON ARMED SERVICES

UNITED STATES SENATE

EIGHTY-NINTH CONGRESS

FIRST SESSION

ON

H.R. 6852

DISPOSAL OF ABACA

H.R. 9047

RELEASE OF ZINC

H.R. 10516

DISPOSAL OF VEGETABLE TANNIN EXTRACTS

H.R. 10714

DISPOSAL OF COLEMANITE

H.R. 10715

DISPOSAL OF CHEMICAL GRADE CHROMITE

H.R. 10748

TRANSFER OF COPPER FROM THE NATIONAL STOCKPILE TO THE

BUREAU OF THE MINT

H.J. Res. 330

DISPOSAL OF CHROMIUM METAL, ACID GRADE FLUORSPAR,

AND SILICON CARBIDE

SEPTEMBER 22, 1965

Printed for the use of the Committee on Armed Services

U.S. GOVERNMENT PRINTING OFFICE

F5-E8 WASHINGTON: 1965

vs‘
COMMITTEE ON ARMED SERVICES

RICHARD

JOHN STENNIS, Mississippi

HARRY FLOOD BYRD, Virginia

STUART SYMINGTON, Missouri

HENRY M. JACKSON, Washington

SA1VI.J. ERVIN, JR., North Carolina

HOWARD W. CANNON, Nevada

ROBERT C. BYRD, West Virginia

STEPHEN M. YOUNG, Ohio

DANIEL K. INOUYE', Hawaii

THOMAS J. McINTYRE, New Hampshire

DANIEL B. BREWSTER, Maryland

WILLIAM H. DARDEN, Chief of Staff

CHARLES B. KIRBOW, Chief Clerk

B. RUSSELL, Georgia, Chairman

LEVERETT SALTONSTALL, Massachusetts'

MARGARET CHASE SMITH, Maine

STROM THURMOND, South Carolina

JACK MILLER, Iowa

JOHN G. TOWER, Texas

SUBCOMMITTEE ON THE NATIONAL STOCKPILE AND NAVAL PETROLEUM RESERVES

STUART SYMINGTON, Missouri, Chairman

HOWARD W. CANNON, Nevada JACK MILLER, Iowa

STEPHEN M. YOUNG, Ohio JOHN 0. TOWER, Texas

DANIEL K. INOUYE, Hawaii

WILLIAM H. DARDEN, Chief of Staff

II
CONTENTS

Statements of Maurice J. Connell, Commissioner of Defense Materials

Service, General Services Administration, on the following bills: Page

H.R. 6852 8

H.R. 9047 10 H.R. 10516 2

H.R. 10714 3

H.R. 10715 4

H.R. 10748 6

H.J. Res. 330 7

III

NATIONAL STOCKPILE DISPOSAL BILLS

WEDNESDAY, SEPTEMBER 22, 1965

U.S. SENATE, SUBCOMMITTEE ON THE NATIONAL

STOCKPILE AND NAVAL PETROLEUM RESERVES OF

THE COMMITTEE ON ARMED SERVICES,

Washington, D.C.

The National Stockpile Subcommittee (composed of Senators

Symington (chairman), Cannon, Young of Ohio, Inouye, Miller, and

Tower) appointed to hold such meetings and briefings as are necessary

to maintain familiarity with the operation of the program for the

stockpiling of strategic and critical materials necessary for the common

defense, met, pursuant to notice, in room 212, Old Senate Office

Building, at 10 a.m.

Present: Senators Symington and Inouye.

Also present: William H. Darden, chief of staff, and H. S. Atkinson,

assistant chief clerk.

Senator SYMINGTON. The committee will come to order.

The subcommittee is meeting this morning to consider seven

House-passed measures authorizing disposal of materials from the

national stockpile or the supplemental stockpile. Almost all these

bills appear to be noncontroversial. The Chair hopes that our meeting may be as brief as is consistent with the disclosure of full information covering the disposals.

The witness on these disposals is Mr. Maurice J. Connell, Commissioner of Defense Materials Service, General Services Administration.

Mr. Connell, we will ask you to cover each of the seven bills in the

order that you select. Members of the subcommittee may have

questions as you move from one subject to the next. Will you please

move up here and you may proceed with your presentation.

STATEMENT OF MAURICE J. CONNELL, COMMISSIONER OF

DEFENSE MATERIALS SERVICE, GENERAL SERVICE ADMINISTRATION; ACCOMPANIED BY JOHN HARLAN, DEPUTY COMMISSIONER

Mr. CONNELL. As you have already observed I have the Deputy

Commissioner, Mr. John Harlan, with me. We have formal statements for each of these bills but we have them summarized and I

would suggest, if it is all right with the Chair, to consider them in

summary form, and submit the formal statements for the record.

1
2 NATIONAL STOCKPILE DISPOSAL BILLS

H.R. 10516

Senator SYMINGTON. We will now take up H.R. 10516.

Mr. CONNELL. The first bill we would like to comment on is H.R.

10516, vegetable tannins, 15,000 long tons of chestnut, 111,457 long

tons of quebracho, and 23,962 long tons of wattle.

