nuclear war. We are engaged in several major tasks in the stockpile

program:

STOCKPILING DISPOSALS

The development of a long-range program for the orderly disposal of excess stockpile materials within the framework of the recommendations of the Executive Stockpile Committee as approved by the President is now underway.

I have established an Interdepartmental Disposal Committee, chaired by the Office of Emergency Planning, to make preliminary investigations of all aspects of the proposed disposal of each of the more than 70 stockpile materials on a commodity-by-commodity basis and to recommend factors and criteria for the disposal of surplus materials, including consultation with the affected industries and foreign governments.

These disposals in the next decade are expected to increase the revenues of the Treasury Department by many millions of dollars. In addition, a yearly saving will be made in the costs of storing stockpiled materials.

The Disposal Committee, through a number of working groups, must resolve the many issues to be considered without undue effects upon various segments of the domestic economy and our international relations.

Obviously, a sudden release of substantial quantities of excess materials could damage our productive capacity and would be clearly self-defeating. Careful analyses of the potential impact of each disposal program is essential. Interested Federal agencies have cooperated fully in providing qualified individuals to participate in the studies undertaken by the working groups.

AMOUNT FROM SALES OF SURPLUS MATERIALS

As evidence of measurable progress in this area of our responsibility, during the 3-year period from January 1, 1961, through December 31, 1963, sales contracts of surplus materials from all Government inventories have amounted to $292 million in cash at sales value.

In addition, $128 million of surplus cotton was transferred to the Department of Agriculture. In some instances, deliveries of these materials to successful bidders will be made over a period of time to avoid market disruption.

Of the total sales, approximately $194 million was from the national stockpile, $87 million from the Defense Production Act inventory, and $10.6 million (tin) from the Federal Facilities Corporation inventory which is now closed out.

During fiscal year 1963, we authorized 18 disposal sales involving 12 materials of which 4 were national stockpile items and 8 were Defense Production Act inventory materials. So far, during fiscal year 1964, OEP has authorized 27 disposal sales involving 24 materials. expect that the rate of disposal will increase substantially over the next few years.

We

As the economy responds to the tax cut and currently underutilized capacity is put to work, a greater demand will develop for most of the materials currently stockpiled. This might provide a more favorable climate for disposal of some of our surpluses.

Senator YOUNG of North Dakota. Would it require further authorizing legislation to permit you to dispose of certain of these commodities?

Mr. MCDERMOTT. Yes, sir; that is correct, sir. There is a 6-month waiting period and congressional approval.

DISPOSAL PLANS FOR MOLYBDENUM

Senator ALLOTT. Mr. Chairman, I would like to ask, while we are on this, What is the situation with respect to molybdenum? You probably know, we have been trying to get a determination upon this now for over a year. It is a matter of extreme consequence, not only to the country but

Mr. CHAMBERS. The GSA has been asked to prepare a report for Congress.

Senator ALLOTT. When will that be accomplished?

Mr. CHAMBERS. Well, I would say in about 4 or 6 weeks.

TIME REQUIRED FOR DISPOSAL PLAN

Senator ALLOTT. May I ask another question? We have been working on this thing for a long time. Why does it still take 6 weeks to provide a disposal plan?

Mr. MCDERMOTT. For this reason, sir: The procedures that have been followed and are being followed are that after some preliminary determinations are made that suggest that a disposal of a commodity that is in surplus in the stockpile can be considered, we give an instruction to the GSA to prepare a detailed plan for the disposal of that commodity. That plan must then be submitted to the several departments and agencies of Government that have an interest, and these industry consultations, which have not been as effectively conducted in the past as they might be, and which become increasingly important as you deal with disposal-industry consultations take place when the specific plan developed by GSA goes out to the departments for their review. Interior and Commerce and State conduct consultations with appropriate elements of the industry, so that does take some time.

Senator ALLOTT. The industry consultations will take place.

Mr. MCDERMOTT. The industry consultations, Senator, take place when the specific plan goes from GSA to the department, and then the department, after they have the industry consultations, report their recommendations back to GSA and OEP.

ONE-COMPANY SUPPLIER SITUATION

Senator ALLOTT. I think I should state for the record I, personally, have no interest in anything touching on molybdenum. But Colorado is practically the only sole supplier of molybdenum to the Western World, and only one company is involved. For that reason, it is a very unusual situation that differs from most stockpile items. This is my interest-because I have been trying to get this brought to a head in order that these people could make adequate plans for the future.

Mr. MCDERMOTT. Yes, sir; I have had personal discussions with representatives of that company and know their plans and know

their problems. It is for that reason that the activity now going on is taking place.

The consultations, sir, include not only the producers, but major consuming interests also. So in the consultation procedure, there will be others consulted. But that process is underway, and as suggested, our 4 to 6 weeks, I think, will produce a plan.

CONVENTIONAL WAR STOCKPILE OBJECTIVES

We are currently determining new conventional war stockpile objectives with the advice of the Interdepartmental Materials Advisory Committee. A complete determination of such objectives was last made in 1958.

Substantial progress has been made on this undertaking. In July 1963, the Office of Emergency Planning announced the establishment of 12 new stockpile objectives for conventional war. Subsequently, a number of policy questions were raised about the criteria used in the development of these and other objectives. As a result of decisions reached by President Johnson on February 24, 1964 regarding the development of conventional war stockpile objectives, I am pleased to report that we have now determined new conventional war stockpile objectives for a total of 71 materials. Of these, 33 have been increased over the old objective while 29 have been decreased, 5 remain the same, 3 have been eliminated, and 1 new material was added.

