On November 25, 1953, the Commission issued release No. 1, paragraph 4 of which reads in part as follows:

4. Proposals shall state the amount proposed to be paid for each of the facilities. Where a proposal contemplates acquisition of several facilities for integrated operation, it shall state separately the aggregate amount proposed to be paid for such facilities on such an integrated basis, and the amount otherwise proposed to be paid for each of the facilities in question on an individual basis *

The Commission's invitation for proposals stated:

In accordance with the terms of the act, negotiations for the sale of each type of plant (i. e., GR-S, GR-I, butadiene, etc.) will be limited to those persons having submitted a proposal for the purchase of such type plant.

The Commission pointed out to prospective purchasers the mandatory provisions of the act.

And I want to say to the members of this committee Minnesota's counsel and its associates' counsel considered very, very carefully what provisions should be contained in their bid. And they consulted with the attorneys for the Commission to see that they were complying with the proposed regulations issued by the Commission and the law as passed by Congress.

Now, Minnesota, Midland, and Edwin W. Pauley submitted to the Commission a time proposal, without qualification, and no strings attached to it, for the purchase of Plancor 611, at a price of $2,500,000, which on negotiation with the Commission, was increased to $3 million. Now, I want to say on that particular plancor we were not the high bidder, but I want to call your attention, members of this committee, that the high bid was not the sole criteria as to whether or not you were to have the plant.

The Commission received a proposal from Shell for the purchase of Plancors 611, 629, and 963, for a lump-sum package price of $27 million, and I understand on negotiations it was raised to $30 million and was recommended.

Now, let me call your attention to this provision in Shell's proposal: We do not state any order of preference for the purchase of the foregoing facilities for the reason that we do not propose to purchase individual facilities ***. We do not state the amount we propose to pay for any of the facilities on an individual basis as we do not propose to purchase individual facilities. Public Law 205 was enacted after full hearing in both Houses of Congress and all of its provisions were considered very carefully.

In our opinion, Shell's proposal to purchase did not comply with the provisions of Public Law 205, in that Shell failed to state the amount to be paid for each of the facilities proposed to be purchased, namely, Plancor 611, 929, and 963; that Shell's proposal in failing to state the amount to be paid for each of the facilities cannot be considered; that Shell was not eligible to negotiate with the Commission for the purchase of any of the facilities offered for sale; that Shell was not eligible to purchase said facilities, and that the Commission's recommendation that these facilities be sold to Shell is improper and a nullity.

Compliance with section 7 (b) is mandatory. We quote the following from the House Committee Report 593, pages 7 and 9:

7 (b) is extremely important, for this provision states what must

And I underscore the word "must"

be contained in bids. This is a protection for the Government as well as the bidder * Paragraph 4 of subsection 7 (b) is mechanical in nature and requires the bidder to indicate the amount proposed to be paid for each of the facilities *

Now, we also call your attention to the following colloquy which took place on the floor of the Senate:

Mr. JOHNSON of COLORADO: I wish to ask whether all the plants other than the three alcohol butadiene plants, will be sold in a single package, or whether they will be sold plant by plant, on bids on a plant-by-plant basis?

Mr. CAPEHART: They will be sold on the basis of plant-by-plant proposals; and the sales will be made plant by plant.

The CHAIRMAN. May I interrupt you there?

Mr. CONNOLLY. You may, Mr. Chairman.

The CHAIRMAN. While you were discussing section 7 (b) of 4, paragraph 4, why not comment on section 7 (b) (5)?

Mr. CONNOLLY. (b) (5)?

The CHAIRMAN. (b) (5).

Mr. CONNOLLY. I intend to do that. In view of the fact that I am notified that the members of the Commission received an opinion from my old friend, John J. Courtney of St. Paul, Minn., whom I have known for many years and known favorably, I would like to comment on John's opinion.

The CHAIRMAN. Yes, sir. then we will take that up.

Let's go ahead with your statement and

Mr. CONNOLLY. Very well. I will continue with the statement and then I would like to have the privilege of commenting.

The CHAIRMAN. All right.

Mr. CONNOLLY. As the House report states, a compliance with paragraph 4, subsection 7 (b) is required in the proposal to purchase and if not followed, the proposal to purchase is a nullity and cannot properly be considered by the Commission as a proposal to purchase. To us, this seems clear and unambiguous.