These are long-term programs, which we would like to start as soon

as possible. We have disposed of prior tannin surpluses very successfully in the past under Government-use programs. These were with

the old Quartermaster General—now the Defense Supply Agency.

We also have sold tannins "off-the-shelf." We would continue these

sales methods on the surpluses covered by H.R. 10516. We strongly

favor enactment of H.R. 10516.

(H.R. 10516 follows:)

[H.R. 10516, 89th Cong., 1st sess.]

AN ACT Authorizing the disposal of vegetable tannin extracts from the national stockpile

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That the Administrator of General Services is

hereby authorized to dispose of approximately the following quantities of vegetable

tannin extracts now held in the national stockpile: fifteen thousand long tons of

chestnut, one hundred eleven thousand four hundred and fifty-seven long tons

of quebracho, and twenty-three thousand nine hundred and sixty-two long tons

of wattle. Such disposal may be made without regard to the provisions of

section 3(e) of the Strategic and Critical Materials Stock Piling Act (50 U.S.C.

98b(e)) that no disposition of materials held in the national stockpile shall be

made prior to the expiration of six months after the publication in the Federal

Register and the transmission to the Congress and to the Armed Services Committee of each House thereof of the notice of the proposed disposition.

Passed the House of Representatives September 20, 1965.

Attest:

RALPH R. ROBERTS, Clerk.

(The prepared statement of Mr. Connell follows:)

Mr. Chairman and members of the subcommittee, I am Maurice J. Connell,

Commissioner, Defense Materials Service of the General Services Administration.

I have with me Mr. John G. Harlan, Jr., Deputy Commissioner, and other staff

members of GSA who are knowledgeable regarding the Government's vegetable

tannin extract disposal program.

On behalf of the Administrator, Mr. Lawson B. Knott, Jr., who asked me to

represent him at the hearings this morning, I want to thank you for the privilege

of appearing before your subcommittee to express the views of the General

Services Administration on H.R. 10516, a bill which would authorize the sale of

the excesses of three vegetable tannin extracts from the national stockpile and

would waive the 6-month waiting period prescribed by the Stock Piling Act.

General Services Administration has prepared long-range disposal plans for

approximately 15,000 long tons of chestnut tannin extract, approximately 111,457

long tons of quebracho tannin extract, and approximately 23,962 long tons of

wattle tannin extract, which represent the total excess quantities.

The other departments and agencies of the Government concerned with the

proposed disposal were consulted and each has concurred in the plan. Affected

sources in industry have also been consulted.

Chestnut, quebracho, and wattle extracts are used in the tanning of hides and

skins. Quebracho is also used as an additive for controlling the viscosity of oil

well drilling muds.

There is no U.S. production of vegetable tannins. Chestnut extract comes

from Italy and France. Quebracho extract comes from Argentina and Paraguay.

Wattle extract comes mainly from Africa.

General Services Administration has had some experience in the sale of all

three of these vegetaple tannin extracts. Under prior congressional actions, a

total of 15,618 long tons, consisting of 12,895 long tons of chestnut, 2,100 long tons

of quebracho, and 623 long tons of wattle, was authorized. As of August 31,

1965, only 3,544 tons of this material, all of which is chestnut extract, remain
NATIONAL STOCKPILE DISPOSAL BILLS 3

unsold. Disposals have been made both by direct commercial sale and under

Government use programs worked out by General Services Administration and

the Department of Defense.

Upon approval of H.R. 10516, we propose to continue existing sales methods

on the additional quantities of vegetable tannins which would become available

for sale.

Commercial supplies of chestnut have been temporarily interrupted due to

'conversion of production facilities in Italy and France. Therefore, no disposal

rate is being established now for chestnut extract pending the time when normal

supplies become available from usual production sources. The quantities of

•chestnut to be made available for disposal will be consistent with market requirements.

For the first disposal year, the rate for quebracho has been established at 3,000

long tons, and that for wattle at 1,500 long tons.

The rates of disposal in subsequent years will be determined after an evaluation

of prior sales and prevailing market conditions, in consultation with other governments which may be affected, and industry.

General Services Administration recommends enactment of H.R. 10516.

This concludes my prepared statement, Mr. Chairman. However, if you or

members of your subcommittee have any questions you may wish to ask, we

shall be happy to answer them at this time or furnish the desired information for

the record.

(In executive session on September 23 the full committee voted to

report H.R. 10516 without amendment, as covered by S. Rept. 778.)

H.R. 10714

Senator SYMINGTON. What is the next bill?

Mr. CONNELL. The next one is H.R. 10714, 67,600 long dry tons of

colemanite. This is a boron-bearing material acquired by the

Commodity Credit Corporation through barter of surplus agricultural products and placed into the supplemental stockpile. We will

have to develop markets for the material and will work closely with

industry in all phases of the program. We strongly recommend passage of H.R. 10714.

(H.R. 10714 f ollows :)

[H.R. 10714, 89th Cong., 1st sess.]

AN ACT To authorize the disposal of colemanite from the supplemental stockpile

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That the Administrator of General Services is

hereby authorized to dispose of, by negotiation or otherwise, approximately

sixty-seven thousand six hundred long dry tons (gross weight) of colemanite now

held in the supplemental stockpile established pursuant to section 104(b) of the

Agricultural Trade Development and Assistance Act of 1954, as amended (7

U.S.C. 1704(b)). Such disposition may be made without regard to the provisions

of section 3 of the Strategic and Critical Materials Stock Piling Act (50 U.S.C.

