effect upon the industry of that immediate move would be very hurtful and adverse. And we might not be able to get the copper even so. Senator INOUYE. Now, you have maintained that your study will take anywhere from 12 to 15 months. At the present time you have 1,27,027 tons. What if the report shows that you will need much more than this under nuclear war conditions? How would you proceed!

Mr. BELSLEY. This point was anticipated in the statement made by the Governor, wherein he pointed out that if the nuclear war studies, when finally completed, did indicate that the stockpile objective for uclear war and reconstruction would be higher than the present inventory, then it might be necessary at a later date to repurchase what was now sold.

Senator INOUYE. Thank you very much.
Thank you, Governor.

That is all.

Senator SYMINGTON. Senator Cannon?
Senator CANNON. No questions.

Senator SYMINGTON. Senator Byrd, we welcome you as one of our colleagues on the full committee, to this hearing. One of the reasons we are moving as rapidly as we can is your great interest in the lead Situation.

Have you any comments or questions you would like to ask?

Senator BYRD of West Virginia. Thank you, Mr. Chairman. I do not have any questions.

I want to compliment the Governor on a very fine statement.

Senator SYMINGTON. Governor, I notice in the copper you propose to release, you include tons of bronze and brass. This contains zinc, does it not?

Mr. ELLINGTON. That is correct, yes, sir.

Senator SYMINGTON. Has your staff figured out how much zinc would be released in addition to this amount?

Mr. BELSLEY. About 30,000 tons.

Senator SYMINGTON. So the way you decided to release the copper adds another 30,000 tons of zinc, is that correct?

Mr. BELSLEY. It could have that effect. If the bill is passed providing for the release of zinc and, if there is any strong objection to the added release of zinc, and we know of none, it could be charged against that as a last resort.

Senator SYMINGTON. That is a good answer.

Let me

ask why you prefer to have the BDSA handle this instead of the producers?

Mr. BELSLEY. Senator, some copper consumers have good order positions with producers, and others do not have. This is quite important. The relationship to the producers varies. We feel that a much fairer distribution to consumers to meet both defense needs and hardship cases with which the consumers of copper are faced would be made if the sale were made directly to the consumers, rather than through the producers. If that were done, it could be done by the Business and Defense Services Administration in the same way that the 20,000 tons recently disposed from the Defense Production Act inventory were released.

This means that a knowledgeable division of the Government take a look at the actual inventory position of the user and at his need fo the copper, and on the basis of that review, certifies as to the con sumer's need. And then the General Services Administration woul release against that certification.

We feel that this is a more equitable way, that it is a better distribu tion to those who are in actual need, regardless of their position on the order boards of producers, or their relationship to a producer. Senator SYMINGTON. The committee has great respect for the coppe producers. Some of the fabricators in my State have paid 68 cents for copper. What worries me, after we sold some materials before, and they were distributed, something happened, because instead of prices going down, they went up. I don't know how it happened. This is exactly what we don't want to happen.

Would you comment?

Mr. BELSLEY. Yes. First, I don't want to yield to anybody in my respect for the producers, I have a similar high respect for them Basically, I don't think this is the problem. I recognize also the pronounced need of the consumers who are the ones who are really hurting. Senator SYMINGTON. When you say "consumer," you mean fabricators, do you not?

Mr. BELSLEY. The fabricators, that is right.

The situation to which you refer could not occur in this copper situation if the disposal were carried out as we propose.

Senator SYMINGTON. How did it occur the last time?

Mr. BELSLEY. The situation to which you referred involved a direct sale, it was open, and it was a bid sale. There was no control, there was no review of the need of any individual consumer or fabricator of the material. In this instance, the certification on which the disposing agency would act would be that the company needs the copper, based on an analysis of their needs.

Senator SYMINGTON. Would they be selling the copper to somebody who didn't need it?

Mr. BELSLEY. They may not be selling it on a reasonably distributed basis to all who need it.

Senator SYMINGTON. You mean they would express a preferential position?

Mr. BELSLEY. That is entirely possible. This has been charged to us by some of the consumers who, at the moment, very much object to the fact that they cannot make copper purchases from the producers, even though producers are satisfying some of their customers.

Senator SYMINGTON. One of the reasons for that is the producers haven't the copper. That is the purpose of the bill, isn't it? There are a lot protesting they can't get the copper, because as I understand it, the producers haven't any.