We expect that we will be able to establish new conventional war objectives for the remainder of the stockpile items during fiscal year 1964 as indicated in our budget submission of last year. Because military requirements and estimated emergency supplies of stockpile materials are constantly shifting, the supple-requirements balance for any material that is now or may become important to defense must be kept under continuing surveillance.

COMMON PLANNING ON NUCLEAR WAR STOCKPILE OBJECTIVES

We are also in the process of determining stockpile objectives for nuclear war based on supply-requirements developed for assumed postattack conditions. This has never heretofore been done in Government or industry. In approaching this problem it was found that one of the major obstacles to a supply-requirements study was the lack of common planning assumptions for use by the interested departments.

În recognition of this, President Kennedy on January 9, 1963, appointed an Assumptions Committee under my chairmanship which conducted studies to develop and recommend Common Planning Assumptions that were formally approved by him on October 30, 1963, and forwarded to Federal agencies for their guidance on November 14, 1963.

Concurrently a task force set up within the Office of Emergency Planning was couducting a nuclear supply-requirements study and preparing departmental guidance for nuclear objectives development. The results of this study are intended to form the basis for establishing stockpile objectives for nuclear war. The development of nuclear war stockpile objectives has been assigned a high priority in fiscal year 1965.

Senator MAGNUSON. Now, Mr. McDermott, the amount of money involved in this program of course will be in the GSA budget.

Mr. MCDERMOTT. That is correct.

Senator MAGNUSON. And the committee, I am sure, members of the committee want to go into this particular subject much more fully than we might do this morning, because we do have GSA coming

up.

MINIMUM ACQUISITION OF MATERIAL

Mr. MCDERMOTT. Mr. Chairman, I might indicate in the past 3 years there has been virtually no acquisition, except a few million dollars. Secondly, part of these new guidelines we got from President Johnson earlier this year are that in this review of stockpile objectives, where we find that requirements result in an increase, there shall be no acquisition program inititated without specific and express Presidential approval. So there is a tight control on acquisition.

Senator MAGNUSON. Senator Monroney will take over here now. Mr. McDermott and I will have to go over to the Interior Committee.

ATTITUDE REGARDING STOCKPILING RESEARCH

Senator SALTONSTALL. Mr. McDermott, are you in favor of the bill now before the Armed Services Committee relative to stockpiling? Mr. MCDERMOTT. Yes, we have taken the position with the subcommittee in support of that bill in its present form.

Senator SALTONSTALL. In its present form?

Mr. MCDERMOTT. Yes, sir.

Senator SALTONSTALL. Thank you.

Senator MONRONEY. You may continue.

IMPORTS AND NATIONAL SECURITY

Mr. CHAMBERS. Under section 232(b) of the Trade Expansion Act, OEP has specific responsibility for investigating claims that imports are threatening to impair the national security. We began the current fiscal year with four import cases under investigation dealing with manganese and chromium ferroalloys, textiles, hydraulic turbines, and asphaltic content of crude oil and in January of 1964 at the request of the General Electric Co. we started an investigation of tungsten mill products.

The investigations dealing with hydraulic turbines and the asphaltic content of crude oil have been completed and the results were made public during the current fiscal year. We also have a responsibility under Presidential Proclamation No. 3279 which established the oil import control program in March of 1959. We maintain a constant surveillance over oil imports, including prices, in relation to the national security.

SURVEILLANCE RESPONSIBILITY

As part of this surveillance responsibility, we prepare a monthly report on residual fuel oil prices and conduct special national security investigations of oil imports. Three such studies have been completed, dealing with tankers, residual fuel oil and the asphaltic content of crude oil.

Senator ALLOTT. Mr. Chambers, would this activity here include such things, for example, as scientific and technical matters if there were just one company in the Western Hemisphere that manufactures it?

Mr. CHAMBERS. Under the law, sir, it goes two ways. If it is an item of which we, on our own initiative, thought there was a threat to national security due to imports, we could initiate an investigation. If the company itself thought that imports were threatening their business and the national security, and if it does not come under the Tariff Commission activities, they could bring it to us.

Senator ALLOTT. All right.

NEW ENGLAND RESIDUAL OIL IMPORT PROBLEM

Senator SALTONSTALL. Mr. Chambers, may I ask you this question on oil: Of course, that is a very important problem in New England; who had the final responsibility of determining the amount of fuel oil imports? I thought it was your office.

Mr. CHAMBERS. We make the recommendation, sir, to the President. The President has the final responsibility.

Senator SALTONSTALL. But he has given it now to the Secretary of the Interior; has he not?

Mr. CHAMBERS. The Secretary of the Interior has basically the overall responsibility for oil-not only residual oil but all oil. Our responsibility runs solely to the national security aspects of it.

Senator SALTONSTALL. Well, then, at the present time you believe that the present restrictions on imports of residual oil, fuel oil, come up to our national security standards?

Mr. CHAMBERS. The recommendations we made to the President, sir, support the present restriction on imports; yes, sir.

Senator SALTONSTALL. I think that is very important from our point of view.

You think that the present restrictions on the oil imports are sufficient do not hurt our national security?

Mr. CHAMBERS. The report which we submitted, sir, indicated that we thought that further examination might be given to the level of imports; but the responsibility for action under this is vested in the Department of Interior, not OEP.

Senator SALTONSTALL. I have no further questions at this time, thank you.

LEVEL OF RESIDUAL OIL IMPORTS

Senator MONRONEY. Could you put in the record the level of imports for the last 3 years on residual fuel oils?

Mr. CHAMBERS. Yes, sir.

Senator MONRONEY. Do you have the responsibility on crude, or just on gasoline?

Mr. CHAMBERS. We have the responsibility, sir. Any time the national security is involved, we are responsible under 232(b) for making an investigation. But actually the Department of Interior administers the overall oil program.

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