08b): Provided, That the time and method of disposition shall be fixed with due

regard to the protection of the United States against avoidable loss and the protection of producers, processors, and consumers against avoidable disruption of

their usual markets.

Passed the House of Representatives September 20, 1965.

Attest:

RALPH R. ROBERTS, Clerk.

(The prepared statement of Mr. Connell follows:)

Mr. Chairman and members of the subcommittee, I am Maurice J. Connell,

Commissioner, Defense Materials Service of the General Services Administration.

I have with me Mr. John G. Harlan, Jr., Deputy Commissioner, and other staff

members of GSA who are knowledgeable regarding the Government's colemanite

disposal program.
4 NATIONAL STOCKPILE DISPOSAL BILLS

On behalf of the Administrator, Mr. Lawson B. Knott, Jr., who asked me to

represent him at the hearings this morning, I want to thank you for the privilege

of appearing before your subcommittee to express the views of the General Services Administration on H.R. 10714, a bill "To authorize the disposal of approximately 67,600 long dry tons (gross weight) of colemanite now held in the supplemental stockpile.'

A stockpile objective never was established for colemanite (calcium borate).

It was acquired through barter of surplus agricultural products and placed in the

supplemental stockpile under the authority of section 206 of the Agricultural Act

of 1956, as amended. General Services Administration has prepared a long-range

disposal plan for the 67,600 tons of colemanite. The other departments and

agencies of the Government concerned with the proposed disposal were consulted

and each has concurred in the plan. Affected sources in industry have also been

consulted.

Only in Turkey is there important production of colemanite (calcium borate).

U.S. mine production of colemanite supplies less than 1 percent of the total boron

minerals produced domestically. The boron needs of the United States are now

supplied mainly by kernite, a sodium salt of boron.

There are three known possibilities for domestic use of colemanite: as a fertilizer additive (subject to increased demand by farmers), in the production of

fiberglass (subject to improvement in technology), and for boric acid production

(subject to construction of facilities designed for the use of colemanite). Small

quantities may also be utilized for industrial research and development purposes

as well as for testing. It appears that even under favorable marketing conditions

the rate of sale for this use may be less than 5,000 long dry tons per year.

Since U.S. industry is geared to the use of more easily processed kernite, the

disposal of the colemanite will depend upon future development of markets for

this material. For this reason, the long-range program must be kept flexible in

order to adjust to future developments. Before an initial release, consultation

with interested industries and others will take place. The rate and conditions of

sale will be determined by GSA in consultation with the executive agencies

concerned and with industry and foreign governments.

The General Services Administration recommends enactment of H.R. 10714.

This concludes my prepared statement, Mr. Chairman. 

However, 

if you or

members of your subcommittee have any questions you may wish to ask, we shall

be happy to answer them at this time or furnish the desired information for the

record.

(In executive session on Sept. 23 the full committee voted to report

H.R. 10714, without amendment, as covered by S. Rept. 777.)

H.R. 10715

Senator SYMINGTON. We will next take up H.R. 10715.

Mr. CONNELL. H.R. 10715; 659,100 short tons of chemical grade

chromite.

This is an ore which is principally used to obtain chrome for plating.

The ore proposed for sale was also acquired through CCC barter and

is in the supplemental stockpile. This is also a long-term program

which we would like to start as soon as possible. GSA strongly

recommends passage of H.R. 10715.

(H.R. 10715 follows:)

[H.R. 10715, 89th Cong., 1st sess.]

AN ACT To authorize the disposal of chemical grade chromite from the supplemental stockpile

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That the Administrator of General Services is

hereby authorized to dispose of, by negotiation or otherwise, approximately six

hundred and fifty-nine thousand one hundred short tons of chemical grade

chromite now held in the supplemental stockpile established pursuant to section

104(b) of the Agricultural Trade Development and Assistance Act of 1954, as

amended (7 U.S.C. 1704(b)). Such disposition may be made without regard to

the provisions of section 3 of the Strategic and Critical Materials Stock Piling

Act (50 U.S.C. 98b): Provided, That the time and method of disposition shall
NATIONAL STOCKPILE DISPOSAL BILLS 5

be fixed with due regard to the protection of the United States against avoidable

loss and the protection of producers, processors, and consumers against avoidable

disruption of their usual markets.

Passed the House of Representatives September 20, 1965.

Attest:

RALPH R. ROBERTS, Clerk.

(The prepared statement of Mr. Connell follows:)

Mr. Chairman and members of the subcommittee, I am Maurice J. Connell,

Commissioner, Defense Materials Service of the General Services Administration.

I have with me Mr. John G. Harlan, Jr., Deputy Commissioner, and other staff

members of GSA who are knowledgeable regarding the Government's chromite

program.

On behalf of the Administrator, Mr. Lawson B. Knott, Jr., who asked me to

represent him at the hearings this morning, I want to thank you for the privilege

of appearing before your subcommittee to express the views of the General

Services Administration on H.R. 10715, a bill to authorize the disposal of approximately 659,100 short tons of chemical grade chromite now held in the supplemental

stockpile, but not needed for stockpile purposes.