Mr. BELSLEY. This was true with respect to the 20,000 tons that were sold. As far as I am aware, there has been no objection to it. There has been no charge of any windfall profit that you were concerned about with respect to the other material, where there may have been, and where the price did go up. This would go directly to the people who demonstrate the need for it.

Senator SYMINGTON. Senator Miller, any questions?
Senator MILLER. Thank you, Mr. Chairman.

I am a little concerned about the recommended amendment, which reads as follows:

And with due regard to the protection of producers, processors, and consumers against avoidable disruptions of their usual markets.

Would you care to explain the proposed mechanics of implementing such a standard as that?

Mr. BELSLEY. I would rather have the General Services Administration meet and explain that, Senator.

But let me point out that this is language which is in the Strategic and Critical Materials Stock Piling Act. I don't think anybody would object if you deleted it, if you were concerned about it. It was proposed as an added precaution. But I would prefer that you pose that question to the people who will actually be administering the sale. Senator MILLER. But your recommendation for inclusion of this language was based on using the same language that is contained in the act?

Mr. BELSLEY. In the act, yes.

Senator SYMINGTON. I would make one point. There is apparently a difference of opinion among the lawyers. My personal opinion is the present law does not allow you to stockpile materials for reconstruction after an attack. The law was written for military defense. Under the proposed bill, S. 28, you would have more of a chance. One other point might be pertinent. If you have a nuclear attack, you are going to be able to mine a good deal of copper before you will be able to rebuild the lathes on which to work that copper, and the presses, and boring mills, and so forth.

Governor, we are very grateful to you for coming down. We hope this is the first of many pleasant relationships with you. Let me again congratulate you on being willing to take on this position.

Mr. ELLINGTON. Thank you very much, gentlemen.

Senator SYMINGTON. Mr. Connell, do you plan to have a presentation?

STATEMENT OF MAURICE J. CONNELL, COMMISSIONER OF DEFENSE MATERIALS SERVICE, GENERAL SERVICES ADMINISTRATION; ACCOMPANIED BY JOHN G. HARLAN, JR., DEPUTY COMMISSIONER

Mr. CONNELL. Yes, Senator.

Senator SYMINGTON. We welcome you.

Mr. CONNELL. Yes, sir, Mr. Chairman. I could supply these statements for the record or summarize each one of them quickly, if you would like me to.

Senator SYMINGTON. You are an old hand at this. Inasmuch as we have a meeting of the full committee later this morning, would you condense it to the extent you deem right?

Mr. CONNELL. Yes, sir.

Mr. Chairman, we favor the enactment of H.R. 1496, the disposal of zinc as authorized by the House. It is 150,000 tons of zinc for commercial sale and 50,000 tons for direct Government use.

The categories that we have put together for zinc, I could supply for the record, so that I don't have to take up the time of this committee. (This information appears on p. 12.)

(The prepared statement of Mr. Connell on H.R. 1496 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 Acting Administrator, Mr. Lawson B. Knott, Jr., who asked me to represent him at the hearing this morning, I want to thank you for the privilege of appearing before your subcommitte for the purpose of expressing the views of the General Services Administration on H.R. 1496, an act to authorize the disposal, without regard to the prescribed 6-month waiting period, of zinc from the national stockpile and the supplemental stockpile.

There are presently 1.5 million short tons of zinc in the inventories of the strategic and critical materials maintained by GSA that are excess to stockpile requirements. Therefore, the zinc which would be disposed of under the proposed legislation is not presently needed for mobilization purposes.

U.S. consumption of zinc reached record proportions in 1964 when 1,170,000 short tons were consumed. One of the major consumers of zinc is the automotive industry which uses the material in die castings.

General Services Administration in recent weeks has received many letters from industry and other sources indicating that U.S. consumers are experiencing difficulties in securing needed supplies of zinc.

As you know, Mr. Chairman, H.R. 1496 as reported by the Committee on Armed Services of the House of Representatives, and as passed by the House on February 23, 1965, amended the original version of the proposed legislation in two respects:

First, the original bill was amended, as recommended by GSA, to provide that the zinc to be disposed of may come, in part, from the supplemental stockpile. H.R. 1496 as introduced applied only to zinc held in the national stockpile. About 320,000 short tons of the present zinc surpluses are in the supplemental stockpile. Authority, therefore, to dispose of zinc from the supplemental stockpile will make it possible to establish disposal procedures which will cover the best possible disposal pattern as to available grades and accessible locations of such material.