Government-owned rubber-producing facilities are referred to as "facilities" in section 7 (a). The term "rubber producing facilities" is defined in section 21 (c) as meaning facilities, in whole or in part, for the manufacture of synthetic rubber, and the component materials thereof, including, but not limited to, buildings and lands in which or on which such facilities may be located and all machinery and utilities associated therewith. We fell that the term "facilities" means only one thing-the 27 plants offered for sale, or any combinations of such plants, and that the term "each facility" can have but one meaning, that is, any one of the 27 plants offered for sale.

When you add the word "each" before the word "facility" you define it.

The Commission in issuing release No. 1, referred to above, construed section 7 (b) (4) of the Act the same as we are construing it. And in issuing instructions in regard to who shall be eligible to negotiate for the purchase of a facility, construed section 16 in the same manner in which we do. Under section 16, as passed by the Senate, it would have been possible for a bidder to submit a proposal on a copolymer facility and by virtue of the proposal be accorded the right to negotiate for a butadiene or styrene facility without having submitted any initial proposal on a butadiene or styrene facility.

In the conference on the Senate and House bills, this was deemed unfair, and I quote from page 17.

The language that was stricken out and added to the bill, committee comments, as follows:

This language will permit a bidder on a copolymer facility to negotiate for the purchase of another copolymer facility or it will permit a bidder on a butadiene facility to be considered for the purchase of another butadiene facility, but it will not permit a bidder on a copolymer facility to be considered for the purchase of a butadiene facility on the basis of that bid, nor will it permit bidders on an expensive catalyst plant to negotiate for other much more expensive facilities.

The provision was changed to require that as a prerequisite to negotiation with any person, that person had to have submitted a proposal on that or a similar facility. Minnesota and its associates, having complied with the act and submitted a valid proposal to purchase Plancor 611, a copolymer plant, were eligible to negotiate with the Commission on Plancor 611, or any other copolymer plant offered for sale, but were not eligible to negotiate for the purchase of a butadiene or styrene plant, or to purchase any butadiene or styrene plant.

In other words, gentlemen, we were confined to the purchase of a copolymer plant.

Congress evidently wanted all interested parties to commit themselves in a manner that could be used by the Commission as a basis for intelligent negotiation. Unallocated lump sum package bids are not in accord with this policy because the Commission is unable to determine the highest bid for any facility covered by such a bid and may thus be unable to negotiate intelligently. It is no accident at all successful prospective purchasers, with the exception of Shell, did state separately the aggregate amount proposed to be paid for the facilities proposed to be purchased by them on an integrated operation, and stated separately the aggregate amount proposed to be paid for each of the facilities proposed to be purchased on an individual basis.

For example, Standard Oil Company of California submitted a proposal for the purchase of four different plants and stated:

Purchaser offers to pay the sum of $16,600,000 for all the facilities defined in the proposal. The price proposed to be paid for each of the facilities except Plancor 611 on an individual basis is set forth in purchaser's alternative proposals. The price otherwise to be paid for Plancor 611 on an individual basis. is $3,500,000.

And in addition thereto, an examination of Standard's proposal will show that the total aggregate amount which it proposed to pay for each facility separately totaled $16 million. In addition, Standard submitted a lump-sum package bid for all four of the facilities and offered to pay $16,600,000 under its combination bid, which amount was $600,000 in excess of the total of the separate amounts, which indicates to us and should have indicated to the Commission that it was important to know what a buyer would pay on a lump sum, and to also know what he would be willing to pay on an individual basis.

Phillips bid upon two facilities. It specified the amount proposed to be paid for each facility separately. It stated its preference between the 2 facilities, and in addition, Phillips proposed to pay a lump sum for the 2 facilities in an amount which was $1,001,000 greater than the aggregate amount proposed to be paid for the 2 facilities separately, which again bears out what I just told you, that in a lump-sum

bid they would pay $1,001,000 more, but on an individual plant bid, where they only bought 1 or 2, they wouldn't pay on that same ratio. Now, the Commission, in its report to Congress, page 28, recognized that Shell had refused to state the amount proposed to be paid by it for each facility, as required by Public Law 205, and stated as follows:

At the same time there were three proposals for the west coast copolymer plant, including the package bid of Shell Chemical Corp., amounting to $30 million, for the styrene plant, the butadiene plant at Torrence, Calif., and the copolymer plant. Shell stated at the outset that its interest was only in the acquisition of all three plants for integrated operation. It wanted no single plant and no combination of two. It represented that its proposal was calculated solely on this basis, and consequently declined to assign figures to each of the three facilities. Shell's package bid represented the highest amount offered to the Commission for the three plants.