General Services Administration has prepared a long-range disposal plan on

the 659,100 short tons of chromite. The other departments and agencies of the

Government concerned with the proposed disposal were consulted and each has

concurred in the plan. Consultations were held with the South African Government and with industry.

There is no U.S. production of chemical grade chromite. It is exclusively a

South African ore insofar as the domestic chemical industry is concerned.

Production of the South African ore in 1960 was estimated at 510,000 short

tons, and it has grown steadily to an estimated 650,000 short tons.

The ore is converted into sodium bichromate, from which other chrome chemicals are derived. These chemicals are used in a wide variety of applications, the

principal ones being plating and anodizing for metal protection. Other applications include paint pigments, the tanning of leather, and miscellaneous uses in

the textile and chemical industries.

U.S. consumption for all uses is believed to be on the order of 265,000 short

tons annually.

Under the provisions of the long-range program developed by GSA, disposals

will start at an annual rate of approximately 20,000 short tons for the first disposal

year. Succeeding offers after the initial offering will be made at intervals and in

quantities to be determined after a careful evaluation of the experience with preceding offers. The program will be under continuing review and will be subject

to change should market conditions warrant.

The General Services Administration recommends enactment of H.R. 10715.

This concludes my prepared statement, Mr. Chairman. However, if you or

members of your subcommittee have any questions you may wish to ask, we shall

be happy to answer them at this time or furnish the desired information for the

record.

(In executive session on September 23 the full committee voted to

report H.R. 10715 ,without amendment, as covered by S. Rept. 776.)

H.R. 10748

Senator SYMINGTON. We will next take up H.R. 10748.

Mr. CONNELL. H.R. 10748; 110,000 short tons of copper. The

new coinage program of the mint places heavy demands on copper.

It is fortunate that we have this surplus to take care of the mint for

the next few years, otherwise they would have to compete with industry for supplies in an already tight market. We will transfer the copper to the mint at current market prices for simil

We strongly favor the enactment of H.R. 1074 4611'

(H.R. 10748 follows:)

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55-188-65 2

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6 NATIONAL STOCKPILE DISPOSAL BILLS

[H.R. 10748, 89th Cong., 1st sess.]

AN ACT To authorize the transfer of copper from the national stockpile to the Bureau of the Mint

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That the Administrator of General Services is

hereby authorized to transfer to the Bureau of the Mint approximately one hundred ten thousand short tons of copper now held in the national stockpile. Such

transfer may be made without regard to the provision of section 3(e) of the Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98b(e)) that no disposition of materials held in the national stockpile shall be made prior to the expiration

of six months after the publication in the Federal Register and the transmission

to the Congress and to the Armed Services Committee of each House thereof of

the notice of the proposed disposition required by said section 3(e).

Passed the House of Representatives September 20, 1965.

At-test:

RALPH R. ROBERTS, Clerk.

(The prepared statement of Mr. Connell follows:)

Mr. Chairman and members of the subcommittee, I am Maurice J. Connell,

Commissioner, Defense Materials Service, General Services Administration. I

have with me Mr. John G. Harlan, Jr., Deputy Commissioner, and other staff

members of GSA who are knowledgeable concerning the Government's stockpile

program.

On behalf of the Administrator, Mr. Lawson B. Knott, Jr., who asked me to

represent him at the hearings this morning, I want to thank you for the opportunity to appear before your subcommittee for the purpose of expressing the

views of GSA on H.R. 10748.

This legislation would, as you know, authorize the proposed transfer by GSA

of approximately 110,000 short tons of copper from the national stockpile to the

Bureau of the Mint. GSA strongly urges approval of H.R. 10748.

The stockpile objective for copper established by the Office of Emergency

Planning is 775,000 short tons. The present inventory of copper exceeds this

objective by approximately 156,000 short tons of copper.

The particular material which will be made available from the stockpile under

this disposal legislation must be further refined before it can be used for coinage

purposes. This will take some time and the material should be made available

as soon as possible so that the necessary refining may proceed.

Therefore, the legislation waives the 6-month waiting period described in

section 3(e) of the Stock Piling Act.

The copper requirements of the mint have been heavy in recent years. Until

now the bulk of these requirements has been satisfied from excesses contained in

the Defense Production Act inventory maintained by GSA. However, all the

material remaining in the latter inventory has now been committed for mint use,

and an additional 110,000 short tons are needed to meet planned requirements

of the mint. The transfer would be made at fair market value.

Satisfaction of the mint requirements for copper from stockpile excesses is in

the Government interests since it not only avoids dollar disbursement by the

Government; as a whole, of approximately $80 million, but also results in an

ultimate savings in storage and maintenance costs.

Use of the Government material for this purpose will also avoid pressures upon

already strained industry supply lines. Because of short supply in our copper

industry, and to avoid plant shutdowns in a vital segment of our national economy,

the Congress, through Public Law 89-9, authorized the disposal of 100,000 tons

of copper from the stockpile. The satisfaction of mint copper needs from the

additional stockpile surplus would eliminate any possibility of negation of the

intent of the Congress in the passage of Public Law 89-9 through any heavy new

demands for copper made upon commercial markets by the mint.