Second, the original bill was amended, also as recommended by GSA, so as to authorize the Administrator of General Services to make available an additional 50,000 short tons of zinc for the purpose of satisfying the direct needs of Federal agencies for this material. As you know, Government agencies have requirements for zinc from time to time, and this authority will make it possible to continue Government policy of satisfying agency requirements for materials of this type from the stockpiles whenever surpluses are available. In view of the foregoing, the General Services Administration strongly favors the enactment of H.R. 1496 as amended.

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.

The proposed plan of disposal of zinc indicating the categories referred to by Mr. Connell on p. 11 follows:)

PROPOSED PLAN OF DISPOSAL

The proposed plan for disposal, which was developed by General Services Administration after consultation and conferences with other governmental agencies and industry, is sufficiently flexible to enable the General Services Administration to proceed with such disposals, if the initial offering is unsuccessful. The plan as presented to the Committee on Armed Services, is outlined below.

An initial offering of 75,000 short tons will be made. Upon completion of sale of the first 75,000 short tons of zinc under this program, General Services Administration will, in consultation with other affected Government agencies and appropriate industrial segments, examine into the question of disposal of the balance of the tonnage remaining for sale under the congressional authorization which may be received.

All of the material to be sold will be restricted to domestic consumption, except that all sales are made subject to the requirements of the defense materials priorities system, administered by the Department of Commerce, in the event any of the material is required to fill a rated order for foreign shipment.

The first 75,000 short tons will be offered for sale on the basis of the U.S. market price for zinc at prices to be determined by GSA. Offers to purchase will be received from the following types of purchasers and awards made in the quantities to be determined by the Government:

1. Recognized domestic producers of primary slab zinc.

2. Recognized domestic producers of secondary slab zinc.

3. Importers of record.

4. Independent alloyers.

5. All other purchasers for domestic consumption.

The zine to be sold is in slab form and the grades are as follows:

SH-Special high grade.

H-High grade.

I-Intermediate grade.

BS-Brass special grade.

S-Selected grade.

PW-Prime western grade.

Zine will be offered to (1) recognized domestic producers of primary slab zinc of the indicated grades, (2) recognized domestic secondary producers of slab the of the indicated grades, and (3) to importers of record of slab zinc of the dicated grades who import slab zinc into the U.S. market under quotas estabished in Presidential Proclamation No. 3257, dated September 22, 1958 (3 CFR, 5), who will agree to distribute the material at no profit for domestic conption.

The quantities to be sold to each such domestic producer of slab zinc will be Stermined on the basis of an appropriate pro rata share of the producers' 32-63 smelter production of such zinc, after appropriate adjustment for special rumstances.

The quantities to be sold to recognized secondary producers of slab zinc of the deated grades will be determined on the basis of appropriate pro rata share of e producers' 1962-63 smelter production of secondary slab zinc after approate adjustment for special circumstances.

The quantities of zinc to be sold to importers of record of slab zinc will be termined on the basis of pro rata shares of slab zinc imports made in 1963 such representatives pursuant to import quotas currently in effect. Such termination will be made by the Government after receipt of orders by GSA. The zinc to be offered exclusively to independent alloyers of slab zinc must be sumed in facilities located in the United States within 3 months from date purchase. The quantities to be sold to each such consumer will be determined the Government on a pro rata basis related to his 1962-63 consumption of Tary slab zinc after appropriate adjustment for special circumstances. The zine to be offered exclusively to all other purchasers must either (a) be comed in facilities located in the United States within 3 months from date purchase; or (b) be resold at no profit for domestic consumption within 90 from date of purchase. The quantity to be sold to each purchaser under category will be determined by the Government after receipt of orders by A and after appropriate adjustments for special circumstances.

It is anticipated that an equitable portion of zinc purchased from the Govent by producers who smelt ores and concentrates on toll, will, by agreement Teen the producer and the toll contractor, be distributed to consumers by through such contractor under the conditions certified to the General Services inistration by the producer.

purchasers who purchase slab zinc from the Government for resale must it within 90 days after date of shipment of zinc by the Government, a cerstatement that the quantity of zinc purchased from the Government has sold at no profit by the purchaser to domestic consumers for domestic Semption, or that the zinc obtained from the Government will be consumed mestic facilities within 3 months from date of delivery.

the event that unexpected market developments make it impossible for purchasers to sell the material within the 90-day time limit, the fact and s therefor must be communicated to the Government and arrangements with the Government for appropriate time extension.

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