The emphasis in those statements is supplied by us. That is the end of the quotation.

Congress wisely provided in the act for a "look-see" before the recommendations of the Commission became final. The matter is here for the consideration of Congress. Congress has the last say, and in conclusion, we repeat that Shell's proposal was not in compliance with Public Law 205, 83d Congress, in that the Shell proposal did not state the amount proposed to be paid for each of the facilities on an individual basis, but only the amount proposed to be paid for three facilities on an integrated basis. Their proposal, having failed to comply with the provisions of the act, is a nullity and should not be considered by the Commission.

Now I would like to address myself to Mr. Courtney's statement. The CHAIRMAN. Suppose we permit Mr. Courtney to make his statement and then you answer it. I think that would be more in lineMr. CONNELLY. Whatever the committee desires.

The CHAIRMAN. Now, Mr. Courtney.

Mr. Smart, give Mr. Connolly-these two Minnesota friends, a seat by each other.

Come around, Mr. Courtney. Now, Mr. Courtney, when we received the letter from the Minnesota Mining Co., we examined it and we sent a copy of it to the Commission. I have the Commission's answer here to the position of the Minnesota Mining Co. We proceeded to study this question. I am going to put in the record-or we will ask the Commission to reply to Mr. Connolly's statement when we put them on the stand.

Now, from our viewpoint, what is our contention with regard to the position of the Minnesota Mining Co. in opposition to the package sale to Shell?

Mr. COURTNEY. Mr. Chairman, I have written an opinion for you which I think has been circulated to the membership, and while I regret the necessity of differing with my longtime friend from the same bar of which I have been a member for a great many years, nevertheless the facts and the law in this case seem to indicate to me

The CHAIRMAN. Talk out a little bit louder.

Mr. COURTNEY (continuing). That the position of the Minnesota Mining Co. is not sustained.

Now, with your permission, Mr. Chairman, I should like to go through the sections of the statute which, in my opinion, are pertinent. The CHAIRMAN. Go right ahead.

Mr. COURTNEY. Minnesota Mining cities Public Law 205, 83d Congress, section 7 (b) (4) that the bid documents:

(b) *** shall be in writing, and shall contain, among other things (4) the amount proposed to be paid of each of the facilities, *

In a release giving instructions and information to bidders, RPF Disposal Commission stated:

4. Proposals shall state the amount proposed to be paid for each of the facilities.

Shell Chemical Corp. submitted a proposal without giving the price assigned to each of the three plants:

We do not state the amounts we propose to pay for any of the facilities on an individual basis as we do not propose to purchase individual facilities.

RPF Disposal Commission recommended acceptance of the combined bid of Shell Chemical and called attention to its proposal which stated that "its interest was only in the acquisition of all three plants for integrated operation," for which reason it "declined to assign figures to each of the three facilities." Shell Chemical Corp.'s bid was the highest of the aggregate bids for all three properties.

Minnesota Mining now contends that the bid is invalid because it did not comply with section 7 (b) (4) nor instruction to bidders, release No. 1, paragraph 4.

Minnesota Mining contends it is immaterial whether or not Shell Chemical's bid for the three plants was in the aggregate the highest. It also contends that the RPF Commission "gave Shell an undue advantage not permitted by law" and urges the rejection of the bid and legislation authorizing the Commission to negotiate new contracts for the sale of these plants.

Provisions of the act: I disagree with the contention of Minnesota Mining.

Section 7 (b) (4) is not to be read by itself. There must be read with it section 7 (b) (5), which is as follows:

(5) The general terms and conditions which the prospective purchaser of a copolymer facility would be willing to accept in order to make the end product of such facility available for sale to small-business enterprises, and the general terms and conditions which the prospective purchaser of a butadiene or styrene facility would be willing to accept in order to make the end product of such facility available for sale to purchasers of copolymer facilities.

In my opinion, Shell Chemical complies with this section. There must also be considered section 2, the declared purpose of the act, which is to effectuate the policies set forth in the Rubber Act of 1948, as amended, for the development within the United States of a "free, competitive, synthetic rubber industry."

Likewise, section 3 (b) (3) authorizes the Commission

to take such action and exercise such powers as may be necessary or appropriate to effectuate the purposes of this act.

Section 7 (a), concerning advertisement for proposals, states:

The advertisement shall *** contain such specifications and reservations *** as the Commission in its discretion determines will best effectuate the purposes of this act.

Section 7 (b), which follows, merely directs that the proposals shall contain six enumerated items of information, "among other things ***"