This concludes my prepared statement, Mr. Chairman. 

However, 

if you or

members of your subcommittee have any questions you may wish to ask, we shall

be happy to answer them at this time or furnish the desired information for the

record.

(In executive session on September 23, the.full committee voted to

report H.R. 10748, without amendment, as covered by S. Rept. 775.)
NATIONAL STOCKPILE DISPOSAL BILLS

H.J. RES. 330

7

Senator SYMINGTON. We will now take up House Joint Resolution

330.

Mr. CONNELL. House Joint Resolution 330. This resolution covers

33,552 pounds of chromium metal, 4,548 short dry tons of acid grade

flourspar, and 56 short tons of silicon carbide. These also were

acquired through CCC barter, and are in the supplemental stockpile.

Each represents only a small part of similar specification-grade

material which we carry in the stockpile. The resolution is designed

to clear the stockpile of these small excesses of offgrade materials.

GSA strongly favors the passage of House Joint Resolution 330.

(H.J. Res. 330 follows:)

[H.J. RES. 330, 89th Cong., 1st sess.]

JOINT RESOLUTION To authorize the disposal of chromium metal, acid grade fluorspar, and silicon

carbide from the supplemental stockpile

Resolved by the Senate and House of Representatives of the United States of America

in Congress assembled, That the Administrator of General Services is hereby

authorized to dispose of, by negotiation or otherwise, the following materials,

in approximately the following quantities, now held in the supplemental stockpile

established pursuant to section 104(b) of the Agricultural Trade Development

and Assistance Act of 1954, as amended (7 U.S.C. 1704(b)):

(1) thirty-three thousand five hundred and fifty-two pounds of chromium

metal;

(2) four thousand five hundred and forty-eight short dry tons of acid

grade fluorspar; and

(3) fifty-six short tons of silicon carbide.

Such disposition may be made without regard to the provisions of section 3 of

the Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98b) : Provided,

That the time and method of disposition shall be fixed with due regard to the

protection of the United States against avoidable loss and the protection of producers, processors, and consumers against avoidable disruption of their usual

markets.

Passed the House of Representatives April 26, 1965.

Attest:

RALPH R. ROBERTS, Clerk.

(The prepared statement of Mr. Connell follows:)

Mr. Chairman and members of the subcommittee, I am Maurice J. Connell,

Commissioner, Defense Materials Service, General Services Administration. I

have with me Mr. John G. Harlan, Jr. Deputy Commissioner, and other staff

members of GSA who are knowledgeable of the Government stockpile program.

On behalf of the Administrator, Mr. Lawson B. Knott, Jr., who asked me to

represent him at the hearings this morning, I want to thank you for the opportunity to appear before your subcommittee for the purpose of expressing the views

of GSA on House Joint Resolution 330.

This resolution would, as you know, authorize the disposal of the following material in approximately the following quantities which are now held in the supplemental stockpile:

(1) 33,552 pounds of chromium metal;

(2) 4,548 short dry tons of acid grade fluorspar; and

(3) 56 short tons of silicon carbide.

The three items covered by House Joint Resolution 330 are subspecification

materials. They represent only a fractional part of similar specification materials

which are carried in the stockpile.

The total acquisition cost of the three items is approximately $270,000. Notwithstanding the relatively small value of these materials as compared to the total

market of the specification grades, affected Government agencies and even industry sources, to the extent deemed appropriate, were consulted during the disposal

planning. No objections have been raised to the disposal of any of the materials

involved.
8 NATIONAL STOCKPILE DISPOSAL BILLS

The materials covered by House Joint Resolution 330 are not needed for stockpile purposes and should be removed from inventory. Though storage and other

costs on them are minimal, their removal will eliminate the necessity to maintain

and account for them.

House Joint Resolution 330 covers an item which is in the legislative program

of General Services Administration for the 89th Congress, 1st session. For this

and the foregoing reasons, this agency strongly recommends enactment of House

Joint Resolution 330.

This concludes my prepared statement, Mr. Chairman. However, if you or

members of your subcommittee have any questions you may wish to ask, we shall

be happy to answer them at this time or furnish the desired information for the

record.

(In executive session on September 23 the full committee voted to

report H.J. Res. 330, without amendment, as covered by S. Rept. 774.)

H.R. 6852

Senator SYMINGTON. We will now consider H.R. 6852 as amended.

Mr. CONNELL. H.R. 6852, as amended-97 million pounds of

abaca. The original bill provided for 47 million pounds, but this was

amended by the House to include the new excess of 50 million pounds

created after introduction of H.R. 6852. GSA favors the amendment

because it ties in with our policy of addressing long-range planning to

total surpluses. In recommending passage of the amended bill, the

House Armed Services Committee suggested that because of the position taken by representatives of the Philippines, the first-year rate of

disposal be limited to 5 million pounds, and that the rate for subsequent years be fixed after consultation with the Philippine Government and industry. GSA has no problems with these limitations,

and if the Senate agrees, we do not object to H.R. 6852, as amended.

(H.R. 6852 follows:)

[H.R. 6852, 89th Cong., 1st sess]

AN ACT To authorize the disposal, without regard to the prescribed six-month waiting period of approxi- mately forty-seven million pounds of abaca from the national stockpile

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Administrator of General Services is here- by authorized to dispose of approximately ninety-seven million pounds of abaca

now held in the national stockpile. Such disposal may be made without regard

to the provision of section 3(e) of the Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98b(e)) that no disposition of materials held in the national stockpile shall be made prior to the expiration of six months after the publication in the Federal Register and the transmission to the Congress and to the Armed Services Committees of each House thereof of notice of the proposed disposition. Passed the House of Representatives September 20, 1965.

Attest: RALPH R. ROBERTS, Clerk.

(The prepared statement of Mr. Connell follows:)

Mr. Chairman and members of the subcommittee, I am Maurice J. Connell, Commissioner, Defense Materials Service of the General Services Administration.

I have with mr Mr. John G. Harlan, Jr., Deputy Commissioner, and other staff members of GSA who are knowledgeable regarding the Government's abaca

program.

On behalf of the Administrator, Mr. Lawson B. Knott, Jr., who asked me to represent him at the hearings this morning, I want to thank you for the privilege of appearing before your subcommittee to express the views of the General Services Administration on H.R. 6852, as amended, a bill which, as you know, would authorize the sale of 97 million pounds of excess abaca from the stockpile. The principal use for abaca fiber is for the manufacture of rope for marine, industrial, and farm purposes. Some quantities of the fiber are also used in the manufacture of various paper products.
NATIONAL STOCKPILE DISPOSAL BILLS 9

At the present time, world production of abaca is running at a rate of about

250 million pounds per year. The Philippines account for over 95 percent of this

production.

The United 

States, 

Canada, Japan, Europe, and the United Kingdom are the

major consumers of abaca fiber. Consumption in the United States and Canada

seems to have settled at a rate of about 70 million pounds per year. This is almost

half the size of the markets which existed in North America before the advent of

synthetic fibers some 10 years ago.

General Service Administration has had some experience in the sale of abaca

fiber under these reduced market conditions. Under prior congressional authority,

we sold approximately 5 million pounds between July and September of 1962,

and about 16 million pounds between September 1959 and June 1960. Consumption levels in the United States and Canada were not materially different in the

years in which these disposals were carried out from what they are now. We

made these sales with no adverse effect upon markets, and we feel we can successfully dispose of the present surpluses without causing serious disruptive influences

in current markets.

It had been our original plan to start disposal of the abaca surpluses under a

program looking to sales of about 93'i million pounds in the first year, with the

quantities and timing of subsequent offerings to be determined after an evaluation

of prior sales and then current market conditions.

In testimony at hearings held by Subcommittee No. 1 of the Armed Services

Committee of the House of Representatives, officials of the Philippine Government stated that it would be preferable if disposals the first year were confined

to approximately 5% million pounds, so that the industry would have time to

adjust to the disposal program.

In light of the Philippine position, the House Armed Services Committee

recommended passage of H.R. 6852, as amended,' with the following suggestions:

(1) That in the first year, disposals be limited to 5y2 million pounds.

(2) That after the initial disposal, General Services Administration consult

with industry, and through the Department of State, representatives of the

Philippine Government, on each subsequent amount proposed for disposal,

and that the effects of the disposal would be considered not only on American.

industry, but also on the Philippine economy.

We do not find these suggestions unreasonable, and if the Senate agrees, we can

and will comply with them without serious impairment to the disposal program.

GSA strongly recommends enactment of H.R. 6852, as amended, so that disposal

of this perishable commodity may start as soon as possible.

This concludes my prepared statement, Mr. Chairman. However, if you or

members of your subcommittee have any questions you may wish to ask, we shall

be happy to answer them at this time or furnish the desired information for the

record.

(In executive session on September 23 the full committee voted to

report H.R. 6852, with an amendment to the title, as covered by

S. Rept. 779.)

H.R. 9047

Senator SYMINGTON. We will now take up H.R. 9047, as amended.

Mr. CONNELL. H.R. 9047, as amended, 150,000 short tons of zinc.

The original bill provided for 300,000 short tons of zinc plus 50,000

short tons for Government use. GSA held a meeting on August 24

with the zinc industry. The industry felt that 150,000 short tons were

adequate for the next 6 months. A House amendment reduced the

quantity to 150,000 short tons. The amended bill also eliminated the

Government-use provision, but this is no problem, because we still

have 47,780 short tons left under Public Law 89-9.

In the interest of getting on with a sales program to supply at least

the quantity which industry says it needs, GSA does not object to

H.R. 9047, as amended.

(H.R. 9047 follows:)
10 NATIONAL STOCKPILE DISPOSAL BILLS

[H.R. 9047, 89th Cong., 1st sess.]

AN ACT TO authorize the release of certain quantities of zinc from either the national stockpile or the

supplemental stockpile, or both

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That the Administrator of General Services is

hereby authorized to dispose of, by negotiation or otherwise, from either the

national stockpile established pursuant to the Strategic and Critical Materials

Stock Piling Act (50 U.S.C. 98-98h) or the supplemental stockpile established

pursuant to section 104(b) of the Agricultural Trade Development and Assistance

Act of 1954 (7 U.S.C. 1704(b)), or from both such stockpiles (1) approximately

one hundred and fifty thousand short tons of zinc. The disposals authorized

by this section may be made without regard to the provisions of section 3 of the

Strategic and Critical Materials Stock Piling Act, but the time and method of the

disposals shall be fixed with due regard to the protection of the United States

against avoidable loss and the protection of producers, processors, and consumers

against avoidable disruption of their usual markets.

Passed the House of Representatives September 20, 1965.

Attest:

RALPH R. ROBERTS, Clerk.

(The prepared statement of Mr. Connell follows:)

Mr. Chairman and members of the subcommittee, I am Maurice J. Connell,

Commissioner, Defense Materials Service of the General Services Administration.

I have with me Mr. John G. Harlan, Jr., Deputy Commissioner, and other staff

members of GSA who are knowledgeable regarding the Government's zinc program.

On behalf of the Administrator, Mr. Lawson B. Knott, Jr., who asked me to

represent him at the hearings this morning, I want to thank you for the privilege

of appearing before your subcommittee for the purpose of expressing the views of

the General Services Administration on H.R. 9047, as amended, a bill "To authorize the release of certain quantities of zinc from either the national stockpile or

the supplemental stockpile, or both."

Presently there are about 1.3 million short tons of zinc in the inventories of

strategic and critical materials maintained by GSA which have not previously

been authorized for disposal. All of such zinc is excess to stockpile requirements.

During the past year, 225,000 short tons of zinc have been released from our

stockpile inventories and sold to industry for domestic consumption.

These releases have been made under Public Law 88-374, approved by the

President on July 14, 1964, authorizing the disposal of 75,000 short tons, and

Public Law 89-9, approved by the President on April 2, 1965, authorizing the

disposal of 150,000 short tons of zinc to industry and 50,000 short tons for the

direct use of Federal agencies.

These disposals not only have helped relieve the apparent tight zinc supply

situation, but also have reduced the Government's excess inventories of zinc.

Turning specifically to the provisions of the bill as originally written, Mr.

Chairman, H.R. 9047 would have authorized the disposal of 300,000 short tons

of zinc, along with 50,000 short tons for direct use by agencies of the U.S.

Government. The amended bill limits disposals to 150,000 short tons, and

eliminates the 50,000 short tons intended for Government use.

General Services Administration has submitted a separate report to the chairman of the Senate Armed Services Committee detailing its position on the H.R.

9047, as amended.

In summary, it is our position that while we would have preferred the larger

quantity, in the interests of getting on with release of at least the quantity which

industry indicates is needed, we have no objection to limitation of disposal to

150,000 short tons.

This concludes my prepared statement, Mr. Chairman. However, if you or

members of your subcommittee have any questions you may wish to ask, we

shall be happy to answer them at this time or furnish the desired information for

the record.

. -

Senator SYMINGTON. What is the amendment again, from what to

what?

Mr. CONNELL. From 300,000 to 150,000 short tones of zinc.

Senator SYMINGTON. Why do you do that?

I.
NATIONAL STOCKPILE DISPOSAL BILLS 11

Mr. CONNELL. We had an industry meeting. As you know we

consult with the industry on all the commodities that we sell and that

is the best deal we could work out with everybody's agreement.

Senator SYMINGTON. Has a law been passed for 300,000?

Mr. CONNELL. No, sir; the bill was amended to 150,000 in the

House.

Senator SYMINGTON. In the House, but you originally asked for

300,000?

Mr. CONNELL. Yes, sir; it was a private bill. It was introduced

as 300,000 and we supported it, but in the industry meeting we could

only get an agreement for 150,000.

Senator SYMINGTON. Agreement with whom?

Mr. CONNELL. The industry.

Senator SYMINGTON. Does the industry dictate what you sell out

of the GSA?

Mr. CONNELL. The industry doesn't dictate. The Government

makes the decision, but this is a private bill and at the request of the

House subcommittee we had a meeting. As I say, this is the best

deal I could work out. To get any zinc at all, this is what we had to

come up with.

Senator SYMINGTON. But you have the zinc, haven't you?

Mr. CONNELL. We have all kinds of zinc; yes, sir.

Senator SYMINGTON. Because the industry only wants you to sell

150,000 tons of zinc instead of 300,000 tons you have agreed. Is that

right?

Mr. CONNELL. I agreed to do it only on the basis that is all I could

work out. I would rather have had the 300,000 tons or I would rather

have the total excesses to sell.

Senator SYMINGTON. How much zine in the stockpile is excess to

objectives?

Mr. CONNELL. I think we have 1,200,000 tons excess.

Senator SYMINGTON. Surplus?

Mr. CONNELL. Yes, sir. It is 1,277,000 short tons.

Senator SYMINGTON. Senator Inouye, have you any questions?

Senator INOUYE. Yes, Mr. Chairman.

May I go back to H.R. 6852, the bill for disposal of abaca?

Senator SYMINGTON. Yes, indeed.

Senator INOUYE. Mr. Connell, I notice that under this arrangement

we are called upon to confer with the Government of the Philippines.

Mr. CONNELL. Yes, sir.

Senator INOUYE. Is this a precedent? This is something new to me.

Do we generally confer with foreign countries on the disposal of surplus

materials?

Mr. CONNELL. Yes, sir. The State Department are our experts

on consultation in the foreign countries, and they did consult with

the Philippine Government on the abaca. We do this generally

through the State Department. They then advise us as to how

they have come out with their consultations.

Senator INOUYE. Is this part of a treaty?

Mr. CONNELL. No, sir. It is done in compliance with our basic

law, the Strategic and Critical Material Stock Piling Act. We must

not disrupt the market and must avoid a loss to the Government.

So we are required to consult with domestic industry and the foreign

industry on that basis.
12 NATIONAL STOCKPILE DISPOSAL BILLS

Senator INOUYE. I see.

Thank you very much.

Thank you, Mr. Chairman.

Senator SYMINGTON. As I understand it, when you had this meeting

on zinc the industry felt you might disrupt the market if you were

allowed more than 150,000 tons. Is that correct?

Mr. CONNELL. Yes, sir; that was their opinion.

Senator SYMINGTON. Do you agree?

Mr. CONNELL. I agree we ought to have 300,000 tons, but that is

the best deal I could work out.

Senator SYMINGTON. Did they tell you why they thought that

300,000 tons would disrupt the market?

Mr. CONNELL. They talked about several things, Senator, at the

industry meeting. We had about 90 people there. They said the

two reasons were (1) the coming quota problem and (2) that in the

next 6 months they felt that their production might catch up with the

tight supply, and we have the 150,000, which has been going that way

for about a year and a half. However, we had to come up and get

additional zinc.

Senator SYMINGTON. My point is that we have to go through all

this rigamarole for each small release. This is the third or fourth

time in the last 12 months we have been asked to dribble out some

zinc. Why don't we just authorize a sufficient amount so that as

the need arises, it can be sold. You won't sell it in a way that would

disrupt the market. It seems eminently more sensible to do that

instead of having to go through all this business in the House and all

through the Senate each time and then take the President's time to

sign every one of these bills. GSA wouldn't move the zinc if it disrupted the market; you couldn't do that under the law. I don't see

why we don't give you the authority to sell 300,000 tons and then you

apply the law in the actual operation of the sale. Otherwise we go

through this again and again and again.

Mr. CONNELL. Yes, sir.

Senator SYMINGTON. Especially when it comes to zinc.

Mr. CONNELL. I agree with you 100 percent. I think that the bill

that is pending in the House, S. 28, would give us what we require.

We would like to have total excesses on every material so we could

put them into the market without losing the market before it is too

late. By the time we get our material in the market there might not

be any market left. I am trying to do the same thing on nickel

where I get the total excesses so that the executive branch of Government can determine when to put that into the market so we don't go

through this rigmarole all the time.

And I certainly agree with you that I would like to have total

excesses all the time.

Senator SYMINGTON. Are there any other bills to be considered

today?

Mr. CONNELL. No, sir.

Senator SYMINGTON. Any further comments, suggestions, or questions?

Mr. CONNELL. No, sir. I always appreciate coming up to your

committee and want to thank you for your prompt action.

Senator SYMINGTON. Thank you, Mr. Connell, we look forward to

seeing you, sir. It is always a pleasure to see you.
NATIONAL STOCKPILE DISPOSAL BILLS 13

I have a letter from the American Mining Congress asking that the

zinc bill releasing 150,000 short tons be approved, which we will

make part of the record.

(The letter referred to follows:)

The Honorable STUART SYMINGTON,

Chairman, Subcommittee on ational Stockpile and Naval Petroleum Reserves, Committee on Armed Services, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: We are advised that hearings are scheduled for September 22 at 10 a.m. with regard to H.R. 9047, a bill authorizing the release of

150,000 short tons of zinc from the national and supplemental stockpiles.

The American Mining Congress urges favorable consideration and passage of

this bill.

Prior to final action by the House Armed Services Committee, there was a Government-industry consultative meeting with respect to this release, held under the

chairmanship of Maurice J. Connell, Commissioner of Defense Materials Service,

General Services Administration, which meeting was attended by some 90 representatives of producers, consumers, dealers, and other interested Government

agencies. Substantially all parties in attendance, including the mining industry,

recommended that authorization for the release of 150,000 short tons of zinc as

authorized in H.R. 9047 in its amended form, would be appropriate on the basis

that such release would not disrupt commercial markets. This recommendation

was adopted by the Administration and the American Mining Congress advised

the House Committee of its support of this view.

We would be very appreciative if this letter could be made part of the record of

the hearings before your subcommittee on H.R. 9047. If there is any further

way in which we can be of assistance to you, please do not hesitate to call upon us.

With warmest regards, I am

Sincerely,

J. ALLEN OVERTON, Jr., Executive Vice President.

Senator SYMINGTON. If there are no further witnesses to be heard,

we will have an executive session.

(Whereupon, at 10:15 a.m., the subcommittee went into executive

session.)

(In executive session on September 30, the full committee voted to

report H.R. 9047, with an amendment, as covered by S. Rept. 803.)

AMERICAN MINING CONGRESS,

September 21, 1965.

A